Drive-in theatres face digital threat

Drive-in movie theatres that managed to scrape by during the surge in modern multiplexes are edging closer to extinction as Hollywood phases out the 35-millimetre reels they need to show films.

Most of the remaining 368 U.S. drive-ins — down from more than 4,000 in 1958 — must decide whether to pay as much as $70,000 to install digital projectors for their large outdoor screens.

About 10 per cent already have, and the United Drive-In Theater Owners Association anticipates studios will move to electronic delivery only as soon as the end of next year.

“It’s a pain,” said Thomas Epps, who is trying to sell the Swingin’ Midway Drive-In Theater outside the eastern Tennessee town of Athens. “It’s an expense to us and it’s not going to bring in another dollar. … ”

The digital conversion, which spares studios the cost of buying and shipping thousands of heavy reels of film for every movie they release, has created a dilemma for drive-in owners, who typically operate one screen and depend on a mix of nostalgia and novelty to attract patrons in warm summer months. While large chains and smaller exhibitors were aided by financing plans, drive-ins don’t have that option yet.

The cost is challenging cash- strapped owners to find a solution. At 75, Epps plans to retire once the Swingin’ Midway is sold. In the meantime, he is leasing a used 2004 digital projector to attract a buyer for his 500-car cinema.

Once he sells the theatre, he’ll pay the balance due on the equipment with the proceeds. His total cost will run about $40,000.

“It’s hard to justify,” said John Vincent, president of the drive-in association and owner of the single-screen Wellfleet Drive-In Theater in Cape Cod, Mass., which is converting. “About 10 per cent converted last summer. It’s too early to tell how many will ultimately make the switch.”

Vincent is working with Cinedigm Digital Cinema Corp., a provider of digital equipment for theatres, on a deal with film studios that would help owners obtain and repay loans to cover the conversion.

Under a similar program for indoor theatres, the Morristown, New Jersey-based company arranges financing and makes money installing and servicing equipment.

To help cover upgrade costs and repay loans, studios pay exhibitors a fee based on the number of times a film is shown in digital format.

The fee comes from money the studios save by not making and shipping film prints, said Chris McGurk, Cinedigm’s chairman and chief executive.