Catalysts driving the next stage of growth in the cinema industry
Having largely completed the transition to digital cinema over the past decade, the global cinema industry is facing two primary catalysts that are propelling its next stage of growth.
First, exhibitors are increasingly focused on differentiating the moviegoers’ experience, which is driving demand for premium formats and new technologies.
Second, as the first generation of digital projectors begins to age and as Virtual Print Fees (“VPF”) agreements begin to expire, exhibitors are demanding tailored solutions that allow for flexibility in maintaining, upgrading and deploying their visualization infrastructure while ensuring asset optimization and lowering total cost of ownership.
A winning combination of products, services and technology
Leveraging Barco’s market leadership in the cinema market and combining for aggregating the strengths and capabilities of each partner, the joint venture will provide exhibitors and partners a comprehensive portfolio of cinema technology solutions, products and services, encompassing:
– Barco’s visualization and image processing technology for the cinema market;
– Appotronics laser technology and light source retrofit modules;
– CFG’s premium cinema solutions and content;
– CITICPE’s financial consulting services; and,
– Innovative business models to facilitate the exhibitor’s decision to upgrade to new technologies, including flexible financing options, uptime insurance and operational partnerships.
Planned Launch of the Joint Venture
The joint venture is expected to become effective during the second quarter of 2018 after customary regulatory approvals have been obtained and following consultation with the relevant social and governmental entities. In a first phase, Barco and Appotronics will start cooperating on selling retrofit modules and projection equipment followed by the addition of CITICPE and CFG’s premium movie solutions later in the year.
Under the terms of the agreement, the partners plan to capitalize the joint venture in the amount of $100 million. Once all partners have entered the joint venture, Barco will own 55% of the joint venture, Appotronics and CFG will each own 20% and CITICPE will own 5%.
Wim Buyens, General Manager of Barco’s Entertainment division for the past seven years, will be appointed as CEO of the joint venture.
Barco will serve as a strategic OEM partner for the joint venture, while retaining full ownership of assets and capabilities related to product management, R&D and manufacturing of all cinema projection and image processing technologies.
Barco plans to spin out its current cinema related sales, marketing and services functions from its Entertainment division into this new joint venture.
Under this new organizational structure, the joint venture will build out dedicated processes and capabilities as it delivers innovative services and solutions to its channel partners and exhibitors. Once effective, the financial results of the joint venture will be consolidated into Barco’s financial results.