Banking giant helps bring 3-D to movie screens
Lifting a roadblock limiting the availability of 3-D movies at the local multiplex, banking giant JP Morgan Chase & Co. has raised nearly $700 million on behalf of a group of the country’s largest theater operators, a move many in Hollywood hope will win over a new generation of filmgoers who enjoy an increasing array of options for entertainment.
The financing, delayed for more than a year because of the financial crisis and the tightening of credit markets, will speed the rollout of 3-D movies to the country’s movie screens as Hollywood races to capitalize on the success of such blockbusters as “Avatar” and “Ice Age: Dawn of the Dinosaurs.”
3-D movies, once considered a cultural misstep on a par with the Edsel and New Coke, have taken off at the box office over the last year, fueled by advances in filmmaking technology and an audience eager for riveting special effects.
The format’s proponents believe 3-D movies represent the next leap for Hollywood, equal to the introduction of sound and color, which they hope will revitalize an industry under siege by video games and the Internet.
Anticipating a coming gold rush, the studios plan to release about 20 films in 3-D this year.
JP Morgan’s financing would pay for the installation of digital projectors in about 12,000 locations, thus easing a bottleneck caused by an abundance of 3-D movies competing for too few screens.
At present, less than 9% of the country’s nearly 40,000 theater screens can play 3-D movies.
Theater owners, who have been dealing with attendance levels largely unchanged from a decade ago, have seen a surge in business thanks to 3-D screenings, which helped fuel a record year in box office revenues. The higher box office from 3-D films, however, is driven in part by their ticket prices, which can run 25% or higher than prices for a typical movie.The dearth of screens is creating friction between rival studios muscling one another to get their 3-D pictures into theaters.
Warner Bros., for example, has decided to release the action movie “Clash of the Titans” in 3-D on April 2, a week after DreamWorks Animation Studios releases its “How to Train Your Dragon,” aimed at children. Those films also will compete for screens with Walt Disney Pictures’ family film starring Johnny Depp, “Alice in Wonderland,” which premieres March 5 -- and possibly even “Avatar” if it continues to play in theaters that long.
Even with the new funding, however, the logjam won’t end soon. It could take three to four months to manufacture the digital equipment before it can be installed in movie theaters.
The funding, which is expected to be formally announced in the next two weeks after studios sign off on the deal, comes nearly three years after the nation’s largest exhibitors -- AMC, Cinemark and Regal -- formed a consortium know as Digital Cinema Implementation Partners to pay for the “digital conversion” of theaters.
Changing over to digital is expensive, however. Installing the technology costs about $70,000 per theater.
As a result, determining who will pay for retrofitting screens -- theater owners who exhibit the movies or the studios that make them -- had been an issue.
The problem seemed to have been overcome in 2008, when the theater consortium said it reached an agreement with five studios to help pay for the $1 billion toward installing 20,000 digital screens in the U.S. and Canada.
Studios agreed to pledge “virtual print fees” -- the money they saved by no longer having to make film prints -- to secure the financing.
But the ensuing economic meltdown dried up credit markets, forcing major theaters and studios to forestall their ambitious 3-D plans.
Since the markets have begin to thaw, however, JP Morgan was able to go back and raise the money.
Times staff writer Claudia Eller contributed to this report.
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