What do you remember about the early days of DCDC?
It started with a simple question once digital projection came about. If everybody is going to be going to digital projection and other forms of storage inside of the theaters, does it continue to make sense to deliver content by digital media, other than electronically? No, we should be doing it electronically. They started trying to figure out the methodologies to do that, how to engage the right industry partners, in order to make it an industry initiative, which was always something we sought as opposed to it being the project of a particular studio or exhibitor chain. They really understood the importance of engaging across the chasms between studios, and between studios and exhibitors. They put together this group consisting of Warner Bros. and Universal on the studio side and AMC, Regal, and Cinemark on the exhibitor side to further the aims of creating an electronic distribution.
Then, in the middle of all of this, the markets fell apart and it became impossible to get financing. 2009 was basically dead time because the markets were still not coming back and nobody wanted to finance. They couldn’t figure out how to do it. It wasn’t until the beginning of 2010 that the market started to come back and JP Morgan put together a $660 million line of credit for the exhibition community to begin rolling out digital cinema. They needed a payback mechanism that was unaffordable for the exhibitors at the time, so that’s where you’ve got these famous virtual print deals so that the financiers would have an ongoing pot of money out of which they could be repaid the amount of money they had to lend before going in to finance the rollout of digital cinemas.
When did you first get involved with DCDC?
My involvement began in March of 2010. I was hired as a consultant by Warner Bros. to figure out how best to start up a business based upon the precepts they wanted to follow, which was the industry initiative, a low-cost alternative for everybody. The idea was to have all content providers and exhibitors treated exactly the same contractually, so there is no worry about the big exhibitors or Warner Bros. or Universal getting a better deal as a content provider than anyone else just because of their size or having put up the initial capital. We figured out the business model that we thought would work, and we had to do that with attention to the technology that was going to be involved.
You were appointed CEO in 2013 and DCDC has since gone on to make great strides. Today you provide delivery to most screens in North America.
I think the numbers are over 26,000 screens now; it pretty much goes up every day. We have an outstanding queue for exhibitors that have signed up; there’s almost an additional 500 that are standing in line. Once all of those 130 exhibition chains have signed up, once they are installed, we’ll have somewhere around 2,500 to 2,600 sites and a bit over 29,000 screens. It’s happened a lot faster than I think anybody thought it would. We keep our costs low, and we keep our pricing as low as we can get it. As you know, once the partners have been repaid all of their capital investments, then we will start rebating money to the users of the system in proportion to how much revenue they’ve been responsible for over the years. And the effective cost of distribution will lower substantially.
Did you have a set time frame in mind when you embarked on this process, or have you just taken it year by year, refining the pitch every time?
You have to stay malleable when running a business like this; you’ve got to go with the marketplace and be guided by the customers. I hope we can start paying back substantial sums to our exhibitor partners and get that done within three years so we can move on to giving rebates to everybody. My board is made up of representatives of each of these major companies, and they may decide that it’s more important to accelerate even further and even deeper into the exhibition community than for them to be repaid as quickly as possible. There are just a lot of variables to think through; there are no promises that have been made. That’s my best guess, and it really is a guess because stuff changes all the time; the type of content that we’re sending changes all the time.
Talking about how that content has evolved, we need to bring event cinema into the conversation. It has grown substantially here in North America over the past couple of years; what do you think the potential of event cinema could be in North America as digital delivery facilitates its distribution?
We’ve invested quite a bit in the ability to put really high-quality images on exhibitors’ screens, from live streaming events and other pre-produced content in that category. Alternative content, in general, takes so many forms today. For example, those who are into gaming or other sorts of e-sports, where you have maybe 50,000 people at an arena watching gamers play against one another—who would’ve thought that was ever going to be something that was really cool? I was a gamer myself, so it’s a gratifying feeling seeing that starting to happen. I think the exhibition community is starting to figure out how best to do that. It’s made a lot of strides in that area.
DCDC is a great example of what can happen when exhibition and distribution work together to benefit the entire ecosystem. Having been involved in this project, do you think this sort of model of collaboration could work industry wide, tackling other hot button issues in our industry?
I think so, but I’m an optimist. My optimism is only guarded by that fact that it’s been hard work to make this all happen. From the very beginning, just gaining the trust and confidence of your clients, maintain the trust and confidence of your partners, and melding those together is something that takes time and a lot of energy, and the right set of precepts that are unavailable for the community of users. It takes a while to do that, but I think it can be done. The whole area of cyber security is very important obviously for the entire industry, and for the world for that matter. It’s something that I think there should be a lot more collaboration on than there currently is. On the other hand, I think it takes collaboration to succeed—and maybe that’s going on quietly, I don’t know, but my sense is that it isn’t. I think something like DCDC would be a really good vehicle to have those types of discussions.
What’s next for DCDC?
We’re just going to keep going. You’ll see many more kinds of alternative content coming down the pipe and a lot more content from the studios that tie in with movie releases. It’s already been a pretty exciting year for us and I’m looking forward to the rest of it. One thing everyone can count on is that we will stay true to our basic precepts. We’re not going to vary from the inherent fairness that we’ve come to represent, because we take it as a very serious responsibility.
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