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IRIS 2010-1:1/4

European Commission

Consultation on Digital Cinema

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Kim de Beer

Institute for Information Law (IViR), University of Amsterdam

On 16 October 2009, the European Commission launched a public consultation of all stakeholders from the European Union’s audiovisual industry on the opportunities and challenges for European cinema in the digital era. The feedback from the professionals from the sector will contribute to setting out the Commission’s policy on digital cinema.

The use of digital technologies by filmmakers has increased in recent years. First sound was digitised, then post-production turned digital, while now production is also increasingly using digital technologies. Digital technologies create a lot of possibilities for both the production and the distribution phase. For example, in the production phase, digital technologies make it possible to create special effects and 3D films. With digitisation, the distribution stage becomes both easier and cheaper. Digital distribution can be ten times cheaper than distribution using traditional prints. This makes the flexibility and diversity of programming easier and enables more European films to travel across borders.

However, in Europe the digital revolution has been slower than foreseen. The cost for digital screening equipment is high. The transition to digital cinema raises two major issues. Firstly, the investment in digital equipment has to be borne by exhibitors, while the savings are made by distributors. Exhibitors do not directly benefit from their investments. Secondly, the investment in digital equipment is financially supportable for large cinema chains, but mostly not for smaller independent (art house) cinemas. These cinemas could be threatened with closure because of the high cost of digital equipment. The closure of these kinds of cinemas could potentially threaten cultural diversity in the European audiovisual sector.

In order to solve the first issue, the United States film industry came up with the Virtual Print Fee (VPF) model. The model is based on involving a third party, who collects part of the distributors’ savings and uses it in contributions towards the digital equipment of participating screens. The consultation could help establish whether a similar model could be effective in Europe.

Member States share the concern that not all cinemas can afford to make the digital transition. A wide range of exhibitors must be maintained to ensure the diversity of European cinema. Therefore, several national governments are considering subsidising the transition to digital cinema. For example, Italy has already notified a State aid scheme for which a public consultation was launched on 22 July 2009 (see IRIS 2009-9:6). Public support schemes by Member States must be assessed in the context of European Union State aid rules. Therefore, they must be compatible with Article 87 of the EC Treaty.

The purpose of the public consultation is to gather information from stakeholders on digital cinema and the aforementioned opportunities and challenges it brings with it. The consultation is open to all stakeholders in digital cinema, such as exhibitors, distributors and producers agents. The information gathered from the consultation will enable the Commission to finalise a Communication in 2010 on “Opportunities and challenges for European Cinema in the digital era”. The public consultation is open until 16 December 2009.

European Commission seeks views on the opportunities and challenges for digital cinema, Brussels, 16 October 2009, IP/09/1534 EN
Public Consultation on Opportunities and Challenges for European Cinema in the Digital Era EN