Digital Cinema Ymagis its business model and what

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 20 -22 2008 Manel Carreras, Director Sales & Business Development Page 1 www. ymagis. com

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

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

Who is Ymagis and what is our contribution üFor Cinema Owners (a. k. a. Exhibitors) üProvide high financial contributions to bare the cost or equipment üTailoring contributions to their needs üFlexible approach to reach all exhibitors regardless of size üRecognise european markets make up diversity üFactor print circulation Page 4 www. ymagis. com

Who is Ymagis and what is our contribution üFor Content Owners (a. k. a. Distributors) ü Establish fair contribution to Digital Cinema transition üContribution agreements need to attract all distributors üCombine various contribution models üFactor print circulation üImmediate savings and long term greater savings Page 5 www. ymagis. com

Where is Ymagis? üHeadquarters in Paris üLocal office in Barcelona üMore European offices planed üPlan deployment of up to 5, 500 screens in these 10 countries Page 6 www. ymagis. com

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

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

Using the 35 mm savings Ymagis üCan negotiate contributions from film distributors üCan negotiate contributions from advertising agencies üCan finance all kinds of cinemas ümultiplexes üindependent first run complexes üsecond run complexes Page 9 www. ymagis. com

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

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

How does it work for exhibitors? ü Exhibitor to acquire the Projection Systems (DCI-compliant). ü Exhibitors to get their own financing ü Ymagis can help provide financing ü Ymagis to provide regular and fixed payments to exhibitors ü Deployment in a complex to be flexible ü start with limited number of systems ü progressively reach 100% as digital contents availablility increases ü No interference with bookings ü Distributors need only to provide Digital Print ü Deployment strategy ensures digital film rotation within cinema Page 12 www. ymagis. com

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

Technical costs ü 35 mm costs represent a high share of distributors’ revenues for small releases. ü 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. Page 14 www. ymagis. com

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

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

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

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