LOCAL SPIN: Stirring Sequel
Osio Cinemas faces down its own extinction.
Thursday, October 25, 2012
At the Osio Cinemas in downtown Monterey, co-owner Mark Borde had a decision to make this summer, one of the “change or die” variety. The change (as it so often is) was inevitable and going to be forced upon him, but the die part – whether to pull the plug on a business he and his partners rescued out of bankruptcy 10 years ago and turned into one of the great little jewels of the city – was purely his decision to make.
The change part came in the form of a mandate from the studios. Starting in 2013, they would no longer ship 35-mm versions of films to theaters. Instead, they would ship digital versions of the films on hard drives. The cost of shipping would go down – the 35-mm versions cost about $200 to ship – and the quality of the projection would go way up because there would be a crisper and brighter picture on the screen, no scratches on actual film and no whirring of the projector in the background. It takes about two hours to download from the drive and the theater is good to go.
All it would take from Borde and his partner Mike Doban would be converting the theater’s projection systems to play digital, at a cost of about $250,000.
Or, as Borde puts it during a conversation at Cafe Lumiere, the coffee house in the theater’s lobby, “that’s $250,000 into a theater that’s not making $250,000.”
That’s where the die part came in. The company operates as a Limited Liability Corporation (LLC) with no ties to anyone’s personal assets. A few pen strokes on some bankruptcy paperwork, tell the 10 or so employees they need to start looking for new jobs, tell the gang of Sicilian fishermen who hang out at Lumiere every morning they need to find someplace else to go, mail the keys to landlord Barry Swenson of San Jose, and the last one out can turn off the lights.
“We saw the digital revolution coming but we thought we had time. We thought we had time to worry about it, until 2015 at least,” says Borde, whose full-time job is running a film distribution company in L.A. “But then warp speed happened. We started getting the notices eight months ago that they wouldn’t supply 35-mm anymore. Two months ago, we were two weeks away from closing.”
“THE ENDGAME IS TO GET RID OF THE MOMS-AND-POPS. THAT’S WHAT KEEPS ME UP AT NIGHT.”
One little-known fact is that Borde has about a dozen investors in the LLC, all of whom are friends or family, save for three local Monterey residents who want to remain anonymous. In the 10 years he’s been open, he’s never had to make a capital call, telling the investors he needs $50,000 from each of them to keep the doors open.
“We’ve always run off of our cash flow, but we don’t make anything either,” Borde says. “Combine that with what all of a sudden happened… at the 11th hour and 59th minute, I decided to call some of the wealthier investors and ask their opinions. I didn’t solicit money from them, but one of the investors said to me, ‘You’re not closing my theater,’ and they stepped in with a loan at a relatively decent term.”
Borde grew up in a theater family, and helped run or manage indie theaters since his youth. He has suspicions about what’s driving the conversion, beyond the obvious one of quick cash. Giants like Cinemark have banks begging to loan them money. The companies born out of the digital age to convert from 35-mm to digital are first in line to get paid.
“I have a theory that the endgame down the line is like anything in big business: Get rid of the moms-and-pops and the people who can’t hold on to the lifeboat, and big business will control all of the films,” he says. “That’s what keeps me up at night.”
This weekend, Osio will launch its move into digital with free popcorn all weekend. Given that Osio makes no money on showing films, there’s this pricey new digital conversion and Borde’s giving the popcorn away, go ahead and buy a box or two of candy.
“Fifty cents out of every ticket dollar goes back to the distributor,” Borde says. “But I get to keep the candy money.”
During a short break in the interview, I tweeted where I was and what I was doing. I received a tweet back from an acquaintance saying he’s recently had a few negative experiences at Osio and wouldn’t mind if it closed.
Lots of other people would, though, me included. And given that Borde and Doban seek to create an environment where guests treat the theater like their living room, with an extra-friendly staff and lots of film talk – if you’ve had a bad experience there, I guarantee that not only does Borde want to know about it, but he will bend over backward to fix it.
In the end, he’s not in the candy business. He exists to bring offbeat culture to offbeat-loving audiences. And the way he does it means he’s really in the business of pleasing people, digital or not.
Mary Duan is the Weekly’s editor. Reach her at email@example.com or follow her at twitter.com/maryrduan