Digital Cinema In Latin America

September 29, 2008

Source: Film Journal International

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Latin America is slowly waking up to digital cinema. While still far behind the U.S., Europe and Asia, the number of DCI-grade digital systems south of the border has tripled in the past year—from around 15 systems in the fall of 2007 to approximately 50 expected by the end of 2008. Mexico will have 16 systems, Brazil 15 and Ecuador four, with the rest in Chile, Peru and Argentina. Even the Falkland Islands, possibly the first country in the world to go 100% digital, has upgraded their single screen in Stanley with digital 3D.

3D is the primary factor driving digital conversions. Of the 50 digital systems, all but a few of the original 1.3K installations have been upgraded to 3D. The addition of 3D makes it easier for exhibitors to justify the cost, as they see immediate results at the box office. Latin American exhibitors typically increase the ticket prices by 10 to 20% over the standard, with the houses frequently selling out and the 3D titles running significantly longer than non-3D titles. For instance, it’s not uncommon for a popular 3D title, such as Disney’s Meet the Robinsons, to be on screens for a good five months in markets like São Paulo, Brazil.

In some cases, the cost of the entire digital conversion, including projectors, servers and 3D, can be recouped within a relatively short six to nine-month period. As an added bonus, some exhibitors have partnered with local third-party companies who sponsor the 3D systems in exchange for advertising and other promotional considerations.

While the conversion of a few select theatres to 3D can be justified, the conversion of the rest of Latin America’s approximately 9,000 screens from 35mm to base-level 2D digital is a far more difficult proposition. Digital titles dubbed or subtitled into the local language are still in short supply, and the audience sees little increased value with 2D digital over 35mm presentations. So far, there has been little to no support from the major U.S. film distributors in providing incentives for 35mm-to-digital upgrades.

Contributing to the past year’s growth in digital systems is the general decline of the U.S. dollar relative to Latin American currencies. In the past five years, the dollar has dropped to approximately 50% from its previous value relative to the Brazilian real, and that has helped U.S.-based companies such as Christie, Dolby and Real D establish stronger footholds in the South American market. High import restrictions, taxes and duties are still a major obstacle when building or upgrading a theatre. In some markets, the combined fees can add up to 100% to the cost of equipment, making digital upgrades prohibitively expensive. Most U.S.-based equipment manufacturers have found solutions by working with local system integrators who know the market and regulations, and frequently can ease the difficulties in getting equipment into the area.

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