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Commission clears Hollywood studios after U-turn

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The European Commission has ended an investigation into the major Hollywood studios after they changed contract provisions on installing digital kit at cinemas.

Eurocrats reckon the changes will make it easier for small, independent films to get decent distribution.

Moving a cinema onto digital equipment is expensive, so the cost is shared between cinema owners and the studios.

The studios were offering a similar system to that used in the US, based on payments of "virtual print fees". This requires the reseller or integrator to finance the cost of kit and install it in a cinema. The studio then pays a VPF to the integrator each time one of its films is shown.

This covers the majority of the costs while the cinema picks up the rest.

The Commission began investigating on its own behalf because of worries that the studios were extracting more favourable terms from the integrators for their own films that would be offered to other studios or independent film makers. The argument in favour of this was to make all studios contribute equally to the cost of the equipment upgrade.

Integrators were obliged by contract to offer the same terms to major studios as to smaller independents.

About half of all European cinema screens, 18,000, will have digital projectors by the end of 2012.

The Commission's statement is here. ®

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