Page 1www.ymagis.com Digital Cinema Ymagis, its business model and what it really means for european exhibitors, distributors and their relationships SECOND ANNUAL CONFERENCE OF EUROPA DISTRIBUTION Estoril Film Festival 2008, Portugal November Manel Carreras, Director Sales & Business Development

Page 2www.ymagis.com Company created in second half 2007 by cinema industry executives and later joined by technology experts. During first year secured agreements with major distributors June 08 started deployment So far signed contracts with 14 exhibitors for 72 screens Cinemas ranging from 2 to 10 screens High % of “Art Houses” Who is Ymagis and what is our contribution

Page 3www.ymagis.com Digital Laboratory Provide services to cinema and advertising distributors and advertising agencies low cost services Digital cinema roll-out Contribution model includes all exhibitors Contribution agreements need to attract all distributors Who is Ymagis and what is our contribution

Page 4www.ymagis.com For Cinema Owners (a.k.a. Exhibitors) Provide high financial contributions to bare the cost or equipment Tailoring contributions to their needs Flexible approach to reach all exhibitors regardless of size Recognise european markets make up diversity Factor print circulation Who is Ymagis and what is our contribution

Page 5www.ymagis.com For Content Owners (a.k.a. Distributors) Establish fair contribution to Digital Cinema transition Contribution agreements need to attract all distributors Combine various contribution models Factor print circulation Immediate savings and long term greater savings Who is Ymagis and what is our contribution

Page 6www.ymagis.com Headquarters in Paris Local office in Barcelona More European offices planed Plan deployment of up to 5,500 screens in these 10 countries Where is Ymagis?

Page 7www.ymagis.com Where is some of the money going to come from ? Total cost of 35 mm, including teasers, trailers, logistics, recycling... Savings for distributor From 800 to 1400 € Between 900 and 1500 € Getting close to 100 € Minimal savings in the range of 800 € per print Total cost of digital

Page 8www.ymagis.com Model based on digital/35mm savings Savings made by cinema and advertising distributors could speed up digital cinema transition process Matching specific European distribution and exhibition needs Public funding alone will not cover all costs, it can help though. Not enough to fund the transition. Public entities cannot legally channel distributors and advertising agencies’ contributions. Using the 35mm savings

Page 9www.ymagis.com Can negotiate contributions from film distributors Can negotiate contributions from advertising agencies Can finance all kinds of cinemas multiplexes independent first run complexes second run complexes Using the 35mm savings Ymagis

Page 10www.ymagis.com Digital Cinema must not be a way to discriminate between distributors or content all distributors must pay a contribution at a rate which does not create a competition distortion all content (films, alternative content, advertising) must contribute in such a way all content suppliers are treated equally A fair treatment for all exhibitors Large circuits should not benefit from special privileges, small independent exhibitors will benefit from the Ymagis model as the big players do. Art houses should be treated the same way as mainstream theaters. Our model ensures a fair treatment for all contributors

Page 11www.ymagis.com Ymagis does not want to change any relationships between existing players of the industry Exhibitors & Integrators Ymagis is not an Integrator Exhibitors & Distributors Ymagis is not a Distributor Ymagis believes it needs to play a role as neutral as possible. Exhibitors should be able to acquire, finance and own the equipment they will operate, as they always did. Our model ensures a fair treatment for all contributors

Page 12www.ymagis.com Exhibitor to acquire the Projection Systems (DCI-compliant). Exhibitors to get their own financing Ymagis can help provide financing Ymagis to provide regular and fixed payments to exhibitors Deployment in a complex to be flexible start with limited number of systems progressively reach100% as digital contents availablility increases No interference with bookings Distributors need only to provide Digital Print Deployment strategy ensures digital film rotation within cinema How does it work for exhibitors?

Page 13www.ymagis.com Different distributors have a different approach to Digital Cinema Large distributors may want to compare their overall digital costs vs 35mm costs. Smaller distributors may be willing to include risks considerations Technical Costs In small releases 35mm costs represent a large share revenues With Digital Cinema these don’t have to be a limit to the distribution of small budget features Savings could be applied to more investment in production, more promotion, more prints, etc What about us, distributors?

Page 14www.ymagis.com 35mm costs represent a high share of distributors’ revenues for small releases. With digital, technical won’t be anymore a limit to the distribution of small budget features. Savings can go to : more investment in production, more promotion, more prints, etc. Technical costs

Page 15www.ymagis.com High risk – medium to low BO Lower risk – higher BO Distributors will have a different approach regarding digital cinema models : Large distributors will want to compare their overall digital costs vs 35mm costs. Smaller players may be willing to include risks considerations in their approach. Number of prints per release Box Office per print in €

Page 16www.ymagis.com An appropriate model must take into account the diversity of the distribution and exhibition industries in Europe. Large distributors that only consider costs can find VPF-like models more attractive Smaller distributors that analyse a model valuing both cost and risk may prefer variable-fees models Ymagis offers the needed flexibility to distributors We combine both models to suit your needs We factor print circulation to establish your contribution What is the solution?

Page 17www.ymagis.com A Digital Transition Fee model derived from VPF that takes into account print circulation often picked by large distributors A variable fee model often picked by some small distributors Various combinations of both models All models must address the circulation issue Exhibitors cannot be impacted by this complexity Ymagis pays a fixed portion of their investment We believe in flexibility to answer the market’s complexity

Page 18www.ymagis.com Thank you for your attention