Headline, Industry News

Drive-in theaters could pay biggest price for movie industry’s digital projection conversion

Tuesday April 02nd 2013

Glenda and Neal Edwards wish they had their $40,000 back.

The Paw Paw couple invested that sum two years ago to upgrade the 35-millimeter projector at the Five Mile Drive-In in Dowagiac, one of two Southwest Michigan drive-in theaters they own, along with Sunset Drive-in in Hartford. The 35-millimeter projector is soon to be obsolete, as the movie industry pushes the digital projection conversion by year’s end. The couple face a ticking clock and a price tag of up to $230,000 to go digital.

Most of the major movie studios have said they will stop distributing 35-millimeter film by the end of this year, leaving theaters and drive-ins two options: Find a way to upgrade to digital projectors or, in all likelihood, close. The digital conversion is estimated to save the studios about $1 billion a year in the cost of making and distributing films, according to the National Association of Theatre Owners. For family-owned theaters, converting is a “huge expense.”

“It’s a tough decision. With two of them, it’s double the expense for us and we’re having trouble breathing with it at the moment,” Glenda Edwards said of the deadline.

She recently contacted digital projection companies to find out her options. A digital projector for a drive-in theater — a piece of equipment that wasn’t available when Edwards and he husband invested their $40,000 in 2011 — will cost $60,000 to $80,000 each. Beyond that, the buildings that house the projectors will need to be renovated to make them temperature controlled. Most projectors must be stored at between 52 and 83 degrees.

Edwards said it’s possible at least one of the couple’s two theaters may close. She hopes the drive-ins — the family has owned Sunset since 2003 and Five Mile since 2006 — will be able to get 35-millimeter film through the summer.

“We’ll do it for as long as we can hold on, as long as we can get prints,” she said.

There are about 5,700 for-profit movie theaters with 39,888 screens in the United States. A little more than 3,900 theaters, accounting for 33,618 screens, already made the move to digital, according to the Patrick Corcoran, the director of media and research for the National Association of Theatre Owners. Most of remaining theaters are independently owned and in small towns, he said.

The digital deadline is particularly intense for the drive-in theaters, the numbers of which have steadily declined for the last 25 years.

There were almost 2,100 drive-in screens in 1987. There were 357 drive-ins and 604 screens in the country in 2011, according to NATO. The number is expected to decline, in part due to the digital projection deadline, John Vincent Jr., president of the United Drive-In Theatre Owners Association told the Los Angeles Times for a January story.

NATO said there are eight drive-ins and 18 screens in Michigan, including three drive-ins in Southwest Michigan. The local drive-in owners said they expect the numbers to drop this year. The question is how much.

“I cannot imagine that the drive-ins will not survive. It doesn’t make sense to me,” Glenda Edwards said.

Susan and Tom Magocs are the co-owners of Coldwater’s Capri Drive-In. It was built by Tom’s father, John, and opened in 1964.
John Magocs grew up during the Great Depression, and his family said he made it a point to pay for everything with cash. His son, Tom, who spent much of his childhood serving popcorn and loading film, followed his father’s financial philosophy.

When it became clear the digital conversion threatened the survival of the family’s drive-in, they decided to put their lake home up for sale two years ago.

“I thought I’d have it my whole life,” Susan said of the home. “I thought it would be in the family forever.”

It sold last spring and paid for most of the $144,000 it cost to upgrade to Barco digital projectors, which were installed March 20. They named them “Rose” and “Treasure Cove.” The couple’s lake house was located off Treasure Cove on Rose Lake in Coldwater.

It’s hard not to second guess themselves about the move, Susan said.

“The other day I woke up after the guy was here and installed the projectors. I said to Tom, ‘Are we the people who live in the trailer and just bought two Cadillacs? Is this what we should’ve done?'” she said.

Weather permitting, on April 12 the Capri Drive-In will open for its 49th year. It will celebrate its 50th anniversary next August. The Capri was John Magocs’ “passion,” something his grandchildren shared in for much of their lives.

“It’s what we do,” Susan said.

She said the family’s theater outlasted some traditional movie theaters and video stores, that this is just the next hurdle.

“Somehow, every time something like this has happened, we’ve made it,” she said.

Worth the investment?

The digital upgrade means a substantial improvement in image and sound quality at the Capri, Susan Magocs said. She had already watched a few trailers on the new equipment and gushed about the results on its biggest, 120-foot-by-75-foot screen — “our own little IMAX outside.”

“The picture is amazing. The sound is amazing. It’s a big step up for the drive-in. No more dark prints. That’s been the case the last few years,” she said.

The equipment also provides some new revenue options. Susan Magocs said the projector can display “anything that can be downloaded.” The family is still trying to understand the projector’s full capabilities, but they’re considering showing free Blu-Ray films, hosting video game tournaments and showing sporting events and concerts. She said these types of events would be held in the spring and fall, not the peak summer movie months.

The projectors could allow them to extend their season and earn more money from concessions.

“We opened ourselves up to a lot more things and we’ll have to do that to make it,” she said.

But upkeep and maintenance costs also caught their attention. Susan Magocs said she expects those costs to at least double with the new equipment. For example, the 6,500-watt bulb used to “throw” the image to the screen cost $1,800 apiece. The old bulbs cost $500 and typically ran all season. The new bulbs run for around 500 hours, she said. Capri shows back-to-back films on its two screens, or around five hours per night on each bulb. This gives them about 100 nights of life on one bulb, or around three-quarters of a season, she said.
They also signed up for a service contract that includes a set number of visits, as opposed to risk paying around $3,000 per visit from a technician.

But Magocs said they try not to dwell on the numbers. “We’re in it,” she said of the commitment.

If other drive-in theaters opt not to convert to digital and close, the Capri becomes one of the last options in Michigan and could potentially grow their base of customers who are seeking the drive-in experience, she said.

While the Capri made the leap, the picture isn’t as clear for Paw Paw’s Edwards family.

“We’re going to do whatever we can to get this done. I just don’t know how it’s going to happen. But I haven’t given up yet,” Glenda Edwards said.

Source: Michigan Live