Hong Kong's GDC strikes VPF deal with Japan's Toho

Hong Kong-based GDC Technology has announced a digital system and virtual print fee (VPF) agreement with Toho, Japan’s largest distributor.

Under the agreement, Toho will pay usage fees for Toho group exhibitors signatory to the GDC deal. The agreement is non-exclusive and solely applies to installations before March 31, 2014.

In July of last year Toho Cinemas announced a separate deal with Sony Protechno Support to install Sony Cinema equipment to reach its stated goal of converting all 568 screens (62 sites) to digital by the end of 2011. It is unclear how many screens each provider will take on and whether the goal will be met. Toho has also partnered with telecommunications giant NTT to provide proprietary digital print delivery networks.

Additionally, Toho announced plans yesterday for a 31-floor hotel and shopping complex boasting a 12-screen digital multiplex to be built on the grounds of the former Koma Theater and Toho Kaikan in Shinjuku’s Kabukicho district. Shochiku and Toei group company T-Joy already has flagship multiplexes in the area, which is becoming Tokyo’s cinema hub. Construction is expected to be completed by 2015.

Japan was relatively slow to convert to digital due to upgrade costs for exhibitors, lack of government support and debates over who should pay VPF fees.

A key to the recent acceleration of conversion to digital in Japan has been exhibitors’ desire to offer not only 3D screenings but ODS (‘other digital stuff’) in a market where movie admissions have remained relatively flat.

Toho’s box office revenues were down 16.9% in the first six months of 2011 compared to last year. “Utilizing digital equipment we want to screen live concerts, plays and sports events,” stated Toho Cinemas CEO Takashi Nagakawa. Approximately a third of Japan’s screens are now digital.

GDC also announced today that it had finalized the financial details of its VPF deal with major distributor Shochiku. As reported in February, GDC signed an agreement with Shochiku’s exhibition subsidiary Movix to convert 226 of its screens to digital.