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Thomson has done a deal with Hollywood film studios to roll out digital cinema, marking another step in its move from consumer electronics to high-margin media services.

The French owner of Technicolor, the cinema services group, said DreamWorks, Sony Pictures, Universal Pictures and Warner Bros had agreed to distribute content digitally in the US and Canada and pay a “virtual print fee” for every film exhibited.

Thomson is also in “late-stage” negotiations with Twentieth Century Fox, New Line Cinema and The Weinstein Company.

With 10-year contracts in place with most of the big studios, Thomson can now seek financing from banks and equipment vendors. It plans to install about 15,000 digital screens in North America over the next 10 years – out of a total of about 37,000 screens – before moving on to Europe and India.

Digital cinema, which offers significantly cheaper running costs than celluloid, has been held up by doubts over who would pay for the systems, which cost about $100,000 per screen.

“The Technicolor business model makes the transition to digital cinema economically sensible,” said Jim Tharp, head of distribution at DreamWorks.

Julian Waldron, Thomson’s chief financial officer, said: “The most important thing was to secure a contract that made it clear to any financial backers that this was a project worth supporting.” Thomson has a 40-45 per cent share of the $1.5bn analogue distribution market. With the advent of digital he expected both the distribution market and Thomson’s share to grow.

Sandeep Deshpande, analyst at Dresdner Kleinwort Wasserstein, said Thomson had stolen a march on Deluxe, its main rival, which is owned by Rank Group. “[Deluxe] does not have the broad range of capabilities needed to provide a significant response,” he said.

Copyright The Financial Times Limited 2017. All rights reserved.
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