Our take...
This deal is significant for several reasons. It was thought that the studios (some at least) were drawing back on a European VPF deal, especially after lessons learned in the first phase of the US deployment. Even if this were the case, this deal indicates that any prevarication is largely over and the majority of studios realise that this is their preferred route to global conversion, while they are not excluding other deals that may be worked out and offered to them. Secondly, there could effectively be no further progress in a digital roll-out in Europe without this move. It changes the landscape to one where this is possible, but it also shows that if exhibitors want guaranteed access to studio content (with no discussions about DCI compliance), then a facilitator may be the best way to go. However, be all that as it may, one thing remains to do and that is convince exhibitors that they want to do this and that the economics are right. The amount of the VPF is not known, and therefore it is difficult to assess whether the exhibitor is going to be happy with the amount they will have to contribute. But it does need to be done, and it is likely that the earliest VPF deals will be the most generous and therefore it is important that exhibitors understand this equation. Wait, and the subsidised contribution from distribution will almost certainly drop, leaving more for them to finance from their own revenues. There are also risks involved with going ahead with digital conversion, but seeing as it is going to happen, and given the fact that 3D is beginning to underline the benefits of going digital, it may be the case that the risk of converting is significantly less than the risks of NOT converting.