draft 1 privileged and confidential 3d uplift. 22 assuming 60-80% of box office from 3d and...
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DRAFT
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Privileged and Confidential
3D UPLIFT
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Assuming 60-80% of box office from 3D and reasonable level of performance:
• Box office increases 21-27% based on higher ticket price*, before accounting for potential audience growth
• Studio theatrical revenue (net of glasses cost) is increased 13-17%**
• The net revenue uplift is generally greater than the $5-12M increase in production cost to shoot/convert the film to 3D
Motion PicturesPotential Gains from 3D Releases
Domestic Box Office of Recent 3D Releases
*Assumes long-term avg. ticket price premium of $2.50 (today’s average is $3.50). Excludes IMAX 3D, which has greater ticket price premiums.** Assumes 50% studio share of global box office and $0.40-$0.55 per ticket cost of glasses.
Recent 3D releases have seen significant share of box office from 3D ticket sales, driving higher revenue
DBO (to date) $113M $115M $721M
Potential Uplift from 3D Release
63%70%
82%
37%30%
18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cloudy with aChance ofMeatballs
Alice inWonderland
Avatar
3D Box Office 2D Box Office
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U.S. MODEL TODAY MPAA average 2D ticket price is $7.50 (2009) Average increase for 3D
$3.50 today $2.50 is forecast (premium expected to decrease) Average Imax ticket is $14.58 (2009) (about $7 above average 2D ticket)
Of the average $3.50 uplift today, the studio gets its normal share (roughly 50%) but pays roughly $0.40-$0.55 for glasses
Note, the glasses are recycled which brings costs to studio down slightly Full manufacturing cost of glasses ranges from $0.50-$0.75
Exhibitors pay the difference (if any) between the amount paid by the studio and the manufacturer’s charge for glasses, as well as an additional $0.50 per admission for use of the RealD equipment.
NOTE THIS IS DIFFERENT FROM JAPAN, WHERE GLASSES COST MORE There are currently about 1,600 Digital 3D screen in Asia, about 350 in Japan Until recently, the Asian 3D market was controlled by XpanD (90% share); they require
special glasses - Active Polarized - that cost $50.00 to $75.00 each, are battery operated, and reused regularly
This past year, prior to the release of AVATAR, RealD expanded rapidly through Asia (mostly China), and by the release of AVATAR, they had a 40% share of the market.
3D UPLIFT CONSIDERATIONS
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Incremental Cost to Shoot in (or upconvert to) 3D is usually $5MM to $12MM
Resident Evil: Afterlife: $10M on a total budget of $58M (this film was shot in 3D) $5.5M production cost (3D package and complexity of shots) $2.5M post production (editing, DI costs) $2.0M visual effects (total fx budget of $10M)
Priest: about $5M (this film is being converted to 3D during post before the fx are done, similar to ALICE)
Cost to Shoot a Film in 3D
DRAFT
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Privileged and Confidential
DIGITAL CINEMA ROLL-OUT
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Motion Pictures Digital Cinema
Rollout Update
• 23,100 digital screens estimated to be installed worldwide by the end of 2010 with 32,900 projected by 2011o Today, there are over 8,000 digital screens in North America and
17,000 screens worldwide
• Easier access to capital has allowed deployment entities to gain financing for the installation of the digital screens o In North America, DCIP has received financing and will begin
rollout with AMC, Regal and Cinemark (comprises > 50% of the market)
• Digital 3D is now the standard with 16 3D feature releases from Hollywood slated for next year (SPE will be releasing Kenny Chesney Summer in 3D in April 2010, Resident Evil: Afterlife in September 2010 and Priest in January 2011)o Today, there are approx. 3,500 digital 3D screens in North
America and 8,300 digital 3D screens worldwide
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3D exhibition of feature films has successfully driven recent box office performance worldwide
“[3D has]…moved out of its adolescence to just be now a part of the cinematic art, used by serious filmmakers…I’m going to make all my movies in 3D, no matter the subject” – James Cameron, December 21. 2009
Studios have already had various successful titles and are aggressively planning for 3D releases of future titles
“[Alice in Wonderland’s]…3D component boosted the overall performance in a big way. [Alice]… begins an onslaught of 3D product entering the market in the coming months, with Paramount’s toon How to Train Your Dragon set to launch March 26, followed by Warner Bros.’ Clash of the Titans on April 2.” – Daily Variety, March 8, 2010
With the continued rollout of digital screens and growth in 3D screens, domestic exhibitors have embraced this new product and are actively looking to be able to carry at least two simultaneous 3D releases by 2011
As Sony considers various 3D release opportunities, several financial considerations must be examined
% of gross box office from 3D
3D ticket upcharge
Cost of 3D eyewear
Digital production and/or conversion costs
Reduced distribution expenses
Executive Summary
Current Digital 3D LandscapeComplexes
3+ Screens at a Complex
30%
17%
620
344
2 Screens Only at a Complex
54%1,1141 Screen Only at a Complex
%Locations
42%1,004
42%1,004
16%383
%Locations
100%2,079TOTAL 100%2,391
3,522TOTAL 3D Screens 5,905
Digital 3D Projection
As of Janaury 2010 December 2010# of Digital 3D Screens at a Complex
North America Digital 3D Overview
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Case Study: Alice in Wonderland
Domestic Box Office Performance Breakdown (through 3/8/2010)
Domestic Box Office Opening Weekend
$115,243,654 Gross Domestic Box as of 3/8/10
$12.2
$115.2
$68.7
$34.3
$0.0
$25.0
$50.0
$75.0
$100.0
$125.0
$150.0
Total 3D and IMAX 2D
$ in
MM
70%
30%
3D IMAX
Digital 3D
Note: 3D and IMAX have totaled $80.9M total domestic box office.
$80.9
Released Fri., Mar. 5, 2010Total Locations 3,728Estimated 3-D Locations 2,063Estimated IMAX Locations 1882-D Weekend Gross $34,335,0313-D Weekend Gross $68,735,943IMAX Gross $12,172,680
Total Weekend Gross $115,243,654
Non-IMAX 3-D Only as Percentage of Total Gross
60%
3-D and IMAX as Percentage of Total Gross
70%
Estimated IMAX Gross per Location
$64,748
Estimated 3-D Gross per Location $33,318
Estimated 2-D Gross per Location $20,622
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Case Study: Avatar
Domestic Box Office Performance Breakdown (through 3/8/2010)
Domestic Box Office Opening Weekend
$720,607,444 Gross Domestic Box as of 3/8/10
$127.1
$720.6 $462.9
$130.6
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
Total 3D and IMAX 2D
$ in
MM
82%
18%
3D IMAX
Digital 3D
Note: 3D and IMAX have totaled $590.0M total domestic box office.
$590.0
Released Fri., Dec.18, 2009Total Locations 3,452Estimated 3-D Locations 2,023Estimated IMAX Locations 1782-D Weekend Gross $21,362,4363-D Weekend Gross $44,357,253IMAX Gross $9,495,072
Total Weekend Gross $75,214,761
Non-IMAX 3-D Only as Percentage of Total Gross
59%
3-D and IMAX as Percentage of Total Gross
72%
Estimated IMAX Gross per Location
$53,343
Estimated 3-D Gross per Location $21,926
Estimated 2-D Gross per Location $14,949
DRAFT
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Case Study: Cloudy with a Chance of Meatballs
Domestic Box Office Performance Breakdown (through 12/11/2009)
Domestic Box Office Opening Weekend
$113,076,648 Gross Domestic Box as of 12/11/09
$8.9
$113.1
$62.0
$42.2
$0.0
$25.0
$50.0
$75.0
$100.0
$125.0
Total 3D and IMAX 2D
$ in
MM
63%
37%
3D IMAX
Digital 3D
Note: 3D and IMAX have totaled $70.9M total domestic box office.
$70.9
Released Fri., Sep. 18, 2009Total Locations 3,119Estimated 3-D Locations 1,675Estimated IMAX Locations 982-D Weekend Gross $9,474,2393-D Weekend Gross $17,860,323IMAX Gross $2,348,850
Total Weekend Gross $29,683,412
Non-IMAX 3-D Only as Percentage of Total Gross
60%
3-D and IMAX as Percentage of Total Gross
68%
Estimated IMAX Gross per Location
$23,968
Estimated 3-D Gross per Location $10,663
Estimated 2-D Gross per Location $6,561
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Worldwide Digital Screen Footprint
5,5727,772 8,056
13,000
21,000
7911,122
4,612 4,816
5,500
6,000
817
1,082
3,2233,429
4,000
5,000
600
900
1,780
4,603
468
12
33
457
0
5,000
10,000
15,000
20,000
25,000
30,000
2006A 2007A 2008A 2009A 2010YTD 2010E 2011E
LatinAmericaandCaribbean
AsiaPacific
Europe,MiddleEast,Africa
NorthAmerica
32,900
23,100
16,76916,064
7,809
6,223
1,940
Projected Digital Screen Rollout as of January 2010
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3342
6000
93002511
5100
7900
994
2500
3700
337
500
700
-
5,000
10,000
15,000
20,000
25,000
2009 2010 E 2011 E
USA/Canada EMEA Asia/Pacific Latin America
Worldwide 3D Screen Projections as of January 2010
7,184
21,600
14,100
Source: Vendor-based footprint data; SPR/SPRI projections.
Worldwide 3-D screens will continue to grow over the next few years
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Digital 3-D is being actively developed by vendors for the global marketplace
Real D is the leading digital 3-D vendor in the marketplace today
Disposable glasses
Footprint as of January 2010*Vendors
Worldwide:2,841 Sites 4,688 Screens
DIS
PO
SA
BL
E G
LA
SS
ES
RE
US
AB
LE
GL
AS
SE
S
Master Image is a Korean developer of 3-D technology for the theater
Disposable glasses
Worldwide:563 Sites 608 Screens
Uses color spectrum technology Reusable glasses
Worldwide:1,403 Sites 1,915 Screens
Uses battery powered glasses that manages each eye separately
Reusable glasses
Worldwide :856 Sites 1,176 Screens
Sony 4K is now actively promoting digital 3D in conjunction with Real D in North America and Europe
* Source: Vendor-based footprint data and projections as of January 2010.
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Privileged and Confidential
NETWORK GROWTH AREAS
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Networks – Growth Opportunities(Per MRP with Addition of 3D Network)
• 3D Network in US with Discovery and IMAX
• Animax/AXN – full penetration in Korea
• India sports channel
• TV1-Hallmark – Australia swap
• SET HD – US
• SET Max – Italy channel
• GXT – Italy channel
• Tamil channel
• MGM channels
• Cine Latino – US/Latin Spanish language movie channel