In a document published on Friday (16 October), Brussels underlined that the ongoing conversion to digital equipment to produce, distribute and project movies carries the potential for enormous savings.
However it produces a problematic "paradox" since "[big] investment for digital equipment has to be borne by exhibitors, but the savings will be made by distributors," reads the document.
Indeed, the market for film distribution in Europe is very concentrated, with the top 10 companies (among which Metropolitan Filmexport or Entertainment Film Distributors) controlling over 80% of the market share in many EU countries.
In contrast, the exhibitors' market is highly fragmented. Just 10% of Europen cinemas are multiplexes and 31% are single-screen, according to figures provided by the Commission.
The numerous small single-screen cinemas are the most likely to show independent works, but are at risk of disappearing due to the cost of the migration to digital equipment. Only big multiplexes may survive after the shift to digital and the unavoidable concentration trend.
To protect the cultural patrimony of small cinemas, the Commission is ready to authorise state aid funding, but it is also considering the development of a different business model in which distributors pay for the infrastructure investment of exhibitors.
Brussels is openly looking at the US model, called Virtual Print Fee (VPF), which envisages that part of the money that is saved by distributors in shipping digital content rather than traditional 35mm print is paid to a third party which invests it in financing the conversion to digital cinema.
"The question is why existing investors and European distributors have so far not been able to sign such agreements," reads the document, with which the Commission started a public consultation to listen to different opinions from relevant stakeholders on the matter.
The procedure is scheduled for closure in December. After that, the Commission will propose a way forward for the digital conversion from 2010.
The EU executive believes that European cinema could develop better and could expand more into extra-EU markets if cinema costs are slashed.
