CONSOLIDATING IN OUTSIDE BROADCAST GROWING IN ... - EVS

15
EvS INSIDE ISSUE 15 aNNUaL rEvIEW 2009
the Network operations
center (Noc) of XDc
delivers a set of remote
services to operators of
movie theatres in
Europe.
N°1
XDC is a leader in services provided to the digital
cinema industry in Europe.
XDc
sOLuTIONs FOR DIGITAL CINeMA
created in 2004, XDc is a 41.3% affiliate of EvS (30.2% fully diluted). XDc is a service provider of digital cinema solutions in Europe. the company
proposes different solutions:
··· deploying services of digital cinema installations for exhibitors in Europe. this activity is mainly based on the vpf model (virtual print fee), through
which the american studios (Warner Bros., Sony pictures, Universal, paramount pictures, twentieth century fox and the Walt Disney Studios)
have agreed to subsidize approximately 75% of the installation, by XDc, of maximum 8,000 digital screens in Europe, hence allowing substantial
savings for exhibitors on the equipment cost. XDc also concluded a global financing agreement with a banks consortium led by BNp paribas fortis
for EUr 100 million, allowing the vpf deployment of its first 2,000 digital screens in Europe. to date, XDc is n° 1 in digital cinema in Europe, with
an order book of more than 1,350 digital screens in Europe, among which more than 50% have already been deployed;
··· services to distributors: XDc offers a full package service: encoding, duplication, key management, 24/7 maintenance, extranet follow up and
physical/virtual delivery;
··· services to exhibitors: XDc rents or sells its servers, applications, services (including maintenance) and projectors acquired from third-party
suppliers. the offer is adapted according to the size of the screen in order to optimize the relationship between the investment and the quality of
the image; and
··· services to providers of alternative content: besides the films proposed by the studios, there exist numerous types of alternative contents, allowing
exhibitors to diversify their commercial proposition, such as projections of sporting events or concerts, live or not (sometimes in 3D). XDc offers a
full service from booking and promotion to delivery, reporting and box office collection.
In order to better serve its clients and to accelerate the execution of its business plan, XDc acquired at the end of 2009 a German company active
in the integration and the maintenance of equipments in cinema theatres: ftt GmbH. this company has affiliates in XDc key markets such as the
Netherlands, austria or poland.
tHe teCHnoloGy
XDc’s masterpiece is the cineStore range: a suite of high-grade digital cinema servers with applications tailored to the needs of the different players
in the film distribution chain. the cineStore Solo is a broadcast server linked to a digital projector in the cinema auditorium. the cineStore plaza is
a central management system for multiplex. It allows to import all types of contents through a central library that can contain about a hundred films.
the cineStore Data is a powerful database supporting XDc’s Network operations center, and including extranet services for exhibitors and
distributors. the XDc systems are 3D compatible. this technology represents the most exciting growth engine for the digitization of the cinema
industry since 2008.
tHe potential and tHe risk
Worldwide, there is a potential of 120,000 screens to be digitized over the next 10 years, of which 30% in Europe and 35% in the United States.
more than 15,000 screens have already been digitized, mainly in the United States. the multicultural and fragmented nature of the European cinema
market is different from the oligopolistic structure of the american market. as a service company, and therefore a local company, XDc focuses on
the Western European market with a young and innovative team of 60 people. today, digital cinema is on the way and XDc has all the assets to
remain one of the major players of this revolution. the main risk lies in the fact that this service/equipment deployment activity requires huge
investments and financing means. XDc has been able in 2009 to secure the necessary financing, as well as the capital needed for its activity. In
case the market conditions worsen, this could be put at risk.