Christie Rental Mode

[Frank Cox]

"The only way to get a loan from a bank is to prove you don't need one."

[Marcel Birgelen]

Right after the last financial crisis hit, you know, that thing in 2008? I had to provide a bank guarantee for the entire loan amount from one company, in order to get a loan in a new company without any track record... Essentially, I gave the bank the money via one door, so they could loan it back to me via the other...

[Andrew Thomas]

Andrew's post says that assuming no major issues, break even is at about the seven-year mark. In a typical outright purchase scenario, the first two or three years are covered by the original purchase parts warranty, but you are responsible for labor costs for maintenance from day 1, as well as the cost either of buying parts off the shelf as needed, or of extending the warranty, after those two years are up.

So the question becomes, does the CAAS model do the same thing (end user is responsible for maintenance, apart from failed parts during the first two years), or is complete parts and labor for maintenance and repair factored into the rental payments?

Barco covers the entire projector for the initial 5 year term, and you can extend the lease beyond 5 years in smaller increments. The projector is fully warrantied through the entirety of the lease even if you extend beyond the initial term. They also include 2 emergency site visits per year at no out of pocket expense. Their NOC service is also baked into the lease price.

If you DO have major part failure outside of the initial 2 year warranty window on a purchase, the CaaS program becomes competitive even further into the future. It's a very interesting model, and as theaters continue to need to upgrade to keep pace with consumer expectations, I can definitely see this model making more sense than purchasing these machines outright.

It should also be noted that as of right now, Barco requires a 10 screen minimum for their CaaS program. Not sure if Christie has something for smaller venues.

[Leo Enticknap]

It should also be noted that as of right now, Barco requires a 10 screen minimum for their CaaS program.

That's a nontrivial gotcha, IMHO.

[Andrew Thomas]

That's a nontrivial gotcha, IMHO.

It mostly means right now it isn't meant for the smallest operators. But thinking about the area I live in, the vast majority of plexes are 10+ screens with only a handful of really small locations. I wouldn't be surprised if they eventually roll out a program for even smaller operators, but it seems reasonable that the really small guys aren't going to be looking to upgrade their aging-but-operable series 2 units any time soon. Better to focus on the medium sized operators looking to upgrade their presentation in this post pandemic marketplace.

[Marcel Birgelen]

It mostly means right now it isn't meant for the smallest operators. But thinking about the area I live in, the vast majority of plexes are 10+ screens with only a handful of really small locations. I wouldn't be surprised if they eventually roll out a program for even smaller operators, but it seems reasonable that the really small guys aren't going to be looking to upgrade their aging-but-operable series 2 units any time soon. Better to focus on the medium sized operators looking to upgrade their presentation in this post pandemic marketplace.

I'd say that's just stupid and a bit ignorant... like, we don't want to deal with all that small meat... The problem here is, that especially those smaller operations have the least options to finance their operations. Any somewhat sound 10+ screen operation can get a bunch of loans or can use an external leasing company to finance "their" assets, while many single screens or duplexes will not even qualify for a loan.

[Leo Enticknap]

It isn't stupid and ignorant from Barco/Cinionic's perspective. They will have done the math and concluded that after shipping and installation costs, and providing whatever support the lease determines, they would be losing money by selling these lease packages to smaller sites (smaller being defined by the number of auditoria, and therefore projectors, in a site).

[Martin McCaffery]

Christie seems to be doing it differently. They are pitching it to the dealers to set up a rental business. I haven't delved into it, hence the originating post, but here's what I just found in their rental mode brochure:

What’s rental mode?

An easy-to-use and easy-to-integrate function that enables you to rent out a CineLife/CineLife+ Series projector by duration or brightness. Meaning, you can lock each rental mode-enabled projector to a set number of operational hours, or a period of time, such as week-to-week, month-to-month, or a fixed end-date.

The benefits of rental mode

› ›

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Gives new life to projectors sitting in inventory

You can now rent out your projectors for applications like time-limited events and outdoor cinemas

Allows you to leave your installed projectors in place–no need to repurpose or move equipment

Introduces a new way to acquire Real|Laser TM projectors for permanent installations

Certainly not an unheard of business model in the 35mm world, though I've never heard of theatres doing rent to own for their projectors.

[Marcel Birgelen]

A rental business is yet another model than a lease. A rental usually is also far more expensive than any normal lease, since the rental company is taking on much more risks. Although, in the current environment, it may even make some sense to recover existing projectors from failed cinemas and rent them out.

It isn't stupid and ignorant from Barco/Cinionic's perspective. They will have done the math and concluded that after shipping and installation costs, and providing whatever support the lease determines, they would be losing money by selling these lease packages to smaller sites (smaller being defined by the number of auditoria, and therefore projectors, in a site).

Why not offer those leases via Barco/Cinionic accredited integrators? Their part of the lease could simply be limited to what's covered by extended warranty and all the rest is between the integrator and the customer. That way, they can probably achieve the volume/scale when it starts to become more interesting for them.

Barco/Cinionic could limit their exposure to any lease going bust, compared to an external financial institution providing a lease or loan on the same projector. Whereas Barco/Cinionic has sufficient channels to repurpose any recovered hardware, all those banks and alike institutions do is selling it off at auctions to the highest bidder...

[Leo Enticknap]

Or simply include an insurance component in the lease package, in the same way that mortgage lenders require borrowers to insure them against the risk of their house being foreclosed while underwater (UK: in negative equity). In this case, the insurance would cover Barco's inability to repossess the projector in the event that the lessee goes bankrupt (e.g. it is seized by a landlord or other creditors following the theater's closure).

[Marcel Birgelen]

In some cases, this insurance doesn't even seem to be necessary. Car leases usually don't include any such insurance, as in general, there is a good market for any repossessed cars. The situation is a bit more niche here, but cinema projectors can also be valuable for non-cinematic applications.