University of Copenhagen Faculty of Humanities Department of Media, Cognition and Communication Course: Contemporary European Cinema Module: Media

Organisations and Institutions Winter 2011

CONTEMPORARY EUROPEAN CINEMA

IN THE

DIGITAL TRANSITION

Antonio Monachello fcb642@alumni.ku.dk

Contents
1. Introduction.............................................................................................................................1 2. Methodology and limitations..................................................................................................2 3. Hollywood versus Europe?.....................................................................................................3 3.1 Introduction.......................................................................................................................3 3.2 Current situation................................................................................................................3 3.3 Hollywood hegemony.......................................................................................................4 3.4 State support and import quotas........................................................................................5 3.5Auteur theory and homogenisation....................................................................................6 3.6 Film distribution in Europe...............................................................................................7 3.6.1 The American way...................................................................................................8 3.6.2 Little Europeans.......................................................................................................9 3.7 Conclusion......................................................................................................................10 4. European digital distribution and exhibition.........................................................................11 4.1 Introduction.....................................................................................................................11 4.2 Brief history of electronic and digital cinema.................................................................12 4.3 Technologies and standards.............................................................................................13 4.4 Digital cinema sites and screen.......................................................................................14 4.4.1 Current situation in Europe....................................................................................14 4.4.2 Current situation in North America........................................................................14 4.5 Digital advantages...........................................................................................................15 4.6 Opportunity or threat?.....................................................................................................16 4.6.1 Independent exhibitors...........................................................................................17 4.6.2 European funds......................................................................................................17 4.6.3 National case studies..............................................................................................18 5. Conclusion............................................................................................................................20 6. References.............................................................................................................................21

1. Introduction
This paper will focus on some of the current issues faced by contemporary European cinema. The ongoing and much discussed process of media convergence characterised by new implications, e.g. the shifting to a global market and the multiplications of screens, led to various speculations about moviegoing practice as soon to be dead. The current situation, as the statistics will show, is different from what one could have imagined just a few years ago and is likely not to change abruptly in the immediate future. The analysis of the latest data available provided by the European Audiovisual Observatory confirms it, along with the domination of Hollywood cinema and the issue of the small number of European movies being successful beyond the borders of the producing state. This paper will deal with the problem faced by the multifaceted European movie industry, marginalised in its own market, analysing some of the perspectives which influenced and are still influencing the policies adopted, such as state support and import quotas, and how they have harmed European cinema. The first part will narrow down the issue starting from a broader perspective which will take in account the overt radical perceptions of Hollywood and Europe as specular traditions of cinema. This dichotomy is still traceable in academic discourses and in policy regulations as well, and it will be seen from an historical perspective showing a much more complex environment than the aforementioned dichotomy. It will then analyse the distribution sector in Europe and it will show the differences with Hollywood studios. This theoretical framework is needed in the second part of the paper for the analysis of the digital roll-out taking place in European cinemas, especially when dealing with its economic dimension. Along with a brief history of the electronic cinema, it will consider the technologies used and the current figures of digital screens in Europe and North America. It will acknowledge its advantages as well its disadvantages, i.e. the financial implications in the roll-out, analysing what the European exhibitors and institutions state about the transition and how the European and national cinema bodies are facing the matter. As the commissioner Androulla Vassiliou, responsible for education and culture, recently stated: The digital revolution has transformed the way the film industry produces, distributes

and screens films. These changes also create great opportunities for European cinema [...]. 1 As every other new technology in cinema, discussions concerning digital cinema being just a commercial exploit should be put apart in favour of a more global discourse in relation to the benefits such technologies could enable. Rather than treat the digital technologies as some sort of magical cure, it will argue that the adoption of digital technologies in distribution, as well as in the other phases, might be a fundamental pillar upon which building a series of initiatives in order to foster the popularity of European movies. Some of them are already being adopted by various EU and national organisations but the path is still long, as the final paragraphs will show.

2. Methodology and limitations

This paper will be twofold: the first part will focus on the theoretical and historical dimensions related to the the problem of Hollywood hegemony, with their paradoxes and bias, while the second will analyse the digital roll-out taking place in Europe, strongly related to the aforementioned problem. The process will be analysed mostly as it is happening in the Western European countries. The historical division in Europe, only recently dissolved, would require a much more comprehensive perspective in terms of the theoretical dimension taken in account in the first part. As for the evaluation of the profit of a movie, the multiplications of screens, with the decreasing costs for home cinema and Internet among all, put it in a difficult position. As some scholars have acknowledged (Doyle, 2002; Jckel, 2003; Kerrigan, 2010), the impossibility to access this vast range of figures makes box office revenues the most important exhibition window that can guarantee the commercial success of a movie. As the statistics will show, moviegoing has still retained its appeal and rationale. Though the benefits of Video On Demand, still at its infancy, seem by far the most promising, this paper will address the issue only in matter of theatrical exhibition. Furthermore, following the lead of Culkin and Randle (2003), it will leave apart the ongoing discussion about the aesthetic qualities of digital cinema and the different technologies developed.

1 http://europa.eu (2010). Press Release: Commission supports digitisation of European cinemas. http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/1168&type=HTML (accessed Nov 22th, 2010)

3. Hollywood versus Europe?

3.1 Introduction Since many facets of the digital transition of cinemas, especially its financial aspect, are connected to the mentioned dichotomy, an analysis regarding the perceived struggle between Hollywood and European cinema is needed. This paper will argue that this dichotomy that lies behind this discussion between film as art and film as entertainment is historically much more intricate than what could seems. While Wood (2007) states that many European films are robbed of their commercial opportunities by few European blockbusters in the market share left by the bigger American ones, Elsaesser (2005) argues that cinema in Europe should not feel threatened by Hollywood. He takes a stance that follows Cowen (1998), arguing that Hollywood film industry is sustaining the very infrastructure of cinemas in Europe. Dealing with film distribution in Europe means facing the long debated issue of Hollywood hegemony. In order to assess it, a picture of the current state is needed. 3.2 Current situation2 According to the latest provisional data provided by the European Audiovisual Observatory (EAO), the gross box office in the EU reached the highest level in 2009, with takings amounting around to 6.27 billion, with a 12% increase compared to 2008. Such growth pairs with the 6% rise in the number of admissions and the increase in ticket prices for 3D movie screenings. Another record was set in the number of movies produced in the EU. As the press release points out, the effects of the global economic crisis are yet to be seen, though the latest news point to a spreading reduction of funds in the public systems. 3 The number of movies produced slightly increased to 1,168, with fiction films consisting of an estimated 80% of the volume.

2 EAO (2010). EU gross box office reached record high in 2009 as European film production continues to grow. http://www.obs.coe.int/about/oea/pr/mif2010_cinema.html (accessed nov 20th, 2010) 3 Adler, T. (2010). HARD TIMES: How Europes Financial Crisis Is Affecting Each Countrys Film Industry. http://www.deadline.com/2010/11/hard-times-how-europes-financial-crisis-is-affecting-each-countrys-filmindustry/ (accessed nov 26th, 2010)

Comforting as the previous figures may be, the press release revealed at the same time other important key issues: as usual, the largest part of this enlarged market share went to the top 100 films, marking out an increase from 69% to 75%. Moreover, the number of films with more than 5 million admissions raised from 34 to 42. Most of them were American blockbusters. US movies in total collected 67.1% of the share. This explains the lowering of the market share for European films in total, reaching 26.7% in the EU, the lowest level since 2005. Even the share of EU/US co-productions decreased to 4.2%. Market shares for national films went down in 18 out of 23 countries, after the record shares noticed in many countries in 2008. 3.3 Hollywood hegemony These data show an ongoing tendency, i.e. the domination of Hollywood, that has been addressed from different perspectives throughout film studies. A complete retrospective of such views would be impossible, therefore this paper will only highlight those which influenced the policies adopted. To Bergfelder (2005) research dealing with European cinema has been historically focused on the various national cinemas. Only in the last 15 years there has been a shift of focus in academic and political policies influenced by the geopolitical integration. He acknowledges that the European countries have used similar mechanisms in order to protect their own national culture in the last 40 years. The typical life of a movie would include a production dependent on state subsidies, a distribution network based on the marketing of festivals and the exhibition in art-house cinemas. After the GATT talks in the mid-1990s, where the European countries stood together against the liberalisation of film trade, there has been the gradual erosion of art cinema as the master narrative of European cinema, both in terms of industrial practice and in terms of academic debates and preferences (p. 318). This resulted in the blurring of the boundaries between the once fixed categories of European high culture and American commercialism, with the former linked to the classical arts, auteurs and state support system while the latter being only commodified popular culture as a mean to homogenisation. However, a closer look in the film industry history regarding those issues shows that such boundaries were never so fixed.

3.4 State support and import quotas The protectionist measures were adopted by the European countries since 1920s. Various quota systems were used to protect national film industries suffering from the effects of the First World War. Apart from such measures, some European countries tried to create a panEuropean collaborative framework, but the results were not successful. The rise of nationalist movements, along with the crisis of 1929 and the outbreak of the Second World War, practically put an end to any further initiative until the 1960s. Cowen (1998) argues that the debate for protectionism in French cinema began in 1930s, but quotas and subsidies were introduced only during the Vichy government to defend the national interests. The film industry was modelled on the German example and the institutions and regulations were maintained after the war, this time limiting the foreign films, not the French ones. Furthermore, he stresses the fact that the European subsidies are often being used by American majors co-producing or having European subsidiaries. This practice has historical traces going back to the 1930s, when the Hollywood studios opened subsidiaries in United Kingdom taking advantage of the quotas put in place to foster the British productions. While in Europe the practice of state funding for film production is ascertained, the interrelations between production companies and the state are not so clear on the American side. As Miller (2001) pointed out, the US governments have a long and documented history of assistance to Hollywood film industry, with a support that spans from tax-credit schemes, to an essential closure of the market for imported products and state, regional and city film commissions. Guback (1985) puts the stress on the establishment of the Informational Media Guaranty Program in 1948, which gave Hollywood studios an advantage over the foreign ones, still suffering from the Second World War. From the 1948 to the mid-1960s this program reimbursed them in dollars at attractive rates for all films sold to countries with difficult or inconvertible currencies, as long they reflected the American point of view. Nevertheless, the foundation upon which is constructed the European approach to film production and appreciation pretends to be more stable than it really is.

3.5 Auteur theory and homogenisation Crofts (1998) states that the principal ways of marketing for European movies are by the nation of production, by authorship and, only for a niche, by a more over sexual representation. All defined against Hollywood as a more authentic offer to the viewers. The definition of what can be considered auteur cinema is not an easy task. Wood (2007: 27) affirms that:
The politique des auteurs was developed by 1950s' French critics to raise the cultural status of cinema and to validate the superiority of European cinema over that of the USA. [...] Critical consideration generally concentrated on the director's ideas and events in his/her life to explain text events in the films. This model ignored the commercial context of film production [...].

Such claim is modelled more upon what has been said after than what the French critics, namely the staff of Cahiers du Cinema, really wrote. The politique des auteurs was developed along the attacks to the tradition de qualit and the praise of film-makers which comprehended the re-evaluation of the commercial American ones, like Hawks and Hitchcock, despised by the intellectuals.4 The manifesto itself, Une certaine tendance du cinma franais by Franois Truffaut, written in January 1954, was a harsh criticism of the French cinema in that period. As Andr Bazin (1957/1986), one of the founders of the Cahiers, wrote about the makers of any piece of art:
The evolution of Western art towards greater personalization should definitely be considered as a step forward, as a refinement of culture, but only as long as this induvidualization remains only a final perfection and does not claim to define culture. At this point, we should remember this irrefutable commonplace we learnt at school: the individual transcends society, but society is also and above all within him. So there can be no definitive criticism of genius or talent which does not first take into consideration the social determinism, the historical combination of circumstances, and the technical background which to a large extent determines it.5

Moreover, dealing with Hollywood cinema:

If you will excuse yet another commonplace, the cinema is an art which is both popular and industrial. These conditions, which are necessary to its existence, in no way constitute a collection 4 Marcorelles, L. (1963) Interview: Roger Leenhardt with Jacques Rivette. http://www.dvdbeaver.com/rivette/OK/leenhardt-rivette.html (accessed nov 27th, 2010). Originally appeared in Sight and Sound Vol. 32 No. 4 (Autumn 1963), pp. 168-73. 5 as edited in Hillier, J. (1986: 251).

of hindrances no more than in architecture they rather represent a group of positive and negative circumstances which have to be reckoned with. And this is especially true of the American cinema, which the theoreticians of the politique des auteurs admire so much. What makes Hollywood so much better than everything else in the world is not only the quality of certain directors, but also the vitality and, in a certain sense, the excellence of a tradition. Hollywood's superiority is only incidentally technical; [...] The American cinema has been able, in an extraordinarily competent way, to show American society just as it wanted to see itself; but not at all passively, as a simple act of satisfaction and escape, but dynamically, i.e. by participating with the means at its disposal in the building of this society.6

Puttnam (as quoted in Jckel, 2003: 14) argues that the mutation of the auteur theory into a political ideology [...] condemned much of Europe's cinema into a cultural ghetto. Elsaesser (2005) suggests the revision of the paradigm auteur/high culture/nation in order to better understand contemporary European cinema. Moreover, another revision should be take place, i.e. the liberation from the classic dichotomy between European cinema and Hollywood. On the opposite side, Wayne (2002: 3) emphasizes the critical paradigm of Hollywood and global hegemony, stating that the American majors in a very complex way are homogenising the world film culture, while incorporating styles and personnel from the cultures it replaces, in a one-sided unfair process. Bergfelder (2005) instead argues that while the same composition of Hollywood is essentially multi-cultural, and the focus on national cinemas in Europe has denied the inclusion of diasporic experiences as integral elements. The following paragraphs will then analyse the distribution market in Europe along with the structural differences in the practices used in comparison to Hollywood. 3.6 Film distribution in Europe
The distribution sector is undoubtedly the most instrumental element in a film reaching its audience. Irrespective of the talent of the writer, director, technical staff and stars involved, if a film fails to secure a distribution deal with one of the majors or a respected independent distributor, it will not be widely exhibited and will certainly not recoup its production budget. Kerrigan (2010: 37)

As with the reckoning of box office revenues, the analysis of film distributors in Europe deals with the international distribution companies of the Hollywood major studios. The
6 Ibid.

Hollywood strategy in dealing with Europe as a single market with only few differences among the nations, ironically shows an approach only tentatively exploited by the European institutions and organisations, historically focused more on their national identities. A brief analysis of distribution structure and expenditures in Hollywood and European movies is therefore needed. 3.6.1 The American way As Jckel (2003: 91) points out, the distribution sector in Europe is dominated by a concentrated core formed by Buena Vista International (the distribution arm of the Walt Disney Company), Columbia TriStar (the international division of Sony Pictures Entertainment), 20th Century-Fox (also handling MGM releases since November 2000), United International Pictures (UIP) (a joint venture between Paramount and Universal) and Warner Bros. This is also a result of the alliances and mergers between majors and European distributors in the 1990s, which gradually strengthened their positions in the national markets. De Vany (2004: 174), in his comprehensive statistical analysis, emphasizes the great variability surrounding the movie industry, since competition in motion pictures where so little is known and so much is at stake looks very different from competition in industries where more is known about what customers want and how to produce it. The fundamental characteristics of the Hollywood studios, developed throughout the past century, are the size, both in terms of domestic market and of supply, and their structure. The risk in the movie production is spread among their several releases, as opposed to the one-off project, typical in Europe. According to Gasson (as cited in Doyle, 2002: 108) only 2 movies out of 10 are profitable for the majors, but they provide enough money to sustain their activities. The structure poses another advantage, that is the marketing and distribution arms are integrated in the film companies. The assured distribution gives the ability to spend more resources for the prints and advertising sector, so as to build audience awareness of their own product (Doyle, 2002: 107). Nevertheless, the vertical integration was first introduced by the European entrepreneurs in the USA, namely Path, which focused mainly in distribution (Kerrigan, 2010).

3.6.2 Little Europeans As stated in the previous paragraph, the main problem in the film industry in Europe relies in the smaller size of companies and their domestic markets, as well in their fragmented structures, in which production is disaggregated from distribution and exhibition. Therefore, producers usually lack the leverage in the negotiations for ensuring their movies a good distribution, at the point that the European production companies are only small players in the different national markets and very minor players in the international ones (Doyle, 2002). The smaller budgets in European then is also a result of the greater risk associated with non-US movies, pushing the companies in a cycle in which poor investment results in low revenues and vice versa. Even if only few movies are profitable and dominate the box offices, the majority of the Hollywood productions are given the potential to have larger revenues and produce more awareness thanks to a wide distribution. Only recently the European distributors are giving to their movies the same scale of release usually given to an American blockbuster, though this is true only for high budget movies, at least in comparison to the independent ones. In America, the cost of a print alone amount to $1,000 to $1,200 (Culkin & Randle, 2003: 88), a figure higher in Europe.7 A release with 100 prints for a movie, far from the thousands of copies issued for a blockbuster, coupled with the cost of shipping, would be then prohibitive. These high prints and advertising costs makes it impossible for any independent production company to provide what a vertical integrated industry can do for every given movie. Usually, independent European movies are distributed with 5-10 prints being sent and used by other cinemas after the initial screenings. Some copy would deteriorate, while the effects of marketing (if there have been any) or social impact would vanish. In fact, when an independent movie receive a sudden attention, the majors distribution companies take it under their arms, with its probable negative drawbacks. The supra-national, national and regional support could not possibly give many movies a wide distribution in a market where most of the movies are not distributed. This lack or at least the poor attention to distribution support by national governments could be linked to the fact that such practice has sense only if structured across several countries, thus the state would have
7 von Schyowski, P. (May 2003). Digital Cinema Business Models: The global outlook. Screen Digest. as cited in Culkin, N., & Randle, K. (2003: 88)

little control upon such companies (Batz, as quoted in Jckel, 2003: 12). Elsaesser (2005) argues that the classic initiatives such as state subsidy systems and partnerships with television didn't succeed in making European cinema competitive. Instead, he suggests to directors and producers to go beyond the national cinema label. They may not be successful in the national market or captivate large audiences, but they may perform well on niche markets all over the world, being the box office only one parameter to measure the success of a movie. As Jckel (2003: 114) acknowledges, along with the hope in the priority given to the distribution sector, the European supports could be playing a much more significant part in ensuring that European films have greater access to more European screens. Nonetheless, some movies, such as Lola Rennt (1998), Amelie (2001), Slumdog Millionaire (2008) to name a few, have demonstrated that even small-to-medium budget movies (especially compared to the American ones) can be appreciated among different countries to a certain large extent as long as they are well distributed and marketed. Lieberson and Appignanesi (2007) identify the lack of producers with entrepreneurial skills in Europe as the main reason for the US domination. Moreover they see this role not opposing that of the auteur, rather as a mean of enhancement. Some film-makers can become their own distributors using Internet in conjunction with the possibilities to get known in the film festival scene. It may be a time-consuming way to get noticed, and not everybody can or will succeed, but it is still an opportunity. The rise in the use of social networks and Internet in general will likely give more prominence to the word of mouth and could be used as a more direct way to find an audience through internet distribution or to gain awareness of their film (Kerrigan, 2010). 3.7 Conclusion The approaches to film as art in Europe and film as entertainment in Hollywood are theoretically related more to the critical theory proposed by Adorno and Horkheimer (1947/2002) than to the politique des auteurs as it was conceived at the beginning. Still, whatever the root may be, the policies put in places to defend national cultures on the one hand helped and fostered the cultural diversity, while on the other marginalised the European

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movies in their own markets. On the other side of the ocean, Hollywood majors crying for a total liberalisation forgot how the American government helped them since the establishment of their movie industry. Fallacious as the American blockbuster model can be, with its overt anxiety on the first week of release, the European short-sightedness produced many paradoxical situations. While taking down borders within the continent, the European countries established imagined borders against the American products with little results, as the statistics has shown. Furthermore, even the production of movies with an higher budget than the usual, was long considered only as a pale imitation of Hollywood blockbusters while it may be one of the many solutions to adopt. The point is not to deny the cultural side of a movie, but rather enabling their potential to have more social effect (as well as more revenue) through more effective means of distribution. The positive efforts, especially those coming during the last years from the European Union agencies, helped only on a small scale. The support for cultural diversity may be beneficial in principle but its fragmentation, coupled with a poor attention on how effectively to reach people, whether considered as an audience or as citizens, mined its effects. Then it came the digital cinema with its enormous cost saving potential. This is crucial in a fragmented territory as it Europe, unable to create vertical integrated industry and lacking of strong cooperative efforts, only recently fostered. The next part will therefore analyse the digital roll-out and how it could in principle help the distribution of European movies.

4. European Digital distribution and exhibition

4.1 Introduction8 The effects of digitisation and Internet in the movie industry and culture have already been treated by various scholars especially in terms of aesthetic differences with the analogue process and about the possibilities opened up by CGI (Computer-Generated Imagery) and VOD (Video On Demand). The emergence of digital technologies is acknowledged at every different level of film-making, and it will likely replace 35mm films in the movie chain in the
8 Europa Cinemas (2010) Digital guide. http://www.europa-cinemas.org/fr/actions/cinema_numerique/digital %20guide/EC_digital_guide_GBFR%20.pdf (accessed dec 11th, 2010)

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next years. This being true especially for Hollywood, always flexible in adapting new technologies. Even the European organisations are acknowledging the benefits of digitisation, as the new rule set by Eurimages for co-production funding shows, with the requirement of a digital master copy, the 35mm copy being included only at producer's own discretion. In production and especially in the editing stages, the digital technology offers more advantages and it can be used only on a particular stage. Even if not shot with digital cameras, the majority of movies are being edited and colour graded on digital platforms, resulting in a digital master, called Digital Intermediate. In distribution and exhibition, film prints retained their role until recently, as digital projection in theatres is more and more gaining prominence. Elsaesser (2005), albeit not speaking about this matter, stresses the importance of the technological innovations developed in Hollywood, such those in sound technology or digital effects, transforming respectively the aural experience and the way reality could be rendered on screen. A comparison between digital projection and those other innovations might seem overtly positive and raise suspicion. Though the stress here is put on the cut of distribution expenses, this perspective can serve as a defence against any arguments treating digital cinema as a marketing gimmick. VOD and other forms of movie consumption will not be analysed as stated, though they also enable new means of distribution and possibilities for European movies. As the next paragraphs will show, the opportunities offered for movie distribution by the current transition to digital theatres are acknowledged as well as their potential disadvantages. First, an excursus on the history of the use of electronic devices in cinema is needed. 4.2 Brief history of electronic and digital cinema As Boddy (2008) acknowledged, the idea of replacing film stocks in the movie exhibition is far from new. On the contrary, the experiments and public demonstrations go up to the 1920s and 1930s, paralleling the beginnings of television industry even in the imagination of reception scenarios. But be that as it may, the success was limited and it peaked in 1939 with the British cinema television, installed in five London theatres and in early 1952 in the U.S.A., where 102 theatres had been equipped for electronic exhibition. While in the 1960s and in the 1970s the electronic cinema would be associated with media activists and video art,

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in the following two decades the efforts were limited to the infiltration of electronic production and post-production tools, along with the multi-channel theatre sound systems. The end of the last millennium witnessed the the beginning of screenings in digital cinemas across the USA. Since then, the overconfident claims clashed with a very slow progress, apart for the use in editing and special effects areas. Only in the last few years the number of digital theatres is expanding at a steady rate, as the related paragraph concerning the current figures will show. 4.3 Technologies and standards9 Currently the most used types of projectors for digital cinema are two: Digital Light Processing (DLP) Cinema, developed by Texas Instruments and Silicon X-tal Reflective Display (SXRD), by Sony. The life expectancy of the projectors is currently estimated at around 5 to 10 years, the usual time it takes to recoup its cost. While the cost for the projector alone amounted to $100,000 seven years ago (Culkin & Randle, 2003: 88), now the price is around the same but it includes the server (Meza & Keslassy, 2010). As for any other digital equipment it is likely to lower as its use will spread. The aforementioned price is for the highlevel projector DCI compliant. DCI stands for Digital Cinema Initiative, a joint venture formed to set a standard architecture for digital cinema systems which offers inter-operability, compatibility and includes strong built-in anti-piracy measures. Nevertheless, albeit developed by the Hollywood majors, the European Digital Cinema Forum, a voluntary body supported by the main European cinema institutions 10, is favourable to its adoption (Monk, 2009). Moreover, the standards designed already take in consideration future developments with long lasting specification, so to standardise on an higher-quality threshold than we can appreciate in a first-generation print. The use of lower standards such as High Definition would be not suitable for cinema environments. Using a global standard would have the same advantage as it was for 35mm films, thus do not excluding smaller theatres to show mainstream movies if they want to. The specifications are about image quality and performance, not hardware, therefore there is no restriction for technologies used to make a DCI compliant projector. Furthermore, every
9 Swartz, C. S. (2005) 10 EDCF Board Members 2010-2011. http://www.edcf.net/board.html (accessed nov 28th, 2010)

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European requirements has been taken in account in its process. The issue related to the its main drawback, i.e. the price, will be taken in account in the related paragraph. 4.4 Digital cinema sites and screen 4.4.1 Current situation in Europe11 The latest statistics collected by MEDIA Salles showed a substantial growth of digital screens and sites in the 34 European countries covered by the program. The number of the screens rose to 4,693, with a 206.9% increase compared to the previous year, while the number of digital sites came to 2,374, with a 191.3% rise. Most digital theatres are in Western Europe, as many as 3,904. The remaining countries located in Eastern Europe and the Mediterranean rim nevertheless showed an higher rate growth than the Western countries. Compared to the total number of screens, digital screens rose from a 4.1% to a 13.1% market penetration, while now 16% of the European cinemas have at least one digital screen. Surprisingly, it surfaced the fact that the majority of digitalised cinemas were small-medium sized ones, not multiplexes. This could be linked to the public intervention being a strong support in some countries. However, this growth revealed the high concentration in terms of exhibition companies: only 5% of them were responsible for 33.6% of digital screens. Another key fact is the increase in the percentage of screens equipped with 3D technology from 54.4% in June 2009 to 68.8% in December 2009 with respect to the overall number of digital screens, thus being the major driving force. 4.4.2 Current situation in North America12 As it should be obvious, the role of Hollywood studios in the inception of digital cinema is directly reflected in the number of digital cinema theatres. Unfortunately, the consulted reports give a broad perspective which include the numbers of theatres in Canada as well. According to a Cinedigm Digital Cinema Corporation update, at the moment there are 12,802 digital screens in North America, increasing by 86% since last year. Compared to the increase in Europe this may seems controversial, but the numbers of digital theatres has increased
11 Media Salles (2010). DiGiTalk, Ideas, Experiences, and Figures on Digital Cinema from DigiTraining Plus 2010. http://www.mediasalles.it/digitalk/ (accessed nov 29th, 2010) 12 http://cinedigm.com (2010) Cinedigm Issues Digital Cinema Industry Update. http://investor.cinedigm.com/releasedetail.cfm?ReleaseID=516936

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steadily since 2005, and now represents approximately a third of total screens. 4.5 Digital advantages As Culkin and Randle (2005) note, whether the quality of a digital projected movie is better than the film or not, it eliminates several problems: the need for multiple prints, with their costs; the deterioration after many screenings or after many copies; the cost and time needed for their delivery. Furthermore it is in principle more environmentally friendly than films stocks. The price of a Digital Cinema Package (DCP), the equivalent of a 35mm print, is around 150, a big benefit for independent distributors, who could increase the circulation of their movies. Actually, digital mastering has an advantage even in the still dominant classic projection, since a movie can be printed on brand new negatives without any loss and moreover can be easily used for television broadcasting, DVD production and VOD. In a hypothetical scenario, movies could be shot and preserved on films (given their higher life expectancy), while distributed and projected in their digital form. Considering the concerns related to the programming and diversity, digital files could contain multiple versions in themselves: subtitled, dubbed or screenings censored for family to give some examples. In principle, digital projectors can handle different sources. The main benefit for exhibitors consists generally in a more flexible programming. It could not be limited only to movies, but extended to every live event taking place in a foreign country. This includes even the broadcasting of an event like an opera performance. Examples are already in place even in Europe. On December 7, 2009 32 Danish cinemas and one cinema in Saint Petersburg showed the live broadcast of Carmen being played in the opera hall La Scala in Milan (Hamre, 2010). Unfortunately, the adoption of digital cinema in Europe has some significant drawbacks, which extensively reflect the conflicts analysed in the first part.

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4.6 Opportunity or threat?13 The major challenge in the digital roll-out is economic: in principle, while distributors will save money, the exhibitors have to make the financial investment required to buy the digital equipment and renovate the screening rooms. Such investment would be unbearable by many exhibitors (especially smaller theatres) without sufficient funds or if not grouped together to share the costs. Therefore, some companies are using a model called VPF (Virtual Print Fee), developed in the U.S.A., consisting in the intervention of a private or public investor, put inbetween the exhibitors and the distributors. This third-party investor covers the financial requirement for the equipment in advance, and then will be repaid by the other two parties in the contract, according to the agreed modalities (Blzquez, 2010). The trouble with the aforementioned model is the applicability to the majority of European theatres, especially in central and eastern Europe countries. While the VPF model is well adapted to the multiplexes, smaller (frequently art-house) cinemas may not be well suited, since this model is based on the week of release and the turnover rate. Most of them, which screen a movie for a longer period, weeks after the initial release, may therefore not benefit from deals with mainstream distributors. A viable response could be cooperation, as the Cinema Buying Group (CBG) has done in U.S.A. and Canada. This group, formed by independent exhibitors, is trying to cover the costs of the roll-out by mutualising with each other. In Europe, the main response for such threats comes from the national and supranational entities. Doyle (2002: 118) is skeptic about the use of new digital technologies being able to hurt the Hollywood dominance. He argues that as long as the majors held the capacity to supply exhibitors with a steady flow of well marketed and attractive movies, little is likely to change. Furthermore, the savings made by the majors could help increasing the concentration in the sector. The most apocalyptic scenario is the often depicted one where only American movies are shown in digital multiplexes. Such perspective clashes with the general consensus towards digital cinema and the increasing attention towards marketing and Internet, along with a lower entry barrier to the market.
13 http://ec.europa.eu (2009). Background Document On Opportunities And Challenges For European Cinema In The Digital Era. http://ec.europa.eu/culture/media/programme/overview/consultations/docs/background_digital_cinema_en.pd f (accessed dec 8th, 2010)

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4.6.1 Independent exhibitors Since the Hollywood studios are the major driving force for the transition, a comparison could be drawn with the scenario in the U.S.A. in the 1950s. Though the issue was not of technical matter, it had in its core the common struggle between majors and independent exhibitors. The antitrust cases known as the Paramount litigation obliged the major studio to sell their theatres. De Vany (2004) argues that these Decrees did harm the independent exhibitor sector, their intended beneficiary. As for the independent exhibitors today in Europe, they see the digital transition as a solution, not a problem.14
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In the conference The independent film exhibition sector and the

challenges of digitisation, held in Barcelona on March 4-6 2010, the 20 panellists and 200 professionals concluded that the roll-out should be a short process, limiting the period in which 35mm prints and DCP coexist, since it would produce extra costs. Moreover, they put the stress on the benefits like the access to alternative content, especially the high quality live content and the possibility to get day-and-date release. Alongside the benefits, they maintain that in the majority of the European sites, the financial investment should not be on the shoulder of the exhibitor alone. While they express the need for more European distributors, advertisers and alternative content suppliers to enter these deals, at the same time they call for the role of the European Authorities in the establishment of guidelines by public intervention in the legal and administrative fields of the VPF deals, when not directly involved in the financial dimension. But what is the current state of public funding in the digital transition? 4.6.2 European funds Pauwels and De Vinck (2010) point out the role of the policies issued by the European agencies to promote diversity of screen, with the support to small theatres, and diversity in screen, with funds for film-making and training. At the same time, they acknowledge the imbalance between national-level production support and European-level support. The stimulation for the roll-out coming from the European organisations is arguably too little and
14 The independent film exhibition sector and the challenges of digitisation Conclusions, http://en.www.mcu.es/principal/docs/MC/PresidenciaUE2010/Cine_RetosDigitalizacion_Conclusions.pdf (accessed dec 25th, 2010) 15 The independent film exhibition sector and the challenges of digitisation Final report, http://en.www.mcu.es/principal/docs/MC/PresidenciaUE2010/Cine_RetosDigitalizacion_Finalreport.pdf (accessed dec 25th, 2010)

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late. The support of 5 million against a shortfall of 465 million will lead to fragmented results. The limitations of the complementary role could then affect the effectiveness of a more comprehensive and faster European response. Even if state subsidy showed little result in terms of wide distribution, due to the lack of proper funds, the digitisation of cinemas and the creation of a distribution network (larger than the existing Europa Cinemas) could be a part of the solution. The national governments and cinema institutes are heavily concerned about the matter. The following paragraphs will evaluate the current situation of national funds in the countries more related in the relationship with Hollywood, United Kingdom and France, albeit on different grounds. The former historically opposed, while the latter more open to coproductions and liberalisation. They will serve as a conclusion to show the current development of digital cinema at its best. The case studies will evaluate the matter even in terms of distribution, with two different independent distributors taken as example, though not exhaustive. 4.6.3 National case studies United Kingdom United Kingdom has been the European pioneer in the digitisation with the set-up of Digital Screen Network (DSN)16 by the UK film council in 2004. It spanned only for a few years and granted 12 million which covered the roll-out of 240 screens in 210 theatres. The concern was primarily the increase of diversity of movies screened, like other initiatives promoted by the British Film Institute: the Prints and Advertising Funds, starting from 2003, and the pilot application started in 2009 called Digital Innovation in Distribution. The DSN funds covered a range of cinema from small to multiplexes, since it was open to every cinema as long as they met the requirement to screen a certain amount of so-called specialised films17 (basically foreign, non-mainstream, dealing with social issues or restored films) and to develop a marketing strategy to give awareness of these movies to the audience. The initiative helped significantly. UK had 284 digital screens in 2008, almost the 30% of
16 http://www.ukfilmcouncil.org.uk/dsn (accessed dec 26th, 2010) 17 http://www.ukfilmcouncil.org.uk/media/pdf/r/2/Defining_Specialsied_Film_Update_20_04_08_.pdf (accessed dec 26th, 2010)

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total screens for the 34 European countries in the MEDIA Salles programme. By then the number is more than doubled, reaching 668. Currently, though it is not the country with most digital screens, it leads the way with regard to digital sites in Europe, to the amount of 358 (Media Salles, 2010: 34). The stagnant growth is related to unavailable of funds in the program, but the interest in new technologies is still active as the launch of the latest Innovation Fund shows.18 As for distribution, the case of the independent distributor Dogwoof 19 is exemplary of the use of new available technologies. Founded in 2004, it is specialised in social issues films. The main characteristic is the heavy use of online marketing, especially on social media platforms like Facebook and Twitter. King's Game (2004), produced in Denmark and distributed in UK by Dogwoof, was the first film screened on the Digital Screen Network. Moreover, they released Age of Stupid (2009), a movie about the climate change issue, with a premiere in 65 cinemas satellite linked.20 Still, this could seem nothing in comparison with mainstream release, but it shows in concrete terms the way to take. France On the other side of the Channel, France offers a different example. The recent growth reflects an initial distrust (at least in funding and deals) followed by a sudden reversal. While it had only 44 digital sites and 66 digital screens in 2008, now the figures have increased to 257 sites and 904 screens, the latter putting France as the leader in Europe as at 1st January, 2010 (Media Salles, 2010: 34). The number of digital cinemas is expected to rise thanks to the efforts of commercial deals, and lately, of national funds. The Centre national du cinma (CNC) launched a three year plan to digitise 1,500 screens with a 104 million fund. An additional support coming at regional level will distribute 26 million (Meza & Keslassy 2010). Though those funds comes mostly as a response to the commercial model, the choice is to follow the DCI standard. Furthermore, the public funding and the commercial deals are opposed only in principle, since they are complementary and show a cooperative approach by the different interested parties.
18 http://www.ukfilmcouncil.org.uk/ (April 1st, 2010). UK Film Council launches new 15m film fund to champion British film. http://www.ukfilmcouncil.org.uk/article/16684/UK-Film-Council-launches-new-15mfilm-fund-to-champion-British-film (accessed dec 27th, 2010) 19 http://www.dogwoof.com (accessed dec 26th, 2010) 20 http://www.dogwoof.com/blog/what-is-dogwoof-indie/

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In the distribution area, the company Swift, founded in 2002, sets a different example. Its main area activity in cinemas is the high-quality auteur film. Didier Costet, its director, was recently interviewed during the the initiative European Distributors: Up Next!, which took place during the last San Sebastian Film Festival. He blamed the small box office revenues on young people, being unreceptive to auteur movies, on the means of distribution, the same as those used 20 years ago, and on the abnormal restriction of movie promotion in television.21 While this perspective is not totally unrealistic, it still shows a non-receptive approach to the novelties in the sector and their acknowledged benefits.

5. Conclusion
The habits in movie consumption are changing but nevertheless cinema going is still alive. The costs for digital production, distribution and exhibition, generally lower than in the analogue process, are enabling a slow revolution in the European movie industry. Currently, only 16% of theatres in Europe have at least one digital screen, but the growth is steady and, as demonstrated, should be fast. Though the change is mainly driven by the new 3D movies, at least at first sight, this should not be used as a rationale against it. The growth in the numbers of digital screens and the efforts showed by the European agencies and the national bodies demonstrate that even the concerns about the financial implications can be solved if the different entities work cooperatively. Furthermore, the differences in the approaches of cinema analysed in the first part are slightly dissolving. Funding the use of newer technologies could mean more cultural diversity. If sufficiently supported, the digital transition could be by far the greatest help the usually poor distributed European movies ever had, even in the difficult field of theatrical exhibition. The support to the digitisation of cinemas should be seen as a possible mean to create an European network in which European movies can more easily circulate, treated both as art and commercial works.

21 Lemercier, F. (August 30, 2010). Interview with Didier Costet. http://cineuropa.org/interview.aspx? documentID=149836 (accessed dec 13th, 2010)

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