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Digital transition: "a process that has to reach maturity"

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Paolo Protti • President of ANEC

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Paolo Protti • President of ANEC

Interview with the president of ANEC (National Association of Italian Film Exhibitors) to discuss the digital equipment process in Italian movie theatres.

Cineuropa: In the space of one year, Italian theatres have seen an explosive increase in digital equipment. What has been the decisive factor in this surge: the 3D phenomenon, the agreement between distributors and exhibitors on VPF or the tax credit?
Paolo Protti: In 2009, the 3D phenomenon had a 99% influence on the development of digital screens which went up from 50-400 in 2009, and stood at 504 at the end of April 2010. This year, 3D is still playing its role, but we’re also seeing the first effects of the agreement on VPF signed between Italian distributors and exhibitors. I think there will soon be a further impetus with the publication of the terms of access to the tax credit created by the government.

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Some professionals reckon that at this rate, Italian theatres will all be digitally equipped by 2012. Do you share this optimistic prediction?
This goal depends on a single factor: the renewal of the tax credit beyond 2010. In the current context of budgetary austerity in Italy, we can’t expect to obtain further funding. If the measure is renewed, we could have a total number of very well-equipped theatres by 2012, capable of making a real transition from film reel to digital. If this isn’t the case, the waiting periods will get longer because switching 100% of theatres over to digital without any backing is impossible.

Is there a risk of seeing a two-speed exhibition sector emerge, with the big networks digitally-equipped and small theatres unable to finance their equipment?
It is a real risk. That’s precisely why the tax credit is essential. The attraction of 3D and the agreement with distributors are not enough to guarantee the financing of the equipment because, after all, there is still a transformation cost that is too expensive for small exhibitors. So it is essential that the tax credit is extended in 2011 and 2012.

What is your position on the theatrical screening of non-cinematic content, which is made possible by digital equipment and is currently developing at a rapid pace?
I think we’re seeing the fear of something new and a change that could undoubtedly happen. But there are contractual guidelines: when exhibitors rent a film, a contract is drawn up. There needs to be a relationship of transparency and total communication between renters and exhibitors so that everything is very clear. I don’t think there will be any problems. But if things proceed behind each other’s backs, negative elements will develop. If exhibitors are informed about the home video release date for example, it’s also natural that if an exhibitor wants to screen alternative content, they must inform the distributor and discuss it with them to find out whether it’s possible or not. It’s a contractual issue which must be handled with absolute transparency.

The agreement between distributors and exhibitors on VPF was concluded in Italy without going through third-party investors.
Third-party investors are nonetheless very much around. Arts Alliance has contracts with major networks and operates in Italy, others have made offers that are currently under discussion. Italian distributors were rather sceptical at first and small exhibitors felt it was a restriction of their autonomy, they had the impression they were no longer owners of their installation. This speeded up the signing of a direct agreement between exhibitors and distributors for VPF without an intermediary, knowing that there is total freedom in the choice of model. Some preferred to sign a contract with Arts Alliance, others preferred to invest themselves by directly involving distributors. Not all distributors are participating yet, but many already are. It’s a process that has to reach maturity: we’re in a free market where you can decide to participate or not.

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