XDC

Thu, 2011-10-20 14:34 — admin

XDC Solutions for the 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 80% 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. Under the VPF model, XDC had an order book of more than 2,300 digital screens in Europe at the end of 2010, among which more than 800 have already been deployed. To date, XDC is n° 1 in digital cinema in Europe;
  • 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 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;
  • services to providers of alternative content: besides the movies 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 Austria, Czech Republic, Poland, Hungary, Romania, Belux and the Netherlands.

 

Performance

The XDC Group recorded EUR 60 million in revenue in 2010, what makes it the leader on the European market. In addition to the FTT acquisition, the historical activities of XDC also performed very strongly in 2010.

Technology and 3D

The 60 engineers and technicians of the XDC Group master the entire technological chain of the digital cinema, since encoding the movies for the distributors until the installation of the projection room. The pan European call center solves the issues relating to projectors, servers and audio and 3D equipments.

Technological repositioning

In March 2011, XDC sold its CineStore activities to Barco (leading provider of digital projectors), while keeping a distribution right on the CineStore products under the VPF agreements as a privileged client. This way, the group refocuses its technology investments on solutions managing digital content networks, open to proprietary manufacturer equipments.

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 30,000 screens have already been digitized, mainly in the United States. In Europe, more than 10,000 screens have already been converted, for a potential of more than 30,000 screens. XDC group, including FTT, holds a global market share of around 35%. 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 around 150 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.