Small cinemas surviving by doing more with less

Small cinemas surviving by doing more with less

Like every cinema owner, I am looking at every opportunity to ensure my cinemas survive these unprecedented conditions. In this newsletter, I want to look into what changes are happening to the business of cinema exhibition. Even before COVID, SCO was started in order to address the bumpy road ahead. The trend was not going in the right direction; on average, fewer patrons per region were going to the cinema. There was already writing on the wall that we needed to react to the new world of streaming convenience eroding our customer base. COVID has only accelerated this trend. The cinema community must now come together to understand and move in the right direction together to maintain commercial viability after COVID has passed and we have a vaccine to bring us back to conditions as before COVID.

In this newsletter we will cover the following:

  1. Launch a series of "Doing More With Less" videos on the CineTechGeek YouTube channel covering processes that exhibitors and producers can learn to improve operations or access new opportunities.
  2. An update on a major topic SCO has covered in the past. Adoption of digital delivery services in Australia.
  3. Updated infographic snapshot of the release slate.
  4. SCO Community connection. A few opportunities to move equipment or take advantage of used equipment.

Doing more with less, CineTechGeek special video series

As the CineTechGeek, I have always focused on creating content that improves the viability of the film production and cinema exhibition industry. I share technological innovations and information to make sure the industry makes the most of these changes. Although I have not been posting much on the CineTechGeek channel in recent years, with the COVID crisis, I have more time to devote to CineTechGeek video creation. I consider this a good time to focus on issues to help exhibitors adapt to the changes COVID will bring to our industry. I encourage you to go to the CineTechGeek youtube channel and "SUBSCRIBE" and hit the bell to be informed of new videos.

The first video for the "Doing more with less" series focuses on the Pre-Show and how we can bring showmanship, regional promotion and advertising opportunities into the wheelhouse of operating a cinema.

Cinemas: Making DCPs for Pre-Show - COST SAVINGS and OPPORTUNITIES

If you have any ideas you would specifically like me to cover, please contact me.

Low hanging fruit for cost effective changes in exhibition - Digital Content Delivery

At SCO I have already covered this topic deeply, however, like many aspects of our industry, COVID has thrust this transition upon us and I am expecting an accelerated transition over the coming months. The following covers recent developing issues in our industry's transition to digital delivery.

Due to the restrictive conditions we need to live under due to COVID, major issues are now with us when dealing with physical DCP hard drive delivery. These include:

  1. Sending boxes that are handled by numerous people is simply not compatible with COVID conditions. We now insist patrons use contactless payment solutions. We should now insist we use contactless DCP delivery. This is especially critical for smaller distributors utilising round robin, cinema to cinema to cinema physical dispatch.
  2. Shipments travelling around Australia need to go though far more stringent conditions. Due to this, we can expect cost increases and longer delivery times. Again, both developments are very worrying for exhibitors. More costs are one thing, but the higher possibility of a dark screen on opening night due to a DCP arriving late can cause even more damage to our businesses.
  3. With limited sessions per day and limited people per session, the implementation of innovative procedures that reduce staff and running costs are of great importance in this crisis. Like many other parts of the world have already realised, we can greatly reduce costs if we adopt this technology UNDER THE CORRECT CONDITIONS. Australia, with the NBN in nearly all locations, is well placed to implement this. We must however, avoid Gatekeeper implementations. I will discuss this in more detail later in this newsletter.
  4. With limited sessions and patrons per session, it becomes more difficult to cover typical physical delivery minimum guarantee (MG). Digital delivery is likely to cost approximately half the cost of physical delivery, making the MG less of a concern. Small enough that the distributor may eventually drop these nominal charges altogether. It is interesting to note that many distributors in this crisis have already let go of MG requirements.

Avoiding the gatekeeper

Currently Australia has 4 companies (down from 6) courting cinemas to adopt digital delivery platforms. These companies are offering extremely generous offerings, including free servers and paying for the internet connections.

SCO highly encourages cinema owners to adopt digital delivery, however with their eyes wide open, understanding the benefits and restrictions taking on board these generous offers.

A free server was initially expected to mark a location as "OWNED" by a content delivery vendor as this is what satellite delivery resulted in, locking distributors into utilising those services at gatekeeper type prices. However, satellites never made sense in Australia and make less sense as time goes on around the world and the internet gets faster and cheaper while satellite costs stay the same. This has morphed into cinemas happy to install multiple content delivery servers to accommodate internet delivery. This will result in having a rack of 4 servers, on all the time and consuming power. All these servers and infrastructure also cost a considerable amount. In the end the exhibitor may have to wear the costs for this hardware and maintenance indirectly through the distributor oncharging it to the exhibitor through the MG.

This has resulted in even more generous offering in that digital content delivery agents are now offering to pay for internet connections. This could be considered very generous to a small exhibitor who is trying to save costs, however, the reason for this is another attempt by the content delivery agents to achieve gatekeeper control on digital delivery.

Each location has a single NBN connection with the possibility of a second NBN connection on backup wires that go into all locations. A third connection is not covered by government regulations and must be paid for directly resulting in a typical $10,000-15,000 connection cost. We are now back to a one or two gatekeeper environment.

This is the purpose of the generous conditions as content delivery vendors are desperate to capture a gatekeeper based model before it's too late and common sense prevails.

Common sense

Common sense would dictate that, like we use our Internet connections to email every distributor, the same NBN line can be used to download content from every exhibitor. Like we can download web-pages and files utilising a tool such as numerous web browsers (FireFox, Chrome, etc) we can also utilise a download agent to download a DCP from any distributor. Like we manage all our emails from a single management PC or manage our cinemas from a single TMS, we can install each vendor's download tool into that single PC/TMS to access the content. This is the "common sense path" which uses pre-existing equipment and maintenance contracts. This is the path we need to take as exhibitors/distributors if we intend to survive the current crisis.

Important Note: one of the larger content delivery vendors DID initially offer the common sense path. My cinemas were beta sites for the download agent which did function well. However, the vendor has now decided to take the gatekeeper based path as described above.

If all content delivery vendors had equal access to all exhibitors, distributors would choose to use the vendor that provided the most cost-effective and feature-rich service. With the gatekeeper based model however, vendors can create a situation where exhibitors are locked in to using their service in order to get content. Due to this, distributors have no choice of vendor.

By no means am I suggesting that you should not take on these generous offers for the current content delivery vendors, however, I would strongly advise that you obtain conditions from these vendors that do not artificially restrict distributors from using the common sense path.

For example, if a content delivery vendor pays for the internet NBN link, you have the right to utilise 100% of the link for your own requirements, such as downloading from other vendors. Note: I would expect, as they paid for the NBN link and dictate it is for the content they deliver, they will claim control of the link, restricting your utilisation of the link. It is then of no use for content delivery from any other content delivery vendor.

It is of extreme importance that you don't accidently place yourself in a position that allows a gatekeeper to control what content can get to your location. Digital delivery is likely to become the predominant delivery path very quickly, and not having the ability to obtain the content digitally could result in the location not being viable as a cinema.

Digital Delivery the norm, no more DISKS

Another aspect of transitioning to digital delivery is that DCPs and physical delivery is likely to all but disappear. An example of this was the work I did on the Emerging Picture/U.S. and Prasad/India e-Cinema networks.

These networks were designed to utilise digital delivery. Utilising the common sense paths as presented above, once digital delivery became the norm, its reliability was extremely high. Plus, the recourse if a link did fail was that a cinema owner only needed to access an alternate internet link (home for example) as a backup.

In my experience of running cinema networks over the last 20 years, the need to fallback to physical delivery is extremely small and likely will melt into the past as the physical backup equipment becomes unused and forgotten.

I am making an issue of this point as, with the use of physical servers at venues operated by the content delivery vendor, it will not be possible to fall back to a backup internet link at home. The likelihood that a fault will cause extreme issues with a location is far higher plus keeping the infrastructure in place to deal with physical delivery is also another burden in costs and training.


As a community of cinema operators and distributors, I hope we are now in a better position to ensure we make the right decision as we evolve under the COVID crisis. We need to be smart and not rush into decisions that could define our future outside of our control.

My current recommendation is that you ensure you have a NBN link that you have complete control of, no matter what. Content delivery vendors are free to install extra links, however, understand, if you have one link, and a content provider has another, its is unlikely you or a second content delivery vendor can justify the costs of any more. This is likely to result in the rest of the content delivery vendors either disappearing or taking the common sense path in the end.

That would be the best path for all.

Snapshot of current release slate

As the release slate infographic appeared to be so popular, below is an update from July 2020 until end February 2021.

Slate Snapshot, July 2020 to February 2021

SCO Deals and sale opportunities

SELL SOME EQUIPMENT - OPPORTUNITY: Two different potential drive-in operators have contacted me looking for opportunities to obtain second hand DCI projector equipment for use in their drive-in. If you are looking to retire some equipment, please contact me and I will pass on the details of these individuals. (NC1600/2000 or Barco C/B projectors ideal.)

The offer of FREE CRU drive housings to replace failing ones is still on.

GREAT OFFER: As small cinemas come out of hibernation, failures due to the change in service hours are not uncommon. SCO has secured a NEW still in box GDC SX2200 DCI player (suitable for any SDI based S1 projector or S2 with SDI interface) for a price of $1500 (Original price $14,000)

Contact me if interested in any of these great offers for the SCO community.

James Gardiner
Founder, Small Cinema Owners Association
Mob: 0412997011

Published: 2020-07-14
jamieg administrator

James is the Founder of Small Cinema Owners Association. He is also known for his YouTube channel CineTechGeek, has been involved with ISDCF and the formation of the digital cinema technologies, is a member of SMPTE. For a job he runs three small regional cinemas in Australia.

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