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INDUSTRY France

Controversy over digital transition: Ymagis responds to Pyramide

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Jean Mizrahi, manager of Ymagis, a company which operates as a third-party investor for the digital equipment of movie theatres (and has signed agreements with MK2 and UGC) responds to Eric Lagesse of Pyramide Distribution, who expressed his concerns (see news) about a model he thinks would jeopardise the finances of independent distributors and the circulation of auteur films.

What do you think about the concerns expressed by Pyramide Distribution?
Some rather aggressive remarks were made, in particular the notion of "fattening the coffers" of companies like Ymagis. We already fulfil a concrete role: we have signed agreements with 800 theatres in France, most of which we have equipped with digital. Nowadays, our profession is in the process of replacing that of the film printing laboratories, which for a long time made margins of 30-40%. These kind of comments give the impression that we’re not a private operator offering a service, but a parasite, whereas in reality we’re the ones moving things forward in terms of digitisation.

(The article continues below - Commercial information)

Isn’t the position of independent distributors necessarily different from that of larger groups?
Yes, obviously. However, it is unacceptable to criticise our price setting system when these distributors have never actually approached us. They’re drawing hasty conclusions based on public documents that have nothing to do with business negotiations. If a distributor bases himself on public documents from a 35mm laboratory, he will pay twice as much for a print than he pays in reality. A business relationship is about agreeing on a plan that suits everyone. When Pyramide says that the plan we propose will lead to distributors paying between €1,600-1,800 per print, this sounds absurd to me. We’re realistic and professional: we will never propose such a plan.

How do you intend to optimize expenses between small and large theatres?
The principle of VPF (Virtual Print Fee) is that every time a film is shown in digital format in a theatre equipped through our economic model, the distributor pays us a certain amount. Theatres show a lot of films, so they generate a lot of income this way, almost too much compared with the cost they represent in terms of equipment. This income can be used to finance other theatres.

Independents, who circulate prints more, would be required to pay more VPF.
We’re obviously not going to make distributors pay indefinitely for print circulations, leading to totally crazy costs: we will set an upper limit. If we propose solutions that are more expensive than 35mm, it’s because we’ve made a mistake. That’s not our aim.

The mutualisation fund that the National Film and Moving lmage Centre (CNC) tried to set up showed that the authorities are concerned about the transition to digital in all theatres. Do you understand these concerns?
No, except for the case of very small, mainly rural theatres, an issue that is clearly the responsibility of the public sector. On the other hand, the solutions we can bring to small distributors will enable them to make far greater savings than large distributors. Many independent distributors handle subtitled prints, which are very expensive. When Eric Lagesse talks of paying €1,600-1,800, I know people who pay that price for 35mm prints. But we won’t reach that price with digital. Independents have everything to gain here.

Are you calling for calmer negotiations?
For over two years, we’ve been asking distributors for a discussion about how we could work together without creating a situation that is economically untenable for them. We’re never had the opportunity for such a discussion! At the moment, we’re in the realm of ideological discourse and not business talk. At some point, we need to sit down at the negotiating table and find solutions together.

(The article continues below - Commercial information)

(Translated from French)

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