Profile: Cinedigm Digital Cinema Corp (CIDM.OQ)

Cinedigm Digital Cinema Corp. (Cinedigm), incorporated on March 31, 2000, is a digital cinema services, software and content marketing and distribution company supporting and capitalizing on the conversion of the exhibition industry from film to digital technology. The Company has four segments: the first digital cinema deployment (Phase I Deployment), the second digital cinema deployment (Phase II Deployment), digital cinema services (Services), and media content and entertainment (Content & Entertainment). The Company provides a digital cinema platform that combines technology solutions, financial advice and guidance, and software services to content owners and distributors and to movie exhibitors. On April 20, 2012, the Company acquired New Video Group, Inc. (New Video). In September 2011, the Company sold its cinema advertising services business, Unique Screen Media (USM). In November 2011, the Company sold its Digital Media Services Division (DMS) digital distribution and delivery business. In November 2012, the Company acquired North American distribution rights to teen assassin fable VIOLET & DAISY.

Cinedigm leverages this digital cinema platform with a series of business applications. The two main applications provided by Cinedigm include end-to-end digital entertainment content acquisition, marketing and distribution business focused on the distribution of alternative content and independent film in theatrical and ancillary home entertainment markets and its operational, analytical and transaction processing software applications. The Phase I Deployment and Phase II Deployment segments are the non-recourse, financing vehicles and administrators for the Company's digital cinema equipment (the Systems) installed in movie theatres nationwide.

The Services segment provides services, software and support to the Phase I Deployment and Phase II Deployment segments, as well as directly to exhibitors and other third party customers. Included in these services are asset management services for a specified fee through service agreements with Phase I Deployment and Phase II Deployment, as well as third party exhibitors as buyers of their own digital cinema equipment, and software license, maintenance and consulting services to Phase I and Phase II Deployment, various other exhibitors, studios and other content organizations. The Content & Entertainment segment provides content marketing and distribution services in both theatrical and ancillary home entertainment markets to alternative and independent film content owners and to theatrical exhibitors.

Deployment

The Company’s Phase I Deployment and Phase II Deployment segments consist of Cinedigm Digital Funding I, LLC (Phase 1 DC) and Access Digital Cinema Phase 2 Corp. (Phase 2 DC). Cinedigm Digital Funding I, LLC is a financing vehicle and administrator for the Company's 3,724 systems installed nationwide in Phase 1 DC's deployment to theatrical exhibitors. Access Digital Cinema Phase 2 Corp is a financing vehicle and administrators for the Company's second digital cinema deployment, through Phase 2 DC (the Phase II Deployment). As of March 31, 2012 Phase II Deployment had 6,725 systems under license agreement and had installed 5,609 of such systems to date.

The business of Phase 1 DC and Phase 2 DC consists of the ownership and licensing of digital systems to theatrical exhibitors and the collection of virtual print fees (VPFs) from motion picture studios and distributors and alternative content fees (ACFs) from alternative content providers and theatrical exhibitors, when content is shown on exhibitors' screens. As part of Phase 1 DC's Phase I Deployment of digital systems, Phase 1 DC has agreements with nine motion picture studios and certain smaller independent studios and exhibitors, allowing Phase 1 DC to collect VPFs and ACFs when content is shown in theatres, in exchange for having facilitated and financed the deployment on 3,724 Systems. As of March 31, 2012, Phase 1 DC had agreements with 16 theatrical exhibitors that license the Company's Systems in order to show digital content distributed by the motion picture studios and other providers, including Cinedigm Content and Entertainment Group.

In connection with the Phase II Deployment, Phase 2 DC has entered into digital cinema deployment agreements with eight motion picture studios and certain smaller independent studios and exhibitors for the distribution of digital movie releases to motion picture exhibitors equipped with Systems, and providing for payment of VPFs to Phase 2 DC and Cinedigm Digital Funding 2, LLC (CDF2). As of March 31, 2012, Phase 2 DC also entered into master license agreements with 191 exhibitors and CDF2 covering a total of 6,725 screens, whereby the exhibitors agreed to the placement of Systems as part of the Phase II Deployment. Included in the 6,725 contracted screens are contracts covering 4,549 screens with 168 exhibitors under the Exhibitor-Buyer Structure, 1,030 screens covering 9 exhibitors through non-recourse financing provided by KBC Bank, 1,123 screens covering 12 exhibitors through CDF2, and 23 screens under other arrangements with 2 exhibitors.

Services

The Company’s Services segment provides a variety of services to the Company's Phase 1 and Phase 2 deployments, exhibitor-buyers and other third party customers. Services consist of Digital Cinema Services, which provides monitoring, billing, collection, verification and other management services to the Company's Phase I Deployment, Phase II Deployment, as well as to exhibitors who purchase their own equipment and Hollywood Software, Inc. d/b/a Cinedigm Software (Software),which develops and licenses software to the theatrical distribution and exhibition industries, as well as other content owners and provides software enhancements and consulting services. As of March 31, 2012, Services provides services to 5,609 Phase 2 Systems deployed.

Software Division

The Company's software provides software applications and services to support movie exhibition and distribution customers of varying sizes, through enterprise software licenses and maintenance fees, software as a service (SaaS) fees through, which it hosts various applications and provides client access through the Internet, data and analytical software tools and services, software customizations, consulting services including training and installation certification through its workshop and training sessions. Theatrical Distribution System (TDS) enables international distributors to plan, book and account for theatrical movie releases and to collect and analyze related financial operations data. Royalty Transaction Solution (RTS) enables licensors and licensees to manage and account for all intellectual property rights and royalty transactions. CineXchange is a Web-based platform providing theatrical data, analytics and software services. Cinesuite is a portfolio of applications developed to manage and facilitate the duplication and distribution of digital media via terrestrial, broadband and satellite delivery methods.

Content & Entertainment

The Company’s content & entertainment segment consists of Cinedigm Content and Entertainment Group (CEG), which acquires, distributes and provides the marketing for programs of alternative content and feature films to movie exhibitors. CEG receives a distribution fee typically equal to 25-35% of all revenues earned through the distribution of the content, as well as a share of any back-end profits earned through its distribution activities. In addition, CEG also offers its theatrical marketing and distribution services through its Indie Direct service for a fixed upfront fee and a share of box office and/or downstream content revenues.

The Company competes with National CineMedia, LLC (NCM), AMC Entertainment, Inc., Sony Pictures Classics, Cinemark Holdings, Inc., NBCUniversal, Regal Entertainment Group, and Christie Digital Systems USA, Inc.