Virtual Print Fee - It's All One Sided



Its all about Money

I receive queries almost daily from movie exhibitors regarding the Virtual Print Fee scheme. My response: Like many contracts, at first blush it sounds great, but in the details it's all one sided - and make no mistake, the film Studios know how to make up a "good" contract.

The Studios' scheme to get  movie exhibitors to convert to digital cinema by paying a virtual print fee (a fee given to the exhibitor because a film print did not need to be distributed)  which defrays the cost for the D-Cinema conversion, comes with lots of stipulations and, in fact, is advantageous to - you guessed it - the Studios

For example, to qualify for the VPF, movie exhibitors must, among other requirements:
- Open digital movies on the first day of their release.  That is why you will
   see first run movies opening in smaller auditoriums with small screens.
   The movie must open but there are other films already in the large auds.
   which can not, under contract, be moved to the smaller auds.

- Any renovation made to a cinema from 1/1/10-to-present that did not
  include a digital cinema platform can not qualify for the VPF. Code:
  those cinemas that are thinking of upgrading, for whatever reason, must
  include a D-Cinema conversion into their plans.

- Once a d-cinema platform is installed the exhibitor has 6 months to
   upgrade all other auditoriums at that location, and one year to upgrade 
   all auditoriums within the circuit.  I'm not sure if this covenant is being
   enforced but it makes conversion very costly and is totally unnecessary.

- Exhibitor must pay a royalty fee on all alternative content exhibited to
  the Studios while the VPF contract is in force. Theory: since we are
  paying the VPF we get our take on all content using the D-Cinema
  equipment.

- Movies released in 3D format must be exhibited in 3D if the exhibitor is
  3D equipped.  This makes for conflicts, as a 3D feature already playing,
  and contracted say for 3 weeks makes compliance with this stipulation
  impossible and may result is a forfeiture of that movie.   

These are but a few of the stipulations under the Studios' VPF scheme. But the giant loophole - that gets the Studios out of the deal (does anyone really think the Studios will be paying the VPF for 10 years as is stipulated in the VPF contract) is the one that states: the Studios reserve the right to demand that the exhibitor upgrade to the latest technical standards as stipulated by the Studios and non-compliance will void the VPF contract.

So there you have it.  Enjoy!

Best and Happy Movie Going.
Jim Lavorato