Attendance at UK cinemas increased in 2011, with box office revenues breaking £1 billion for the first time. This was driven by the digitization of screens, which improved the cinema experience, and reduced piracy through successful prosecutions. The Digital Funding Partnership helped finance the conversion of small and medium cinemas to digital. Those not converting could lose customers. Alternative content like live events faced high classification fees, potentially limiting offerings.

1. The Cinema
Exhibitor’s
Association
Annual Report
By Catherine May

2. Why have attendances
increased?
 Each year attendance climbs dramatically, and in
2011 it reached the high figure of 171,562,192
 Box office continued to grow year on year, breaking
the £1 billion barrier for the first time at £1.038 billion,
an increase of 5.1 per cent on 2010.
 Digitisation of the sector had increasingly developed
throughout each year and in 2011, it did so much
that by the end of the year over 2,700 screens, 72 per
cent of the UK base, had been converted to digital,
almost doubling the number in place at the end of
2010. Of these, 475 were 3D-enabled.
 Therefore the quality of the film and the cinema
experience is becoming increasingly more desirable.

3.  2011 also saw continued success in the fight against
film theft. Two individuals responsible for a number of
such incidents were successfully prosecuted during
the year for attempting to capture and distribute
films recorded in cinema theatres.
 One of these involved the first successful
prosecution under the existing legislation in
Scotland.
 This increased audience attendance as due to the
reduction in piracy it now gives people less
opportunity to watch films illegally for a cheaper
price.
Why have attendances
increased?

4. What is DFP?
 The DPF is the Digital funding partnership.
 The Cinema Exhibitors’ Association
established the Digital Funding Partnership
(UK) in 2010 to help secure finance to
allow small and medium-sized UK cinema
operators to purchase digital cinema
equipment.

5. What is VPF?
 Virtual Print Fee (VPF) is the name given to a
subsidy paid by a film distributor towards the
purchase of digital cinema projection
equipment for use by a film exhibitor in the
presentation of first release motion pictures.
 The subsidy is paid like a fee per booking of a
movie, intended to match the savings that
occurs by not shipping a film print.
 The model is designed to help redistribute the
savings realized by studios when using digital
distribution instead of film print distribution.

6. What might happen to those
who don’t use DFP?
 Smaller firms who don’t use the DFP may
suffer financially, as it allows operators to
purchase digital equipment which will
enhance the performance of the cinema
and therefore make it a more desirable
location.
 Without the use of DFP small to medium
sized cinema operators may loose custom
due to a lack of quality and
establishment.

7. Alternative content
 During 2012, the CEA became aware of an issue
related to the fees required by the BBFC for
classification of so-called ‘alternative content’
events – live theatre, ballet, sports and gaming for
example. There was some evidence that
producers of such content were choosing not to
bring some events to the UK given what they saw
as the disproportionate burden the current level of
classification fees represented when considered
against the limited release of such screenings. (It
was noted that similar concerns might apply to
certain films with limited theatrical release
patterns.)

8.  Recognising this as a potential barrier to
growth in an area of activity that was
proving increasingly lucrative for many of
its members, the Association, working with
some of the key UK distributors of such
content, approached the BBFC about this
issue. They were open to exploring a
number of options to address this issue,
including the potential introduction of a
different fee structure for this material.
Alternative content

9. Alternative content
 As a non profit-making organisation, the
BBFC is required to cover their costs and
so any reduction in fees in one area of
their activities must be made up by an
increase elsewhere. At the end of 2011, all
sides were considering the potential
implications of such a move.