Scrabble Spells Digital for Middle Eastern Cinemas

8:04 AM PST 12/8/2010 by Jonathan Landreth

Mumbai Co. and Top Hollywood Studios to Subsidize Digitalization over Two Years

HONG KONG -- Mumbai-based Scrabble Entertainment and five major Hollywood movie studios are extending their cooperation into the Middle East to subsidize the digitalization of more than 400 regional movie theaters over the next two years, Scrabble CEO Ranjit Thakur said Wednesday.

Only about one-fifth of the 150,000 movie screens in the world today are paired with digital projection systems and only about 21,000 are capable of projecting modern stereoscopic 3D movies, according to the Digital Cinema web site. Without digital projection, exhibitors can’t charge higher ticket prices for movies such as Avatar, which became a global blockbuster largely on the strength of its 3D ticket sales.

Three-year-old Scrabble, owned by Bollywood producer and Indian multiplex movie theater development leader Manmohan Shetty, plans to help Middle Eastern movie exhibition companies such as Grand Cinemas in Dubai and the Oman Arab Cinema Company go digital in order, in part, to accommodate the increasing number of 3D movies coming out of Hollywood.

Seeking new markets for those films, Hollywood studios, which largely subsidized the conversion to digital of the North American theater business over the last seven years, now are looking for partners such as Scrabble to help expand their 3D reach overseas, into territories which in aggregate produce more than half of Hollywood’s total box office gross sales these days.

“We are following the business model we established with Hollywood in India in 2008,” Thakur told The Hollywood Reporter on the sidelines of the three-day CineAsia distributors and exhibitors conference that ends here on Thursday. 

That business model, which charges cinema owners a “Virtual Print Fee” they pay back to Scrabble over time, has helped the rapid growth of the number of Indian cinemas capable of digital movie projection.

Scrabble, India’s first and only digital cinema deployment company, upgraded 220 screens in 23 cities in India over the last three years and has plans to put digital systems into 250 more theaters next year.

In early 2011, Scrabble hopes to repeat its Indian success in the United Arab Emirates, Lebanon, Kuwait, Qatar, Bahrain, Oman, Jordan and Syria. In those countries, Scrabble will act as a non-exclusive intermediary between local theater owners and 20th Century Fox, Walt Disney, Paramount, Universal and Warner Bros.

“This model works for the cinema companies because they can pay us back over three to five years as they earn back our investment in their new hardware,” Thakur said.

The cost to cinema owners in most Middle Eastern countries will be comparable to the costs incurred by Indian cinema owners with one exception, import duties, which typically are around 5% in the Middle East compared with 20% in India, Thakur said.

After expansion into the Middle East, Scrabble will look at opportunities in Eastern Europe and Africa, “basically, wherever there’s good business sense in it,” Thakur said, discounting China’s booming market as a non-starter because “it’s locked up by the China Film Group.”