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Hampton Arts Cinema's future imperiled by digital projection costs

The two-screen Hampton Arts Cinema, in Westhampton Beach,

The two-screen Hampton Arts Cinema, in Westhampton Beach, was open for business on July 18, 2014, but it has turned to crowdfunding site to raise the $125,000 needed to purchase two digital projectors. Credit: Randee Daddona

The Hampton Arts Cinema has seen a lot in its day. A fire in the 1930s, a car crashing into the theater in the 1970s and Hurricane Sandy in 2012 have all threatened the movie theater during its 87 years. Despite several close calls, one fast-approaching threat could put the business under for good: the move to digital projection.

The two-screen Westhampton Beach theater doesn't have the money necessary to pay for the movie industry's mandated upgrade from film, and it has turned to crowdfunding site to raise the $125,000 needed to purchase two digital projectors. As of Friday, it had raised $11,732, or 9 percent, of its goal; it faces an Aug. 30 Kickstarter deadline.

"This is the eleventh hour," said general manager Tim Walkman. "We just don't have the funds needed to replace all this equipment."

For years, movie studios have been ramping up efforts to make the switch from film to digital projection, and although no official cutoff date has been given, major studios like Paramount Pictures plan to end production and distribution of celluloid prints this year.

Paramount's 2013 release of "Anchorman 2" was originally intended to be its last movie distributed on 35-millimeter film, but the studio has since made an exception for the upcoming release of Christopher Nolan's "Interstellar," which will have a limited film release.

Today, nearly 95 percent of screens in the United States use digital projectors, accounting for roughly 87 percent of movie theaters nationally, according to the National Association of Theater Owners.

Industrywide changes in technology like the one in movie exhibition tend to have a particularly negative impact on small-business owners, said Erica Chase-Gregory, acting director of the Small Business Development Center at Farmingdale State College.

"Technology changes can hurt small business in certain industries," she said, likening what's happening with movie theaters to the changes print shop owners faced in the '90s. "They were left with only two options: Either they made the changes [to digital printing] or they went out of business."

To make the leap, Hampton Arts is offering Kickstarter donors a range of incentives, from a large popcorn and drink for a $10 donation, to a year of on-screen ads for businesses that pledge $5,000.

Under the site's rules, if the goal isn't met by the deadline, all funds pledged are returned to donors.

For the small venue, missing that magic number could mean the end of business.

"If we don't make it, the likelihood is we'll end up having to close," said Walkman, who has worked at the theater intermittently for 10 years with his sister, managing director Laurie Rubick.

Digital conversion is an expensive process for small venues like Hampton Arts, ranging from $50,000 to $70,000 a projector. The theater, originally used for vaudeville performances as the Hampton Star, has been an entertainment venue for the community since 1927.

"From a business point of view, I don't know what plan B will be," said theater owner Peter Vivian of Roseland, New Jersey.

Vivian, 64, has worked in movie exhibition since he was 12 and said that although the move to digital wasn't a surprise, his marginally profitable business couldn't really do much to prepare for it financially.

The industry's now nearly complete move to digital was talked about as far back as 1999 by movie studios, which in 2005 began offering theater owners the opportunity to negotiate reimbursement agreements to pay for the cost of upgraded equipment.

Such "virtual print fees" are a way in which movie studios, through individually negotiated deals, help theaters pay for digital projection systems over roughly 10 years. On a weekly basis, individual theaters could be paid a negotiated amount for each movie they played through a digital projector.

The opt-in period for most VPF agreements ended in 2012, and though many larger theater chains signed up, nearly 13 percent of the nation's roughly 5,847 theaters have yet to make the conversions.

"Some were not in a position to financially make the leap until they actually had to," said Patrick Corcoran, chief communications officer of the theater owners association.

As the number of companies that manufacture film dwindles, the price of using celluloid has risen. It can cost up to $1,200 to produce a single movie print for exhibition at one theater, and by using hard drives loaded with a digital copy instead, the studio industry stands to save nearly $1 billion a year.

Although Hampton Arts is an independently owned, for-profit business, Chase-Gregory said fundraising for such small community businesses is generally received well by potential donors and can often be successful.

"It's a very innovative way for a business to raise funds when they need them," she said. "The community doesn't want to see their local cinema fail."

Theater managers Rubick and Walkman said they are keeping their fingers crossed and hoping for the best.

"I'm asking people to support what we have for the community," said Hampton Arts owner Vivian. "I'm asking people if this theater is worth saving. I hope it is."

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