LOS ANGELES (Reuters) - Movie exhibitor Regal Entertainment Group (RGC.N) said on Tuesday it reached a deal with privately held RealD 3D to upgrade 1,500 screens with 3-D technology in what analysts hope is a sign that theater operators’ digital conversions are finally gaining momentum.
The Regal deal is the largest commitment to 3-D by any movie theater chain, the companies said, raising the number of screens running RealD’s 3-D technology to over 3,500.
Terms of the deal were not disclosed. The deal hinges on the completion of the Digital Cinema Implementation Partners (DCIP) initiative, a widely anticipated $1.1 billion financing deal among three large movie chains and Hollywood studios.
Once outfitted with digital projectors, theaters can then add 3-D technology.
”We look forward to the finalization of the DCIP deals, which will allow Regal to commence the expanded 3-D roll-out,“ said,” said Mike Campbell, Chief Executive Officer and chairman of Regal Entertainment Group, the largest movie chain operator with 6,763 screens in 551 locations.
The DCIP’s members -- Regal, Cinemark Holdings Inc (CNK.N) and AMC Entertainment Inc (AC.N) -- had hoped to finish the financing deal with studios to deploy cinema digital technology by the fourth quarter of 2007, but several issues forced the group to push back that target to the second quarter of 2008.
Some analysts have cited concerns there will not be enough 3-D screens to accommodate a huge slate of upcoming Hollywood 3-D titles beginning in 2009.
Last month, DreamWorks Animation SKG DWA.N Chief Executive Jeffrey Katzenberg, a leading proponent of 3-D films, said he was disappointed with the pace that movie theater chains were moving to deploy digital and 3-D technology.
Katzenberg and many in Hollywood are looking to the success of the 3-D concert movie “Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour,” which grossed nearly $30 million in its opening weekend, as a template for the future. Tickets sold at a premium, commanding about $15.
“Regal’s announcement ... could act as a carrot to entice studios to move ahead with finalizing a digital projector financing plan with the top three theater chains, somewhat improving the odds of hitting targets for a roll-out beginning in second half of 2008,” JP Morgan analyst Barton Crockett said in a note to clients on Tuesday.
In a statement, Katzenberg said he believed the Regal and RealD partnership “marks a defining moment for the greatest transformation in movie-going in 70 years.”
Katzenberg has pledged to make all future films in 3-D at an incremental cost of $15 million per film.
He had originally hoped to see 5,000 3-D screens domestically by the time his studio’s first 3-D film, “Monsters vs. Aliens,” is released in spring 2009, but last month his company said that goal was unlikely unless a deal was reached within weeks.
About 4,000 of the 37,000 cinema screens in the United States are digitally equipped, while a little more than 1,000 screens have 3-D capability.
Once the DCIP digital upgrade starts, it is expected to take about three years to complete the upgrade.
Editing by Gary Hill