DreamWorks’ big-budget bet, “Monsters vs. Aliens,” has faced one hurdle after another -- including a whipping from the blogosphere over its extravagant Superbowl ad in January. But now comes the worst news yet: Fewer than half of the theaters that were supposed to be ready for digital 3D projection will be ready by the movie’s release on March 27.
DreamWorks announced a year ago that it expected 5,000 theaters to be 3D-ready for a wide 3D opening of “Monsters.” But the economic recession has further delayed the already-long-delayed conversion of movie theaters to digital projection.
Expectations have been revised downward.
Last week DreamWorks Animation CEO Jeffrey Katzenberg told investors that “Monsters,” with an estimated budget of $165 million, would be able to be seen on “in excess of 2,000 3D screens,” out of the 7,000 screens planned for opening weekend.
“We believe this number will be more than enough to allow our film to serve as a proof of concept and to propel the new format forward,” he said on the investor call.
But that’s a far cry from what DreamWorks had anticipated, and will be a blow to its ability to maximize the moviegoing experience and ticket sales on the movie.
Enthusiasm for 3D remains high with studios, theater owners and filmmakers, especially as another way to entice moviegoers.
But the question now is whether enough screens will ever be ready in time not only for “Monsters” but for the ever-lengthening slate of 3D movies already in production over the next couple of years -- including major releases by directors like Tim Burton, James Cameron and projects like “Tr2n” and “Toy Story 3” (see accompanying story.)
Here’s the key reason for the slowdown: Installing digital cinema installation required for 3D can cost $100,000 per screen. These installations are typically financed using a virtual print fee (VPF) model -- meaning that the studios pay an agreed fee per screen, per movie, to offset exhibitors' costs.
The studios have been covering their part of the cost. The theater-owners’ portion of the financing has needed to come through venture capital financing, which has dried up since the catastrophic news on Wall Street.
The funding is being implemented through companies acting as middlemen in the process, such as Cinedigm (formerly AccessIT) and Digital Cinema Integration Partners, a joint venture owned by AMC Entertainment, Cinemark and Regal Entertainment Group, which represents over 14,000 screens in North America.
Cinedigm has already converted roughly 4,000 screens, the majority of those currently in use. It had begun funding a "Phase 2" program for 10,000 screens, but the economic crisis, which essentially has stalled those efforts.
Adding 3D technology is yet another layer of sophistication -- and cost. The latest figures suggest that there are roughly 2,000 3D-ready screens in 1,320 theaters.
The delay is particularly frustrating, since studios and exhibitors have been seeing increased traffic at 3D movies, as well as audiences demonstrating a willingness to pay a premium at the box office, in some cases 20 percent over 2D.
