Memorandum submitted by Cinema Exhibitor's
Association
The following submission has been written specifically
for the Committee's new inquiry into New Media and the Creative
Industries. It is a précis of numerous consultation exercises
that CEA has conducted, members' opinions expressed during CEA
Board/Branch meetings and other gatherings when members have taken
the opportunity to express views and attempts to provide a consensus
view of cinema exhibition to the emergence of new delivery systems
to the public of filmed entertainment. There is much speculation
and misinformation circulating within the sector on both current
and future developments within the new media sectors and it is
therefore very difficult to state with certainty the outcome of
current and future developments.
Cinema exhibition believes that, notwithstanding
the means of delivery of film to cinemas, the importance of exhibiting
a film in the cinema will continue to be the pinnacle for the
creator of filmed entertainment and the bedrock on which the future
exploitation of that filmed entertainment is built. We believe
that the creative community who make filmed entertainment will
continue to aspire to having its work initially appreciated by
the public in the place for which it was intended. The creative
norms required for cinematographic exhibition will continue to
be of a higher quality than those required for other delivery
systems and the opportunity for creative experimentation is greater.
Cinematographic exhibition will continue to be the most efficient
method of launching a cinematographic work, though not all works
intended for cinematographic exhibition will be judged to be of
a quality that deserves exhibition in cinemas. The intention of
all involved in making a cinematographic work will have been to
have it launched in cinemas. Launching a work in the cinema provides
the opportunity for the filmmaker to exploit all forms of publicity
prior to its launch to bring to the notice of the general public
that his work is available and worthy of viewing in the cinema.
Viewing of a film by the general public in the cinema provides
the filmmaker with the opportunity to gauge the reaction of the
public to the work. We firmly believe that the cinema will continue
to be the prime place for viewing movies with like-minded individuals
that will re-emphasise the importance of cinema in the social
fabric of society.
Though it is speculation, it is likely that
the numerous consequential windows through which cinematographic
product is currently exploited by filmmakers will contract and
their sequential order may change. In time it is believed that
there will be only two distinct and effective windows for the
exploitation of cinematographic product; namely theatrical exhibition
and personal/domestic consumption. Theatrical exhibition will
remain the first window and we believe will continue to be exclusive.
It is acknowledged that currently there is much speculation in
the press based on reports of statements made by film producers
that theatrical exclusivity will effectively disappear but we
believe that the importance of theatrical exhibition for the marketing
of the film is such that the majority of film producers will acknowledge
and accept that the cinema sector needs a period of exclusivity
to remain viable and that for the marketing purposes of their
cinematic work they need the cinema. It is the most effective
way for the creator of the cinematographic work to create a "must
see" factor even if the "must see" desire is fulfilled
outside the period of theatrical exclusivity. Over the last 18
months in the UK the period of theatrical exclusivity has been
reduced (notwithstanding piracy) to between 3 and just over 4
months. Exhibition believes that the absolute minimum should be
4 months for the best financial return to both the production
sector and cinema exhibition. The domestic/personal consumption
window will be dominated by on-demand services which will be subdivided
into either single timed viewing, long term viewing or home burnt
copies of product but this will not be widespread until the security
of downloading is guaranteed. Currently the largest source of
income for film producers is created from the rental and sale
of DVDs and whilst we do not believe that these two sources of
income will totally disappear, their importance over time will
steadily decline. The time may come when the only legally produced
DVDs are in collector's sets or produced for the Christmas market.
As to the delivery systems for personal/domestic
use, it is thought that both pay TV and free-to-air TV will continue
to utilise cinematographic product though the price paid may be
at different levels to those currently enjoyed by producers. VOD
in all its guises, the purchase of the licence for one viewing,
a period of viewing or the right to burn a copy, will we believe
become the largest source of income for the producer and this
could be delivered through either adapted televisions sets, computers
or even telephones. Development of VOD will be ultimately dependent
on the security that the producer of the product is able to engineer
into the delivery systems and obtain payment for the delivery.
The importance of cinema exhibition both as
a marketing tool for the production sector will continue and also
remain the benchmark for the calculation of the amount charged
for personal/domestic deliveries of cinematographic product. The
method of delivery of cinematographic product to cinemas will
over time change to a form of digital delivery. Whether this will
be via direct satellite link online or a downloadable copy will
be dependent on technological advances particularly in the area
of piracy protection and cost. The producer/distributor through
the use of digital delivery systems will be able to reduce costs
of delivery and exhibition believes that this saving should initially
be used to fund the digitalisation of cinema exhibition. The digitalisation
of cinema must, if it is to be successful, produce an image for
our audiences, which is preferably of better quality than that
produced by projection of 35mm film with a minimum of equality
with it. Currently 2K projectors produce such an image and we
believe that this should be the minimum quality benchmark for
all cinematographic performances in cinemas. It must also be possible
that films produced by all filmmakers globally be capable of being
projected from one machine. The projector must be capable of accepting
product from throughout the world for if different machines are
necessary to exhibit different producers product the cost of the
provision of those machines will be prohibitive. Exhibition does
not wish to see the promotion of different delivery systems which
has occurred over the provision for enhanced sound that means
two reading and delivery systems are required or what is currently
developing in the improved DVD market where two standards are
to be issued. A common open standard for digital projection in
cinema is needed to progress. This common standard must be acceptable
to the major studios and European producers. It must also be capable
of preserving the independent editorial control of the exhibitor
and be free from additional reporting systems and controls imposed
by the distributor/producer. During the period of transition exhibitors
with cinemas which have not been able to be digitalised must continue
to be supplied with 35mm prints on the same basis as now to ensure
that the choice of product remains available to all throughout
the UK and the public are not deprived of choice.
It has been argued in some territories that
a test market for digital projection should be developed first
to identify problems that may arise in the delivery of cinematographic
product and the exhibition of it before a whole territory is encouraged
to convert to digital projection. In the UK the UK Film Council's
Digital Cinema Circuit, which is being introduced to widen the
choice of film and increase availability of specialist product
in the UK, will in practice achieve a wide test bed for digital
projection. This will advance the knowledge of distributors and
exhibitors concerning digital delivery and exhibition's from that
already gained through limited testing that has taken place over
the past few years.
If the industry decides that the digitalisation
of cinemas is worthwhile and it goes ahead it is likely that the
relationship between exhibition, distribution and production will
change from the current business models. If total digitalisation
were to take place in the UK there will probably be benefits to
cinema exhibition though these will not arise overnight. It will
undoubtedly be necessary for distribution to fund the changeover
for benefits are unlikely to be achieved until all sites in the
UK have at least 50% (and this figure may not be high enough)
of their screens digitalised for only then will the possibility
of fully exploiting the digitalisation of cinema be possible.
Only when there is a film bank of digitalised film, both current
and historical, will it be possible to utilise digital projectors
fully by offering the public the widest possible choice and combination
of cinematographic product.
With the digitalisation of cinema it is likely
that exhibitors will explore the possibility of simulcasts and
other non-film programming for their cinemas. The development
of simulcasts may be hampered by the potential of increased musical
rights fees that may be payable for this form of entertainment.
It is expected that filmed stories will remain the most important
entertainment product shown in cinemas. The European Commission's
proposal that rights holders for music where it is delivered across
borders on-line if applied to all creative product delivered across
borders may detract from the importance of the UK as a film distribution
centre. It is likely that in time there will only be one uplift
facility for all major films that are distributed by satellite
in Europe and it is likely to be in the country where the financial
rewards for the rights holders is greatest.
Creative product has a value to the creator
but until distributors, licensed by the creator, exploit it legally
it has no monetary value. Monetary chains currently in place ensure
that the creator receives income for the creative product. As
far as is technologically possible the current legislative framework
should be replicated for the new media delivery systems. The unauthorised
copying of creative product damages not just the creator of the
product but all those employed in the licensed legal delivery
systems. The number of people employed in the legal delivery system
sector are substantially more than those directly involved in
the creative process (UK film production—10,000 employees,
UK film exhibition—17,000 employees) and there is tax loss
to the exchequer as most unauthorised exploitation of creative
product is within the "black" economy.
Programmes being undertaken by such organisations
such as FACT and the increased security being operated by the
industry are barely containing the problem of unauthorised copying
of copyright works. A new law making cam-cording of a film within
a cinema illegal, whether carried out for profit or not, would
help cinema staff in their fight against piracy. To halt the unauthorised
copying, the sources from which the copies are made must be stopped
but—just as important—if there were not market places
in which illegally copied material could be sold, the public's
ease of access would be curtailed. The Licensing Act 2003 introduced
an offence for designated premises supervisors who permitted the
licensed premises for which they are responsible to be used for
the misuse of copyright material and, under the Section 182 Guidance,
gave encouragement to the licensing authorities to review premises
licences where copyright offences are committed. This will help
with the removal of marketplaces for the illegal sale and misuse
of copyright product. Whilst many trading standards officers are
taking their responsibilities much more seriously to prevent the
sale of stolen copyright product in both formal and informal markets
greater power must be given to them to enable them to close markets
and prosecute both the traders and the organisers of the market
if the sale of stolen copyright material takes place. The penalties
for copyright theft, though recently increased, should be increased
further.
The source of much copyright theft is the Internet
and Internet providers who permit their servers to be utilised
for the distribution of illegally circulated product should, wherever
possible, be closed down or access to their sites blocked. Persons
illegally downloading stolen copyright material should be vigorously
pursued and prosecuted. Until the persons who take advantage of
the illegally sourced material suffers harsh consequences for
their actions, the incentive remains to buy the product. The person
purchasing stolen copyright material should also be prosecuted.
To enable industry members to help police illegal
and legal uses of copyright material and with the ever diminishing
windows for the traditional exploitation chain it is becoming
increasingly important that they are made aware what product is
legally being or about to be released into new or the next delivery
system. This will enable those making reports to an enforcing
authority to only pass on actionable information on the copyright
material. It may be necessary to legislate to ensure that this
information is provided by rights holders.
2 February 2006
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