The
Department of Justice (“Department”) has prepared this Initial Regulatory
Assessment (“Initial RA”) to assess the costs and benefits of its Notice of
Proposed Rulemaking concerning movie captioning and audio description (“DOJ
Movie NPRM”).This proposed rule, which
is being issued in order to amend the Department’s existing title III ADA
regulation, is proposing to explicitly require movie theaters to exhibit movies
with closed captioning and audio description at all times and for all showings
whenever movies are produced, distributed, or otherwise made available with
captioning and audio description unless to do so would result in an undue
burden or fundamental alteration.The
Department is also proposing to explicitly require movie theaters to have a
certain number of closed captioning devices and audio description listening devices
unless to do so would result in an undue burden or fundamental alteration. The
Department is proposing a six month compliance date for digital movie screens
and is seeking public comment on two options for analog screens:Option 1, a four-year compliance date for
analog movie screens, or Option 2, a deferral of rulemaking on analog screens
until a later date.
The proposed regulation explicitly addresses equity
and fairness considerations as provided under the Americans with Disabilities
Act (ADA).Foremost among the expected
benefits from the proposed regulation is the ability of a greater number of
individuals who are deaf or hard of hearing or are blind or have low vision to
better understand what is being said and shown at movie theaters so that they
may fully and equally participate in the movie-going experience to the same
extent as those without these disabilities.
While some theaters do provide captioning and audio description to their
patrons, many do not, creating a barrier for persons with disabilities to take
part in the social and cultural movie-going experience.
The Initial RA
provides estimates of the total cost of the rule under Option 1 (a six-month compliance
date for digital screens and a four-year compliance date for analog screens)
and Option 2 (a six-month compliance date for digital screens and a deferral of
new regulatory requirements on analog screens) over a 15-year time
horizon.Both options include the same
requirements for digital screens. Under Option 1, we estimate that the cost of
the rule will range
from $177.8 million to $225.9 million when using a 7 percent discount rate, and
from $219.0 million to $275.7 million when using a 3 percent discount rate. Under
Option 2, we estimate that the
costs of the rule will range from $138.1 million to $186.2 million when using a
7 percent discount rate, and from $169.3 million to $226.0 million when using a
3 percent discount rate. As seen in Table ES- 1, the range of cost estimates
for both options depends on the assumptions used regarding the extent to which
theaters are or will soon be providing closed movie captioning and audio
description as proposed in this rule, but independent of this rulemaking. This Initial RA estimates costs using three
different baselines due to a lack of information regarding the extent to which theaters
are already providing captioning and audio description as proposed in this rule
(see Section 4.2 for details). Under each baseline, the Department assumes
that no theaters (digital or analog) are audio description enabled (see Table
8 in section 4.2 (Baseline) for greater detail). Under Option 1, each baseline assumes that 2
percent of analog theaters currently meet the requirements of this proposed
rule.Under Option 2, the baselines do
not make assumptions about analog screens because the rule would defer
requirements on such screens to a future rulemaking.
- Baseline 1 (One Screen Per-Theater) – This baseline assumes that on
average, every movie theater with digital screens has one screen that is
captioning enabled (based on an assumption of at least some compliance with the
existing ADA requirements that public accommodations provide effective
communication to persons with hearing and vision disabilities). This assumption leads to an estimate of about
13 percent of all digital screens having captioning capabilities. For Option 1, this baseline also
assumes that 2 percent of analog screens are captioning enabled.
- Baseline 2 (Litigation-Based) – This baseline is derived from available
data regarding movie theater companies that are now providing captioning and
that have been involved in recent litigation challenging their failure to
comply with existing ADA effective communication requirements. This baseline assumes that 42 percent
of digital screens are captioning enabled.
For Option 1, this baseline also assumes that 2 percent of analog screens
are captioning enabled.
- Baseline 3 (2013 NATO Survey-Based)
– This baseline uses data provided in testimony by officials from the
National Association of Theater Owners (NATO) before Congress in May 2013,
which stated that 53 percent of digital screens were already captioning
enabled. For Option 1, this
baselines also assumes that 2 percent of analog screens are captioning enabled.
Costs are estimated over a
15-year period, beginning with the year in which the rule becomes effective
(assumed to be 2015) (Table ES-1 and Table ES-2). For both options, costs are estimated for
theaters with digital screens beginning in the first year after publication of
the final rule (2015). For Option 1,
costs are estimated for theaters with analog screens beginning in the fourth
year after publication of the final rule (2018).
The estimated costs
primarily consist of the following: (1)
the purchase of hardware and/or software to send captions to individual
captioning devices; (2) the purchase of individual captioning devices as per
the scoping requirements specified in the rule; (3) periodic costs to replace
hardware, software, and devices; (4) annual operations and maintenance costs to
cover storage, management, staff training, and other recurring costs; (5) any
additional hardware costs to transmit audio description to individual audio
description listening devices; and (6) any additional costs associated with the
purchase of individual audio description listening devices. The costs do not include the costs to
theaters to convert their screens from analog to digital, because this rule
does not require any movie theater to convert to digital, and doing so it is not
necessary to comply with the proposed requirements.
| Discount Rate |
TOTAL Costs - 15 Years |
TOTAL Costs - 15 Years |
TOTAL Costs - 15 Years |
|---|
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
(millions $) |
Under Baseline 2 Assumptions –
Litigation-Based
(millions $) |
Under Baseline 3 Assumptions – NATO
Survey Based
(millions $) |
|---|
7%
|
$225.9
|
$191.9
|
$177.8
|
3%
|
$275.7
|
$235.6
|
$219.0
|
|
Discount Rate
|
TOTAL Costs - 15 Years
Under Baseline 1 Assumptions - One Screen
Per-Theater
(millions $)
|
TOTAL Costs - 15 Years
Under Baseline 2 Assumptions –
Litigation-Based
(millions $)
|
TOTAL Costs - 15 Years
Under Baseline 3 Assumptions – NATO
Survey Based
(millions $)
|
7%
|
$186.2
|
$152.2
|
$138.1
|
3%
|
$226.0
|
$186.0
|
$169.3
|
Under Option 1, the
estimated annualized costs of the proposed regulation under each of the three
baseline scenarios range from $19.5 million
to $24.8 million when using a 7 percent discount rate, and from $18.3 million to $23.1 million under a
3 percent discount rate. Under Option 2, the estimated annualized costs of the
proposed regulation under each of the three baseline scenarios range from $15.2 million to $20.4 million under a
7 percent discount rate, and from $14.2 million
to $18.9 million under a 3 percent discount rate (see Table ES-3.[1]).
The
benefits of this rule are difficult to quantify for multiple reasons, including
the following: (1) the Department has not been able to locate robust data on
the rate at which persons with disabilities currently go to movies shown in
movie theaters, (2) the fact that the
number of persons with disabilities who will newly go to movies will change,
(3) the number of persons with disabilities who will go to movies more often
will change, (4) the number of persons who will go to the movies as part of a
larger group that includes a person with a disability will change, and (5) the
number of persons with disabilities who would have gone to the movies anyway,
but under the rule will have a fuller and more pleasant experience will also
change—all of which will change by an unknown amount. In addition, the Department is not
aware of any peer reviewed academic or professional studies that monetize or
quantify the societal benefit of providing closed captioning and audio
description at movie theaters.
In
2012, the per capita annual movie attendance rate in the U.S. and Canada was
4.1, with moviegoers paying on average $7.96 per ticket.
[2] Data on movie-going patterns of persons who
are deaf or hard of hearing or are blind or have low vision is very limited,
making estimations of demand very difficult.
However, numerous public comments suggest that many persons who are deaf
or hard of hearing or are blind or have low vision do not go to the movies at
all, or attend movies well below the average per capita rate of 4.1 admissions
annually, because of the lack of auxiliary aids and services that would allow
them to understand the movie.
Though
the Department cannot confidently estimate the likely number of people who
would directly benefit from this proposed rule, we have reviewed data on the
number of people with hearing or vision disabilities in the United States. The Census Bureau estimates that 3.3 percent
of the U.S. population has difficulty seeing, which translates into a little
more than eight million individuals in 2010, and a little more than two million
of those had “severe” difficulty seeing.
[3] At the same time, the Census Bureau estimates
that 3.1 percent of people had difficulty hearing, which was a little more than
7.5 million individuals in 2010, and approximately one million of them having
“severe” difficulty hearing. However,
for a variety of reasons not all of these people would benefit from this proposed
rule (see Section 5, Benefits, for more details). In addition, there are others who can be
considered
indirect beneficiaries of
the rule, such as those who would benefit from accompanying a person who is
deaf or hard of hearing or is blind or has low vision to a movie showing, (e.g.,
a child who can enjoy and discuss a movie with his or her parent with a hearing
disability) (see Section 5, Benefits, for more details).
Of perhaps greater significance to
the discussion of the
benefits of this
rule, however, are issues relating to fairness, equity, and equal access, all
of which are extremely difficult to monetize, and the Department has not been
able to robustly quantify and place a dollar value on those benefits. Regardless, the Department believes the
non-quantifiable benefits justify the costs of requiring captioning and audio
description at movie theaters nationwide.
|
|
7% Discount Rate
|
3% Discount Rate
|
|
|
Baseline 1 Assumptions
(One Screen Per-Theater)
|
Baseline 2 Assumptions
(Litigation-Based)
|
Baseline 3 Assumptions
(NATO Survey Based)
|
Baseline 1 Assumptions
(One Screen Per-Theater)
|
Baseline 2 Assumptions
(Litigation-Based)
|
Baseline 3 Assumptions
(NATO Survey Based)
|
|
Costs
(million $)
|
Option 1 – Four Year Compliance for Analog Screens
|
|
$24.8
|
$21.1
|
$19.5
|
$23.1
|
$19.7
|
$18.3
|
|
Option 2 – Deferred Rulemaking for Analog Screens
|
$20.4
|
$16.7
|
$15.2
|
$18.9
|
$15.6
|
$14.2
|
|
Benefits
|
The
proposed rule would address the discriminatory effects of communication
barriers at movie theaters encountered by individuals who are deaf or hard of
hearing or are blind or have low vision. By ensuring that movie
theaters screen those movies that are produced and distributed with the
necessary auxiliary aids and services—captioning and audio description—and
that theaters provide the individual devices needed to deliver these services
to patrons with these particular disabilities, this rule would afford such
individuals an equal opportunity to attend movies and follow both the audio
and visual aspects of movies exhibited at movie theaters. Although the
Department is unable to monetize or quantify the benefits of this proposed
rule, it would have important benefits. For example, it would provide
people with hearing and vision disabilities better access to the movie
viewing experience enjoyed by others; it would allow such persons to attend
and enjoy movies with their family members and acquaintances; it would allow
people with hearing or vision disabilities to participate in conversations
about movies with family members and acquaintances; and it would promote
other hard to quantify benefits recognized in Executive Order 13563 such as
equity, human dignity, and fairness.
|
The Initial RA shows that estimated
annual costs for this proposed rule will not exceed $100 million in any year
under any of three baseline scenarios, irrespective of which option the
Department selects for analog screens. Annual costs for each year during the 15-year
expected term of the proposed regulation are depicted in Figure ES-1 for Option
1 and Figure ES-2 for Option 2.
Because
movie theater complexes vary greatly by number of screens, which significantly
impacts overall costs per facility, the analysis breaks the movie exhibition
industry into four theater types based on size—Megaplexes (16+ screens),
Multiplexes (8-15 screens), Miniplexes (2-7 screens), and Single Screen
Theaters—and by digital or analog system.
Per-facility costs were then calculated for each theater type. The largest costs per-year for any single
movie theater would occur in the first year due to the purchase of necessary
equipment. The average capital cost in
the first year for digital Megaplex theaters is estimated to total $38,547, while the average capital
cost in the first year for digital single screen theaters is estimated to total
$3,198 (Table ES-4.
|
Digital Theater
Type/Size
|
Per Theater
Initial Capital Costs
(Using Doremi Technology for Movies in Digital
Format)
|
Per Theater
Initial Capital Costs
(Using USL
Technology for Movies in Digital Format)
|
Average Initial
Capital Costs for Digital Theater
(Average of Different Technology)
|
Megaplex
|
$40,540
|
$36,554
|
$38,547
|
Multiplex
|
$27,880
|
$25,798
|
$26,839
|
Miniplex
|
$10,920
|
$10,252
|
$10,586
|
Single Screen
|
$3,285
|
$3,111
|
$3,198
|
Note: These initial capital costs include the costs
to purchase and install: (1) captioning hardware and/or software (one per
screen); (2) individual devices for captioning (ranging from 4 for Single
Screens to 34 for Megaplexes); (3) additional hardware, if needed, to transmit
audio description (from none to one device per screen); and (4) additional
audio description listening devices (ranging from 2 for Single Screens to 18
for Megaplexes).
*Because unit costs for captioning and audio description
equipment have either remained steady or declined between 2010 and 2013, they are
assumed to remain constant from 2013 (when last researched) to 2015, when the
final rule is expected to be published.
Should the Department proceed
under Option 1 and cover analog screens in the final rule, though with a
four-year compliance date, per theater costs for analog theaters would be
higher than those for digital theaters for each type/size.
[4] The first year per-theater capital costs for
analog single screen theaters, which are measured in year four, would total a
little more than $8,172 (Table
ES-
5). The first year per-theater capital costs for
digital single screen theaters, which are measured in year one, would average
$3,198 (Table ES-4).
|
Analog Theater
Type/Size
|
Per Theater Initial Capital Costs
(Rear
Window Technology for Analog Films)
|
Megaplex**
|
NA
|
Multiplex**
|
NA
|
Miniplex
|
$31,884
|
Single Screen
|
$8,172
|
Note: These first year costs include (1) the costs
to purchase and install: captioning hardware and/or software (one per screen); (2)
individual devices for captioning (ranging from 4 for Single Screens to 12 for
Miniplexes); (3) additional hardware, if needed, to transmit audio description
(from none to one device per screen); and (4) additional audio description
listening devices (ranging from 2 for Single Screens to 4 for Miniplexes).
*Because unit costs for captioning and audio description
equipment have either remained steady or declined between 2010 and 2013, they are
assumed to remain constant from 2013 (when last researched) to 2015, when the
final rule is expected to be published.
**Note that the RA assumes that all Megaplexes and
Multiplexes have transitioned to digital projection systems by the time this
rule goes into effect.
In keeping with the
Regulatory Flexibility Act (“RFA”), the Initial RA examines the economic impact
of the proposed rule on small businesses in the movie exhibition industry. Small businesses comprise the vast majority
of firms in this industry. The current
size standard for a small movie theater business is $35.5 million dollars in
annual revenue; in 2007, the latest year for which detailed breakouts by
industry and annual revenue are available, approximately 98 percent of movie
theater firms met the standard for small business and these firms managed
approximately 53 percent of movie theater establishments.[5] Therefore, this proposed rule will have a
significant economic impact on a substantial number of small entities.
As part of this regulatory
analysis, the Department has conducted an Initial Regulatory Flexibility
Analysis (“IRFA”) on the economic impact of this rule on small business. The IRFA has been used by the Department to
help determine whether small businesses would be disproportionately burdened. In addition, the Department has used the IRFA
to examine other ways, if possible, to accomplish the Department’s goals with
fewer burdens on small businesses. The Department considered multiple
alternatives, including a more stringent one that would require analog theaters
to be compliant within two years of the publication of the final rule; this
alternative was rejected because of concerns about the burden on small movie
theaters. Based on its assessment, and
as previously discussed, the Department has decided to seek public comment on
two options with respect to analog screens: a four-year compliance date for
analog screens (Option 1), or deferral of new regulatory requirements for
analog screens (Option 2).
As part of a larger movement
within the film producing industry, nearly all film production is moving to
digital. Industry estimates predict the
production of movies using analog film will cease by 2014 and that by the end
of 2015, analog film will no longer exist in theaters, with a few rare
exceptions.
[6] Thus, by 2015, most movie exhibition places
will have converted to the digital format.
Because of the cost of transitioning to digital, most of the larger
firms have already been able to convert or are planning to do so soon. Therefore, any remaining analog theaters are
more likely to be small businesses. At
the same time, per screen costs of captioning equipment are significantly
higher for analog theaters than for digital theaters.
The IRFA estimates the
average initial capital costs per-firm for firms that display digital or analog
movies under Option 1, and for firms that display digital movies under Option 2. The average costs for small firms (which have
a proportionately higher number of Single Screens and Miniplexes) are estimated
to be between approximately 0.7 percent to 2.1 percent of their average annual
receipts for firms with digital theaters, and between approximately 2.0 percent
to 5.7 percent of average annual receipts for firms with analog theaters (Table
ES-
6 and Table ES-
7).
|
Cost
|
Firms $499,999 and under
|
Firms $500,000 to $4,999,999
|
Firms $5,000,000 to $35,500,000**
|
Average receipts per firm*
|
$188,384 to $201,973
|
$1,471,549 to
$1,484,995
|
$9,705,377 to
$12,437,259
|
Average cost per theater*
|
$3,198 to $3,966
|
$10,063 to $10,586
|
$13,984 to $17,281
|
Average cost per firm*
|
$3,233 to $3,992
|
$12,539 to $14,454
|
$81,176 to $103,309
|
Ratio of average cost/receipts*
|
1.6% to 2.1%
|
0.8% to 1.0%
|
0.7% to 1.1%
|
|
Cost
|
Firms $499,999 and under
|
Firms $500,000 to $4,999,999
|
Firms $5,000,000 to $35,500,000**
|
Average receipts per firm*
|
$188,384 to $201,973
|
$1,471,549 to $1,484,995
|
$9,705,377 to $12,437,259
|
Average cost per theater*
|
$8,172 to $10,638
|
$30,204 to $31,884
|
$43,449 to $54,673
|
Average cost per firm*
|
$8,263 to $10,706
|
$37,638 to $43,534
|
$252,224 to $326,844
|
Ratio of average cost/receipts*
|
4.1% to 5.7%
|
2.5% to 3.0%
|
2.0% to 3.4%
|
* The ranges represent the figures
calculated using the two datasets created from data from the 2007 Economic
Census, which breaks out data by revenue category (downloaded from SBA’s Web
site and the Census Bureau’s American FactFinder Web site, respectively), but
which differ slightly. Note that the
composition of theater size types also varies per revenue group depending on
the dataset used, and therefore the average cost per theater varies as well.
** Note that the calculations for this category using the dataset
downloaded from the SBA Web site do not include any data for the two firms in
the revenue category for firms with sales/receipts/revenue of $30,000,000-$34,999,999because
no data on annual receipts for those two firms was included. The dataset downloaded from American
FactFinder had different revenue categories from those downloaded from SBA’s
Web site. To estimate those firms
meeting the SBA size standards using the dataset downloaded from the American
FactFinder Web site, all the firms with revenues less than $25 million, and
half of those with revenues from $25,000,000 to $49,999,999 were counted as a
way of estimating the number of entities that fall under $35.5 million within
that revenue category.
Note: These first
year costs include (1) the costs to purchase and install: captioning hardware
and/or software (one per screen); (2) individual devices for captioning
(ranging from 4 for Single Screens to 34 for Megaplexes); (3) additional
hardware, if needed, to transmit audio description (from none to one device per
screen); and (4) additional audio description listening devices (ranging from 2
for Single Screens to 18 for Megaplexes). Because unit costs for captioning and audio
description equipment have either remained steady or declined between 2010 and
2013, they are assumed to remain constant from 2013 (when last researched) to
2015, when the final rule is expected to be published.
Title III of the Americans with Disabilities Act (ADA)
contains broad language prohibiting public accommodations and commercial
facilities—including movie theaters—from discriminating against individuals
with disabilities. The Department’s
title III regulation implementing title III’s auxiliary aid provision
reiterates the obligation of covered entities to ensure effective communication
with individuals with disabilities and identifies, among other things, open
captioning, closed captioning, and audio recordings as examples of auxiliary
aids and services. 28 CFR
36.303(a)-(c). Recent technological
changes in the movie theater industry—including wide-spread conversion from
analog (film) projection to digital cinema systems—make exhibition of captioned
and audio-described movies easier and less costly than ever before. In addition, at this time nearly all first
run motion pictures released by the major domestic movie studios include closed
captioning (and to a lesser extent, audio description). Going to the movies is
a quintessential American experience. In
any given month, over 56 million adults (roughly 26 percent of the adult
population) make a trip to a movie theater to take in a movie.
[7] Movies are a part of our shared cultural
experience, “water cooler” talk, and the subject of lunch-time
conversations. The Supreme Court
observed over 60 years ago that motion pictures “are a significant medium for
the communication of ideas” and “may affect public attitudes and behavior in a
variety of ways, ranging from direct espousal of a political or social doctrine
to subtle shaping of thought which characterizes all artistic expression. The importance of motion pictures as an organ
of public opinion is not lessened by the fact that they are designed to
entertain as well as to inform.”
[8] When individuals who are deaf or hard of
hearing or are blind or have low vision have the opportunity to attend movies
that they can actually understand because of the availability of captions or
audio description, they are exposed to new ideas and gain knowledge that
contributes to the development of their communication and literacy.
Until recent technological developments, the only
captioning methodologies available required that the captions be directly
displayed on the film, and thus visible to all patrons in an auditorium, to
which movie theaters and some patrons without disabilities objected. Current technology allows for closed
captioning, which, in the context of movies, consists of captions that are
visible only to those who use a special device and not the rest of the theater. This advancement in technology, coupled with
the recent conversion to digital cinema, have made exhibition of captioned and
audio-described movies easier and less costly.
While there has been an increase in the number of
movie theaters exhibiting movies with closed captions (and, to a much lesser
extent, audio description) due in large part to successful disability rights
litigation brought by private plaintiffs during the past few years, the
availability of movies exhibited with closed captions and audio description
varies significantly across the U.S. depending upon locality and movie theater
ownership. The ADA requirements for
effective communication apply to all public accommodations (including movie
theaters) in every jurisdiction in the U.S and should be consistently applied
using a uniform ADA standard. The right
to access movies exhibited with closed captioning and audio description should
not depend on whether the person with a disability resides in a jurisdiction
where movie theaters, subject to a consent decree or settlement, exhibit movies
with closed captioning and/or audio description. And, even in jurisdictions where theaters
exhibit movies with captioning and audio description, many do not make
captioning and audio description available at all movie showings. Thus, some persons who are deaf, hard of
hearing, blind, or have low vision, still cannot fully take part in movie-going
outings with family or friends, join in social conversations about recent movie
releases, or otherwise participate in a meaningful way in an important aspect
of American culture.
The Department received numerous comments from
individuals who are deaf or hard of hearing or are blind or have low vision in
response to its 2010 Advance Notice of Proposed Rulemaking on Movie Captioning
and Video Description in Movie Theaters, (2010 ANPRM), 75 FR 43467, (July 26,
2010), describing how they were unable to take part in the movie-going
experience with their friends and family because of the unavailability of
captioning or audio description. Many
individuals felt that this not only affected their ability to socialize and
fully take part in family outings, but also deprived them of the opportunity to
meaningfully engage in the discourse that often surrounds movie attendance.
The Department is convinced that regulation is
warranted at this time in order to achieve the goals and promise of the ADA and
is proposing to explicitly require movie theaters to exhibit movies with closed
captioning and audio description at all times and for all showings whenever movies
are produced, distributed, or otherwise made available with captioning and
audio description unless to do so would result in an undue burden or
fundamental alteration.
Currently, there are two formats
used by movie theaters in the United States to exhibit movies: digital and
analog technologies.[9] The older format—analog technology—uses reels
of film and a traditional film projector to show movies.[10]
Five to six reels of film are used for a
typical feature-length analog movie.
These reels of film must be physically delivered to each movie theater.
The newer digital cinema format, on
the other hand, does not rely on film to exhibit movies. Instead, digital movies are captured as a
series of electronic files in a standardized format (typically referred to as
the “digital cinema package” or “DCP”) and are exhibited by movie theaters
using a digital server and digital projector.
Current digital cinema technology typically requires one digital server
and one projector (or a combined server/projector) for each screen. Digital movies are delivered to movie theaters
either physically by delivery of a storage medium (such as high-resolution
DVDs, hard drives, or flash drives) or electronically via the Internet, fiber-optic
cable, or satellite network.
Digital cinema has several
advantages relative to analog film. For
movie studios and distributors, digital cinema’s biggest calling card is its
substantially lower distribution costs due to not having to “print” and
distribute large reels of analog film to movie theaters nationwide. For movie theaters, the advantages of digital
cinema include (1) images that do not degrade over time like analog film; (2) the
ability to screen “alternate content” such as live concerts or sporting events;
(3) greater flexibility in scheduling movies within auditoriums or at different
times based on audience demand; and (4) enhanced revenue opportunities by, for
example, exhibiting premium content such as digital 3D movies. Some movie aficionados debate quality and
other differences, but digital cinema’s advantages to the movie production
industry are significant.
Digital
cinema systems are also, however, quite expensive for movie exhibitors. Costs range from about $70,000 - $100,000 per
screen.
[11] As a result, while some “early adopter” movie
theaters have had digital cinema systems since the mid-2000s, wide-spread
conversion of domestic movie theaters to digital cinema did not commence until at
least 2008. Several factors have helped
spur broader growth of digital cinema systems since 2008, including: (1) industry-wide
consensus on standardized file formats and secure delivery systems for DCPs; (2)
agreements on financing vehicles for digital cinema systems, including subsidized
leases by digital cinema vendors or manufacturers, formation of equipment
buying consortiums, or payment of negotiated “virtual print fees” (“VPF”) by
studios to movie theaters for each digital movie; and (3) the wide-spread
popularity of digital 3D and IMAX films, which typically increase both
attendance and revenue for movie theaters.
[12]
Currently,
the U.S. movie theater industry is in the midst of accelerated conversion to digital
cinema. In May 2013, the head of
National Association of Theater Owners (NATO) testified before Congress that “[a]pproximately
88% of the nation’s movie screens now use digital projection.”
[13]
Meanwhile, fewer movies are now
available on analog film to the point where in 2011, the head of the Motion
Picture Association of America (MPAA) was reported to have predicted that analog
film would disappear in less than three years.
[14]
Since
the advent of captioning and audio description, movie studios (or movie distributors)—rather
than movie theaters—have determined which movies will be captioned or
audio-described and have underwritten the production of movies with these
accessibility features. The movie
studios (or movie distributors) then, in turn, distribute these captioned
and/or audio-described movies to movie theaters without charge for these
features. According to comments from the
MPAA on the Department’s 2010 ANPRM, nearly all “wide-release” movies currently
released by its member studios include captioning and about two-thirds of such
movies include audio description.
[15]
Turning
to the exhibition side of the movie industry, technologies for movie theaters to
show movies with captioning and audio description vary depending on whether the
movie is being screened in an analog or digital format. For analog movies, the choices for captioning
and audio description equipment are limited.
Until the mid-1990s, the only way to caption a movie was to actually
“burn” captions on the film. When the
analog film was screened, such “open captions” were then visible to the entire
movie audience much like sub-titles on foreign films. In 1995, however, WGBH in Boston began
marketing a new system for exhibiting “closed captioned” movies that was called
the Rear Window® closed captioning system (“RWC”). Unlike older “open caption” technology, the
proprietary RWC system neither altered the actual film nor rendered captions
visible to the entire movie audience.
Instead, this system used several components—including a multi-channel
digital media player, CD-ROMs, and LED panels mounted on the back wall of an
auditorium—to generate “closed captions” (
i.e.,
captions that are only visible to patrons using specialized captioning display
devices at their seats). A related
proprietary system—called DVS-Theatrical® (“DVS”)—enables provision of audio
description for analog movies. Together,
RWC and DVS are referred to as the MoPix® system. Due largely to the movie theater industry’s
commitment to digital conversion, MoPix® remains the only
commercially-available system for exhibition of analog movies with closed
captions and audio description.
[16]
For
digital cinema systems, there are more choices for captioning technologies. Exhibiting open captions for a digital film
entails no additional equipment or costs for movie theaters. Digital cinema systems allow any movie to be
shown with open captioning—at the movie theater’s discretion—simply by
selecting the captioning file (generally referred to as the “HI” file) from the
DCP on the appropriate digital server (assuming, of course, that the DCP
provided by the movie studio or distributor included an open caption file). For closed captioning, all digital systems
require one or more pieces of “hardware” (
e.g.,
server-based thumb drive or wall-mounted FM/IR panel) that essentially act as
an electronic “conduit” for the captioning signal between the digital server
and the individual captioning display “devices” used by patrons at their seats. With a cost of a little over $3,000 to outfit
an average-sized movie auditorium with digital captioning equipment (see
discussion in Section 4.6), the capital costs for
such captioning equipment are nominal relative to the costs for digital cinema
systems.
Currently,
there are four different closed caption technologies for digital cinema systems
available on the commercial market—the Rear Window® system; the CaptiView™
system by Doremi Cinema, LLC; Ultra Stereo Labs (USL), Inc.’s closed caption
infrared system; and Sony’s Entertainment Access Glasses and Audio Description
receivers.
[17] The Department understands that about 300 RWC
systems are currently installed at U.S. movie theaters nationwide; research by
the Department also suggests that as of March 2013, about 9,750 Doremi
CaptiView™ systems have been installed domestically. Sony’s glasses are a recent entrant to the
market, first available in 2012. Because
Sony’s glasses are a very new and expensive product in a market when other less
expensive and more established options are available (including cheaper
glasses), they are not included in the main estimation; preliminary cost
estimates using Sony glasses are presented in the Appendix for informational
purposes.
For audio
description, the technologies involved are neither complex nor expensive. For movie theaters using analog systems,
audio description is delivered by DVS or MoPix® systems using the theaters’
existing sound system. For movie
theaters with digital cinema systems, provision of audio-described movies
generally requires no additional equipment; theaters may make use of their
existing digital servers and sound systems.
To exhibit an audio-described digital movie, a digital theater need only
select the audio description file (generally referred to as the “VI-N” file)
from the DCP on the appropriate digital server and play the movie. The audio description signal for that movie
then will be transmitted to receivers/headsets worn by individual patrons via
the theater’s existing FM or Infrared-based assistive listening system (“ALS”)
using additional devices.
In the
DOJ Movie NPRM, the Department is proposing to provide specific regulatory
requirements regarding how movie theaters should meet their effective
communication obligations through the exhibition of closed-captioned and audio-described
movies. The proposed rule states that a movie
theater owner or operator is required to exhibit movies with closed captioning
and/or audio description for all screenings so long as the movie has been
produced by the movie studio or distributor with captioning or audio
description. The proposed rule imposes
no independent obligation on movie theaters to provide captions and audio
description if the movie is not available with these features. The obligations that are imposed by the
proposed rule are mitigated should a movie theater owner or operator establish
that exhibition of closed-captioned or audio-described movies would result in an
undue burden or fundamental alteration.
The proposed rule for
captioning and audio description rests on the existing obligation of title
III-covered facilities—such as movie theaters—to ensure that persons with
disabilities receive “full and equal enjoyment” of their respective goods and
services, including, as needed, the provision of auxiliary aids and services
for persons with sensory disabilities.
[18]
The Department’s proposed rule sets
forth several discrete regulatory requirements.
First, the Department
is proposing to require movie theaters’ digital screens to comply with the
requirements to exhibit movies with closed captioning and audio-description for
all screenings of movies available with these features within 6 months from the
date of the publication of the final rule in the Federal Register.
Second, the
Department is seeking public comment on two options for movie theaters’ analog
screens:
- Option 1: Require that as of four
years from the final rule’s publication date in the Federal Register, movie
theaters’ analog screens exhibit movies with closed captions and
audio-description, for all screenings of movies available with these features.
- Option 2: Defer rulemaking on
analog screens until a later date.
Third,
the NPRM proposes to require movie theaters to have a certain number of
individual captioning devices capable of delivering the captions at the seat of
the individual, and to provide them to patrons upon request. The proposed numbers are based upon the
number of seats in the movie theater itself and can be shared among the screens
in the theater.
Fourth, the NPRM proposes to
require movie theaters to have a certain number of devices capable of
delivering audio description and to provide them to patrons upon request.
The NPRM recognizes that the assistive listening devices used for audio
amplification that are currently required by the 2010 ADA standards often
contain an extra channel, and therefore can also be used to deliver audio
description. The NPRM proposes minimal scoping for audio description listening
devices, and also permits movie theaters that have two channel devices for
assistive listening to use those devices for audio description in lieu of
purchasing additional devices.
Fifth,
the NPRM proposes to require that movie theaters ensure that their staff has
the capability to operate the equipment to show captions and audio description
and to show patrons how to use individual devices.
Finally,
the NPRM proposes that movie theaters provide the public with notice about the
availability of captions and audio description when it provides notice to the
public regarding screenings and showing times of these movies.
As with other effective
communication obligations under the ADA, covered entities do not have to comply
with these requirements to the extent that they constitute an undue burden or
fundamental alteration.
This section outlines the overall cost estimation
approach under both proposed options, while details (including sources) are
presented in the sections that follow.
In the industry’s early days, movies were shown
primarily in establishments that had a single auditorium with a single screen;
in recent years a single establishment can have more than a dozen screens, all
showing movies at the same time. Because
movie theater complexes vary greatly by the number of screens, and the overall
cost of this rule varies in direct relation to the number of screens, this RA
breaks the movie exhibition industry into four theater types based on size—Megaplexes
(16+ screens), Multiplexes (8-15 screens), Miniplexes (2-7 screens), and Single
Screen Theaters. Per-facility costs were
then calculated for each theater type, based on research-based assumptions
regarding the average number of screens and auditorium size by type
(Megaplexes, Multiplexes, Miniplexes, or Single Screen).
Because costs vary significantly between digital and
analog captioning equipment, the RA uses estimates of the current total number
of theaters in the U.S., recent estimates of the percent of screens that are
digital, and the average number of screens per theater by type to determine the
portion of theaters by each of the four types that are digital or analog. The vast majority of theaters now project
digitally, and analog theaters are likely to be either single screen or
Miniplex theaters (see the discussion in Section 4.2 for detail).
The theater type characteristics are used to estimate the captioning
and audio description equipment that would be needed, which includes hardware
and software, plus the appropriate number of personal devices based on the
scoping requirements. These element counts
are the building blocks of the cost estimates for an average theater of each of
the four types.
The RA uses a 15-year timeframe for the cost analysis,
which is a timeframe similar to that used in the Regulatory Impact Analysis of
the Final Revised Regulations Implementing Titles II and III of the ADA (Sept.
15, 2010). This timeframe is the
Department’s current best estimate of the impact of this current rule before it
is replaced by a revised regulation. Because
the 15 year timeframe for this rule exceeds the expected life of captioning
equipment, the analysis incorporates a rolling “replacement schedule” whereby
this equipment is assumed to require replacement over a span of several years
based on its expected useful life (see Section 4.7).
The analysis also accounts for growth (or contraction)
over time in the movie theater exhibition industry by theater size type
(Megaplexes, Multiplexes, Miniplexes, or Single Screen). The four different types have very different
average costs, due to their differences in size, as well as differences in
growth/contraction rates.
An annual cost factor is also added, as a percentage of
capital costs per theater, to account for operations and maintenance (O&M) and
recurring training costs for the provision of the captioning and audio
description services. The rule also
requires that when movie theaters publish movie listings in newspapers or other
publication formats to inform patrons of show times or locations, that such
communications also indicate which screenings will be captioned or
audio-described. However, the additional
cost of noting which screenings will be captioned or have audio description is
expected to be de minimus when a theater is already preparing a communication
listing movie titles and screening times.
Total annual costs for each theater type represent the
sum of the following costs, as applicable: (1) unit costs for captioning
equipment (hardware/software and required individual devices) for existing and
new digital screens; (2) unit costs for audio description equipment (hardware,
if any, and required individual devices) for existing and new digital screens; (3)
unit costs for captioning equipment (hardware/software and required individual devices)
for existing analog screens; (4) unit costs for audio description equipment
(hardware, if any, and required individual devices) for existing analog screens;
and (5) the cost of replacing equipment under the “replacement schedule”; and
(6) O&M costs.
These total costs are then measured against a baseline,
which represents the Department’s best assessment of the state of the industry,
including the availability of closed captioning and audio description, if the
rule were not to be implemented. In this
way, the resulting net costs appropriately reflect the incremental economic
impact of the proposed rule. There is a
certain degree of uncertainty regarding the extent to which movie theaters
would be offering captioning and audio description if the Department were not
undertaking this rulemaking process.
Therefore, costs have been estimated against three different baseline
scenarios, as detailed in Section 4.2.
Using this approach, annual costs are calculated for each
of the 15 “regulatory years” and, within each of these years, separately for
each of the three baseline scenarios.
Annual cost totals for each year are presented as “rolled-up” costs for
all theater types at both 3 percent and 7 percent discount rates, discounted to
2015. Additionally, the Initial RA also
assesses annualized costs for all theater types collectively.
As noted above, despite the
existing obligation to provide effective communication to movie patrons who are
deaf or hard of hearing or blind or have low vision, and the increasing
availability of movies produced with captions and audio description, until
recently, few movie theaters actually provided these auxiliary aids and
services. The Department recognizes that
this has begun to change. The industry
as a whole is seeing an increasing number of theaters with closed captioning
and audio description capabilities. The
industry trade association, NATO, surveyed its membership in early 2013 and,
based on the responses of two-thirds of those surveyed, estimated that at least
53 percent of digital screens in the nation have closed captioning
capabilities.
[19]
At least one large theater
chain executive has made statements to the Department indicating that its
efforts to equip all of its digital theaters with captioning and audio
description equipment were voluntary.
[20] Meanwhile, several
recent court cases have resulted in decisions and/or settlements that are
resulting in theater owners providing closed captioning and audio description,
independent of any Department actions (see NPRM for further details).
The assumption used for the current rate at which theaters
have or soon will be providing closed movie captioning and audio description as
proposed in this rule, but
independent of
this particular rulemaking, has a significant impact on the analysis. Given the uncertainty surrounding this
assumption and the significant impact it has on the estimation of costs, the RA
has estimated costs against three different estimations of the baseline. Under each baseline, the Department assumes
that no theaters (digital or analog) are audio description enabled. Under Option 1, each baseline assumes that 2
percent of analog theaters currently meet the requirements of this proposed
rule. Under Option 2, the baselines do
not make assumptions about analog screens because the rule would defer
requirements on such screens to future rulemaking.
- Baseline 1 (One Screen Per-Theater) – This baseline takes a minimum approach of assuming that
every movie theater with digital screens has at least one screen—and only one
screen—that is captioning enabled, based on an assumption of some level of compliance
with the existing longstanding ADA requirements that public accommodations
provide effective communication to persons with hearing and vision disabilities.
This assumption leads to about 13
percent of all digital screens having captioning capabilities.
Specifically, this baseline
assumes only one screen per theater complex will have captioning capabilities
for digital Megaplexes, Multiplexes, Miniplexes, and Single Screen theaters. For Option 1, this baseline also
assumes that 2 percent of analog screens are captioning enabled. Each screen with captioning
capabilities is assumed to have the necessary software/hardware as well as the
number of devices that would be needed to meet the proposed rule’s scoping
standards for a single screen.
- Baseline 2 (Litigation-based) – This baseline is derived using available data regarding
movie theater companies that are now providing captioning and that have been
involved in recent litigation challenging their failure to comply with existing
ADA effective communication requirements. After being involved in litigation, Regal,
AMC, Cinemark, Harkins, and National Amusements have committed to providing or
have already provided captioning and audio description at all their digital
screens. Using 2010 NATO data detailing
how many screens are owned by each of these exhibitors, this assumption leads
to an estimate that 42 percent of digital screens are captioning
enabled. For Option 1, this baseline
also assumes that 2 percent of analog screens are captioning enabled.
- Baseline 3 (2013 NATO Survey-based) – This baseline uses data provided in testimony by officials
from NATO before Congress in May 2013, which stated that 53 percent of
digital screens were already captioning enabled. For Option 1, this baseline also assumes that
2 percent of analog screens are captioning enabled.
Table below provides a visual representation of these baselines.
|
Baseline
|
Digital Theaters Captioning
|
Digital Theaters Audio Description
|
Analog Theaters Captioning
|
Analog Theaters Audio Description
|
Baseline 1
|
1 screen per digital
theater fully captioning enabled
|
0% of digital theaters
have necessary hardware or devices
|
2% of analog theaters
already fully captioning enabled
|
0% of analog theaters
have necessary hardware or devices
|
Baseline 2
|
42% of digital screens are captioning enabled.
Of those theaters* with captioning enabled screens:
50%
have
all necessary hardware and devices.
50%
have the necessary hardware but only half of the required devices.
|
0% of digital theaters have necessary hardware or devices
|
2% of analog theaters already fully captioning enabled
|
0% of analog theaters have necessary hardware or devices
|
Baseline
3
|
53% digital screens are captioning enabled.
Of those theaters* with captioning enabled screens:
· 50% have all necessary hardware and devices.
· 50%
have the necessary hardware but only half of the required devices.
|
0% of digital theaters have necessary hardware or devices
|
2% of analog theaters already fully captioning enabled
|
0% of analog theaters have necessary hardware or devices
|
*First, the percentage of screens that
are captioning enabled was allocated by theater size (applied primarily to
Megaplex and Multiplex screens). Then the number of theaters needing hardware
and the number needing devices were calculated for each theater size (Megaplex,
Multiplex, Miniplex, and Single Screen).
Detail on the distribution of these captioning enabled
theaters by type is not known, so several general assumptions or approaches were
used across all the baseline scenarios, as applicable. These include:
o
In the Litigation-based and NATO Survey-based baseline
scenarios, the assumptions regarding screens already captioning enabled refer
to digital screens only. In
addition, the RA assumes that only half of the theaters included in that
percentage possess all the required number of devices; the other half possessed
the required hardware but only half of the required devices.
o
Litigation-based and NATO Survey-based baseline scenarios
were applied primarily to Megaplex and Multiplex theaters, because those are
the largest theater types and are assumed to all be digital. Table 9 below details how those
distributions are applied to theaters by size type.
|
Theater Type
|
Litigation
Baseline
(42.4%
of all Digital Theaters)
|
2013 NATO Survey Baseline (53% of all Digital
Theaters)
|
Megaplex
|
All
(100%) Megaplexes (all digital)
|
All
(100%) Megaplexes (all digital)
|
Multiplex
|
Nearly
one fourth (23%) of Digital Multiplexes
|
Nearly
one half (44%) of Digital Multiplexes
|
Miniplex
|
No
Miniplexes
|
No
Miniplexes
|
Single Screen
|
No
Single Screens
|
No
Single Screens
|
Because the proposed rule for movie captioning and audio
description imposes requirements that vary depending on the size of the movie
theater (e.g., number of screens and
total seat count), the analysis breaks out the movie theater exhibition
industry by theater size. The MPAA’s“
Theatrical
Market Statistics – 2009” presents statistics from 2007 to 2009 showing the
break-down of movie theaters by four theater “types” in the United States:
Megaplexes (16+ screens); Multiplexes (8-15 screens); Miniplexes (2 – 7
screens); and Single Screen Theaters.
[21]
However, data on total or average seat counts for these four
theater types was not found. Therefore,
assumptions were made by Department subject matter experts (based on MPAA
statistics and independent research) regarding screen and seat counts in the
“average” theater for each of the four theater types. The following assumptions are used for the
“average” theater for each type:
|
Theater Type
|
Average Number of Screens
|
Average Seat Count per Screen
|
Average Number of Seats per Theater
|
Megaplex – 16+ screens
|
18
|
175
|
3,150
|
Multiplex – 8-15 screens
|
11
|
180
|
1,980
|
Miniplex
– 2-7 screens
|
4
|
150
|
600
|
Single Screen – 1 screen
|
1
|
175
|
175
|
Source:
Department of Justice Subject Matter Expert Review of MPAA data
|
To bring the estimates of the number of theaters forward
from 2009 to 2015, average growth/contraction rates were applied to each
type. Recent data on growth and decline
of theaters by size is only available for two size categories: 1-7 screens per theater establishment and 8+
screens per theater establishment.
Growth/contraction rates were calculated for the period 2008-2012 and
applied as follows: an increase of 2.0
percent (calculated for theaters with 8+ screens) to Megaplexes and Multiplexes
and a decline of 4.2 percent (calculated for theaters 1-7 screens) to
Miniplexes, and single screens theaters.
[22] These
growth/contraction rates were applied throughout the 15 years of the rule’s
expected impact, to account for new theater construction as well as annual
theater closures for Miniplexes and Single Screen Theaters. The RA thus estimates that as of the rule’s
effective date, there will be 718 Megaplexes, 1,893 Multiplexes, 1,500 Miniplexes,
and 966 Single Screen Theaters (Table 11).
|
Theater Type
|
Projected Number of Theaters in 2015
|
Annual Growth Rate
|
Projected Number of Screens in 2015
|
Megaplex – 16+ screens
|
718
|
2.0%
|
12,924
|
Multiplex – 8-15 screens
|
1,893
|
2.0%
|
20,823
|
Miniplex
– 2-7 screens
|
1,500
|
-4.2%
|
6,000
|
Single Screen – 1 screen
|
996
|
-4.2%
|
996
|
TOTAL
|
5,107
|
---
|
40,743
|
Source: Estimated using data for 2008-2012 as in MPAA’s Theatrical Market Statistics – 2012.
Although data is available on the total number of screens in
the U.S., it is not broken down by theater type. The total number of theaters of each type was
multiplied by the average number of screens, to reach the total number of
screens in the U.S.
Because screens with digital projection have a different
compliance date and significantly different costs than analog screens, the
analysis under Option 1 must estimate the number and proportion (by theater
type) of movie theaters that use digital projection systems on the projected
effective date of the final rule (2015), and the number and percentage that remain
analog. The cost model estimates costs
for digital and analog theaters separately for multiple reasons, including the
fact that larger theaters are more likely to have digital systems and are more
likely to increase in number over time, while theaters that still have analog screens
are more likely to be Single Screen or Miniplex establishments, which are
contracting in number.
As discussed in testimony before Congress in May 2013, NATO
estimates that 88 percent of screens in the nation now have digital projection.
[23] Since larger
establishments are more likely to have made the transfer to digital technology,
the model distributes the proportion of digital screens starting with
Megaplexes and Multiplexes first, and the remainder to Miniplexes and Single
Screens. Since Megaplexes and
Multiplexes accounted for approximately 82 percent of all screens, all of those
types were assumed to have transitioned to digital; the remaining 6 percent of
U.S. screens that are digital are distributed among the Miniplexes and Single
Screen theaters. Based on the foregoing
table, the cost model assumes the following with respect to the number of
digital screens/theaters as of the effective date of the proposed rule:
|
|
Number of Digital Theaters
|
Number of Digital Screens
|
Number of Analog Theaters
|
Number of Analog Screens
|
|
Megaplex
– 16+ screens
|
718
|
12,924
|
0
|
0
|
|
Multiplex
– 8-15 screens
|
1,893
|
20,823
|
0
|
0
|
|
Miniplex – 2-7 screens
|
452
|
1,807
|
1,048
|
4,192
|
|
Single
Screen – 1 screen
|
300
|
300
|
696
|
696
|
|
TOTAL
|
3,363
|
35,854
|
1,744
|
4,888
|
Once the number of theaters has been established, as well as the portion that are analog and the portion that are digital, the next step is to establish the amount of equipment, by type, that will be needed by the average theater for each size group/type.
For captioning equipment available on the U.S.
commercial market—irrespective of whether a theater is using an analog or
digital cinema system—two separate types of equipment are required: (1) one or
more pieces of “hardware” (such as a wall-mounted LED panel, wall-mounted IR
emitter, a server-based thumb drive, and/or a media player that serves as an
interface between an analog projector and the Rear Window® captioning system)
that transmit the captioning signal/text to its associated end-use device; and
(2) individual captioning devices (such as cup-holder mounted clear reflector
screens or LED display units) that display the closed captions to individual
movie patrons while seated in their seats or on specially designed
eyewear/glasses. Generally speaking, one
piece of “hardware” (e.g., thumb
drive, LED display, or IR emitter panel) is needed for each screen/auditorium
exhibiting a closed-captioned movie. By
contrast, for individual captioning devices, the proposed rule sets scoping
requirements based not on screen counts, but, instead, on the total number of seats in the entire movie
theater. Thus, for most (if not all)
movie theaters, fewer individual pieces of captioning hardware will be needed
per-facility than individual captioning devices. Consequently, because captioning hardware and
devices are unlikely to be needed in exactly the same numbers at any given
theater, the Initial RA separately assesses costs for captioning hardware and
individual captioning devices.
The Department has determined the following equipment needs,
based on the proposed rule’s scoping and the assumed average theater
characteristics for both captioning and audio description capabilities (Table 13).
|
Equipment
|
Megaplex
Avg:
18 Screens
|
Multiplex
Avg:
11 Screens
|
Miniplex
Avg:
4 Screens
|
Single Screen
|
Captioning Hardware Needed
|
18
|
11
|
4
|
1
|
Captioning Devices Needed
|
34
|
28
|
12
|
4
|
Audio Hardware Needed
|
18
|
11
|
4
|
1
|
Audio Devices Needed
|
18
|
11
|
4
|
2
|
Once the required equipment
pieces were estimated for each theater type, they could be multiplied by their
individual unit costs. For captioning
equipment used with digital cinema systems, unit costs are based on retail
prices (and any associated installation costs) provided to the Department by
manufacturers of captioning equipment via telephone interviews or available on Web
sites or brochures.[24] These costs are
generally lower for digital equipment than unit cost information provided in
response to the 2010 ANPRM, but not appreciably different for analog equipment.
Multiple
companies sell digital closed captioning equipment and theaters have the
freedom to choose which technology best fits their needs. Because of this, the analysis makes estimates
based on price quotes from multiple sellers and averages the costs of the
dominant technologies. Digital closed
captioning equipment is available from the Rear Window® system;
[25] the CaptiView™ system by Doremi Cinema, LLC; and Ultra
Stereo Labs (USL), Inc.’s closed caption infrared system. The unit costs for
the single required hardware (and any accompanying software update) needed per
screen to transmit the captions and the costs for a single individual receiving
device (of which multiple are required per screen, see Table 13 for estimated number of
devices per theater) are listed in Table below:
|
Technology
|
Digital Captioning Hardware Cost
(one needed per screen)
|
Digital Captioning Individual Device Costs
(multiple per screen/theater may be needed)
|
Digital Audio Description Hardware Cost
(one needed per screen)
|
Digital Audio Description Individual Device Costs
(multiple per screen/theater may be needed)
|
|
Doremi's CaptiView
|
$690
|
$430
|
$625
|
$125
|
USL*
|
$1,057
|
$479
|
$0
|
$69
|
* USL
technology can be used with two different devices (a cup-holder held viewer and
glasses). This figure is an average of
the two (cup-holder viewer and glasses, $443 and $514, respectively). In addition, USL captioning hardware can be
used for audio description – therefore there are no additional hardware costs.
Unit costs for analog captioning equipment are
similarly based on retail prices (and any associated installation costs)
provided to the Department by manufacturers of captioning equipment via
telephone interviews or available on Web sites or brochures. Unlike digital captioning equipment, there is
currently only one commercially-available product—the Rear Window® Captioning
system (“RWC”) developed and marketed by WGBH—that enables analog systems to
display closed captions to moviegoers on individual captioning devices (Table 15)
|
Technology
|
Analog Captioning Hardware Cost
(one per screen needed)
|
Analog Captioning Device Costs
(multiple per screen/theater may be
needed)
|
Analog Audio Description Hardware Cost
(one per screen needed)
|
Analog Audio Description Device Costs
(multiple per screen/theater may be
needed)
|
| Rear
Window[26]
|
$7,113
|
$95
|
$467
|
$106
|
Using these unit costs, the average, incremental cost of
purchasing the necessary equipment to transmit digital captions is estimated to
be approximately $38,547 for a Megaplex theater, $26,839 for a Multiplex,
$10,586 for a Miniplex and $3,198 for a Single Screen theater (Table 16). These costs are estimated based on paying
full retail prices and do not incorporate any possible discount pricing or subsidies.
These costs also do not incorporate any of the costs of transitioning from
analog to digital projection systems. The proposed rule does not require that a theater transition to digital
projection.
| Cost Per Digital Theater**
|
Doremi's CaptiView
|
USL
|
Average
|
Megaplex – 16+ screens
|
$40,540
|
$36,554
|
$38,547
|
Multiplex – 8-15 screens
|
$27,880
|
$25,798
|
$26,839
|
Miniplex
– 2-7 screens
|
$10,920
|
$10,252
|
$10,586
|
Single Screen – 1 screen
|
$3,285
|
$3,111
|
$3,198
|
Note: These costs include the costs to purchase and
install: (1) captioning hardware and/or software (one per screen); (2) individual
devices for captioning (ranging from 4 for Single Screens to 34 for
Megaplexes); (3) additional hardware, if needed, to transmit audio description
(from none to one device per screen); and (4) additional audio description
listening devices (ranging from 2 for Single Screens to 18 for Megaplexes).
*Because unit
costs for captioning and audio description equipment have either remained
steady or declined between 2010 and 2013, they are assumed to remain constant
from 2013 (when last researched) to 2015, when the final rule is expected to be
published.
**These costs
are based on the average theater characteristics presented in Table 2 regarding
the average number of screens and seats.
The per-theater costs for Miniplexes and Single Screens using
analog systems are notably higher. (Note: As discussed in Section 4.4 above, the RA assumes that
all Megaplexes and Multiplexes have transitioned to digital projection systems).
Using the unit costs for Rear Window’s
analog closed captioning technology, the average, incremental cost of
purchasing the necessary equipment to transmit captions is estimated to be
approximately $31,884 for a Miniplex and $8,172 for a Single Screen theater (Table 17). Again, the costs are estimated based on
paying full retail prices and do not incorporate any possible discount pricing
or subsidies.
|
Cost Per Analog Theater
|
Rear Window
|
Megaplex – 16+ screens **
|
NA
|
Multiplex – 8-15 screens **
|
NA
|
Miniplex – 2-7 screens
|
$31,884
|
|
Single Screen – 1 screen
|
$8,172
|
Note: These costs include the costs to purchase and
install: (1) captioning hardware and/or software (one per screen); (2) individual
devices for captioning (ranging from 4 for Single Screens to 12 for Miniplexes);
(3) additional hardware, if needed, to transmit audio description (from none to
one device per screen); and (4) additional devices for audio description
(ranging from 2 for Single Screens to 4 for Miniplexes).
*Because unit
costs for captioning and audio description equipment have either remained
steady or declined between 2010 and 2013, they are assumed to remain constant
from 2013 (when last researched) to 2015, when the final rule is expected to be
published.
**Note that the RA assumes that all
Megaplexes and Multiplexes have transitioned to digital projection systems.
Given the assumed 15-year term of the proposed rule,
movie captioning and audio description equipment will require replacement one
or more times during this period. Public
comments to the 2010 ANPRM, as well as information provided by manufacturers of
captioning equipment, suggest that captioning hardware is expected to last
about 10 years, while captioning and audio description listening devices are
likely to last four to seven years before requiring replacement. The Initial RA thus incorporates a
“replacement schedule” for captioning hardware and devices into the cost model,
which assumes that all captioning hardware will be replaced 9-11 years after
initial installment, and all captioning devices will need replacement after four
to seven years of use.
Moreover, within these respective replacement schedules
for captioning hardware and devices, it is likely that more equipment will need
replacement near the mid-point of the replacement timeframe (as opposed to
“earlier” or “later” years). The Initial
RA's cost model thus employs the following weighted percentages in the
respective rolling replacement schedules for captioning and audio description hardware
(Table 18) and devices (Table 19):
|
Year After Purchase
|
Percent of All Hardware Needing Replacement
|
|
Hardware Replacement -- 9th Year
|
15%
|
|
Hardware Replacement --10th Year
|
70%
|
Hardware Replacement --11th Year
|
15%
|
|
Year After Purchase
|
Percent of All Hardware Needing Replacement
|
|
Device Replacement -- 4th year
|
15%
|
|
Device Replacement -- 5th year
|
35%
|
|
Device Replacement -- 6th year
|
35%
|
|
Device Replacement -- 7th year
|
15%
|
In practice, these replacement schedules for captioning
hardware and devices mean that, in any given regulatory year after the fourth
year, some proportion of captioning equipment is being replaced. Which captioning hardware and devices are
being replaced in any particular year (and for which movie theaters) simply
follows a consistent pattern depending on the year in which the equipment was
originally installed/placed in service.[27]
Note that Miniplex and Single Screen theaters have
negative growth rates—i.e., declines—in contrast to the positive growth rates
experienced by Megaplex and Multiplex theaters.
Going forward, the ratio of theaters at the time of replacement was
applied to account for theaters that may have closed since purchasing the
hardware and devices and have no need for replacements.
Information provided by captioning equipment vendors
and other industry sources suggests that operation and maintenance (“O&M”)
costs for captioning equipment will be relatively modest. Captioning hardware, which is typically
mounted high on a wall in a movie auditorium (or otherwise placed in the
projection booth), is unlikely to be tampered with, or accidently broken by,
movie patrons or theater staff.
Captioning devices, on the other hand, are more prone to potential wear
and tear by virtue of their use by individual movie patrons. Thus, it is expected that captioning devices
will require occasional cleaning or minor maintenance by theater staff. Captioning equipment companies also noted
that repair of such equipment is rare.
For the most part, if captioning equipment breaks down, the answer is
replacement rather than repair. (Such
replacement costs are covered by the replacement schedule for captioning
equipment discussed above). Repair costs
for captioning equipment are thus expected to be de minimus.
The rule will require that at least one person at the
theater be able to provide patrons with closed captioning devices and audio
description listening devices and direct patrons on the equipment’s use. This requirement can most easily be met by
expanding the training for those persons who will already be required to be
on-site to manage or oversee overall operations and/or the start of the exhibition
of the movies. In addition, staff is
already required by theaters to distribute assistive listening devices when
requested by patrons, and direct patrons on the use of those devices. It is reasonable to assume that the same
staff member would provide assistance with the closed captioning devices and
audio description listening devices as well.
A separate staff with ADA expertise is not required. The costs of this part of the rule will
include any additional training time and any time spent providing and
collecting devices and demonstrating their use, if needed.
The Initial RA uses a value equivalent to 3 percent of
all the captioning and audio descriptive equipment owned by the theater to
capture the afore-discussed minimal operations and maintenance cost and
incremental increase to staff time, costs of adding information that captioning
or audio description is available when preparing communications regarding movie
offerings, and other potential increases in administrative costs. These costs are annual. This 3 percent is a factor commonly used in
construction and equipment maintenance (see the Regulatory Impact Analysis of
the Final Revised Regulations Implementing Titles II and III of the ADA (Sept.
15, 2010)).
In dollar terms, operations, maintenance, and training costs
for analog theaters are estimated on an annual basis to average from a low of
$245 for Single Screens to a high of $957 for Miniplexes; for digital theaters’
operations, maintenance and training costs are estimated to average from a low
of $96 for Single Screens to a high of $1,156 for Megaplexes (Table 20).
|
Digital Theater Type/Size
|
Average First Year Initial Capital for
Digital Theater
|
Average O&M costs – 3% of Capital costs
|
Average First Year Initial Capital for Analog
Theater
|
Average O&M costs – 3% of Capital costs
|
Megaplex
|
$38,547
|
$1,156
|
NA**
|
NA**
|
Multiplex
|
$26,839
|
$805
|
NA**
|
NA**
|
Miniplex
|
$10,586
|
$318
|
$31,884
|
$957
|
Single Screen
|
$3,198
|
$96
|
$8,172
|
$245
|
*Since unit
costs for captioning and audio description equipment have either remained
steady or declined between 2010 and 2013, they are assumed to remain constant
from 2013 (when last researched) to 2015, when the final rule is expected to be
published.
**Note that the RA assumes that all Megaplexes and Multiplexes have
transitioned to digital projection systems.
The Department is presenting these estimates for operations,
maintenance, and training and seeking public comment.
The rule does not propose
any additional reporting of recordkeeping by covered entities to be available
or submitted to Federal agencies.
In addition to all the unit costs, theater characteristics,
and other inputs specified with greater detail that are critical to the
estimation, the analysis also requires certain other assumptions. The RA seeks to make conservative
assumptions, which err on the side of leading to higher costs, in the absence
of more robust information. These
assumptions include:
· All newly constructed
theaters will use digital exhibition processes, not analog.
· Those theaters that still project
analog film in 2015 are assumed to remain analog. (This is considered a “conservative”
assumption because costs for analog captioning are significantly higher than
for digital captioning.)
· Analog theaters are assumed
to make their equipment purchases at the end of the fourth year (2018), just
before compliance is required.
· Since the number of Miniplex
and Single Screen theaters is declining, the number of theaters that purchase
equipment in the procurement year is based on the number of theaters that are
expected to be in business the following year.
In other words, if a theater expects to go out of business, we assume
they will not make the investment in purchasing the captioning technology the
year before they close.
· In the absence of more
detailed information, the model assumes that two percent of all analog theaters
are already providing captioning and audio description.[28] (In 2015, this
amounts to around 35 Miniplex and Single Screen theaters and about 100 screens
total; in 2018, those figures changed to 32 theaters and 89 screens.)
· Unit costs for captioning
and audio description are assumed to remain constant from 2013 (when last
researched) to 2015, when the final rule is expected to be published. Since unit costs for the equipment surveyed
have either remained steady or declined between 2010 and 2013, this assumption
may likely overestimate at least some equipment costs. Note also, that this assumption means that
per-theater costs to purchase equipment are the same for 2013 and 2015, all
other factors being equal.
· All theaters will comply
with the rule, and no theater will assert that it does not need to comply with
this ADA obligation because compliance would result in an “undue burden.” The ADA provides that covered entities need
not comply with a requirement if doing so would result in a fundamental alteration or undue burden. 42 U.S.C. 12182(b)(2)(A)(iii). Since it is likely that at least some movie
theaters will not purchase the specified captioning and audio description
equipment because doing so would constitute an undue burden, this assumption
errs on the side of overestimating costs.
For Option 1, costs of compliance with this proposed rule
over a 15 year period from the date of publication of the final rule are
estimated to range from $177.8 million
to $225.9 million when using a 7 percent discount rate, and from $219.0 million to $275.7 million when
using a 3 percent discount rate. For
Option 2, costs of compliance over a 15 year period from the date of
publication of the final rule are estimated to
range from $138.1 million to $186.2 million when using a 7 percent
discount rate, and from $169.3 million
and $226.0 million when using a 3 percent discount rate. Table and Table show that these cost ranges depend on which baseline is used
regarding the extent which theaters have or will soon be providing closed movie
captioning and audio description as proposed in this rule, but independent of
this rulemaking.
| Discount Rate
|
TOTAL Costs - 15 Years
Under Baseline 1 Assumptions - One Screen Per-Theater
(millions $)
|
TOTAL Costs - 15 Years
Under Baseline 2 Assumptions – Litigation-Based
(millions $)
|
TOTAL Costs - 15 Years
Under Baseline 3 Assumptions – NATO Survey Based
(millions $)
|
|
7%
|
$225.9
|
$191.9
|
$177.8
|
|
3%
|
$275.7
|
$235.6
|
$219.0
|
|
Discount Rate
|
TOTAL
Costs - 15 Years
|
TOTAL
Costs - 15 Years
|
TOTAL
Costs - 15 Years
|
Under
Baseline 1 Assumptions - One Screen Per-Theater
|
Under
Baseline 2 Assumptions – Litigation-Based
|
Under
Baseline 3 Assumptions – NATO Survey Based
|
(millions
$)
|
(millions
$)
|
(millions
$)
|
7%
|
$186.2
|
$152.2
|
$138.1
|
3%
|
$226.0
|
$186.0
|
$169.3
|
Under Option 1, the estimated annualized costs of the
proposed regulation under each of the three possible baseline scenarios range from
$19.5 million to $24.8 million when
using a 7 percent discount rate, and from $18.3
million and $23.1 million when using a 3 percent discount rate. Under Option 2, the estimated annualized costs
of the proposed regulation under each of the three possible baseline scenarios
range from $15.2 million to $20.4
million when using a 7 percent discount rate, and from
$14.2 million and $18.9 million when using a 3 percent discount
rate. See Table 23 and Table
24.
[29]
|
Discount Rate
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
|
Under Baseline 2 Assumptions –
Litigation-Based
|
Under Baseline 3 Assumptions – NATO
Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$24.8
|
$21.1
|
$19.5
|
3%
|
$23.1
|
$19.7
|
$18.3
|
|
Discount Rate
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
|
Under Baseline 2 Assumptions –
Litigation-Based
|
Under Baseline 3 Assumptions – NATO
Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$20.4
|
$16.7
|
$15.2
|
3%
|
$18.9
|
$15.6
|
$14.2
|
The
Initial RA shows that estimated annual costs for this proposed rule will not
exceed $100 million in any year under any of three baseline scenarios, irrespective
of whether the Department adopts either option for analog screens. Annual costs for each year during the 15 year
expected term of the proposed regulation under Option 1 are depicted in Figure 3. In addition, detailed tables of annual costs
for each of the baseline scenarios are presented in the Appendix.
As seen in Figure 3, the greatest single-year
costs occur in the first year following the expected publication of the final
rule, and these costs range from approximately $50 million under the NATO Survey-Based
Baseline to just under $80 million under the One Screen Per-Theater Baseline.
[30] The concentration of
costs in the first year is due to the fact that the most recent published data
indicate that 88 percent of screens use digital projection and they will be required
to have the necessary equipment within six months of publication of the final
rule in order to provide closed captioning and audio description for movies that
come with those features from the distributor.
Under the scenario in which analog screens are required to comply within
four years (Option 1), the next largest single-year costs occur during the
fourth year after the expected publication of the final rule, which is the
compliance deadline for movie theaters with analog screens. If rulemaking is deferred for analog screens,
the next notable increase in costs occurs between years 9 and 11, as many
theaters may need to replace captioning hardware at those times.
A break-out of costs by category, as
shown below in Figure
5 for
Option 1 and Figure
6 for
Option 2, illustrates the fact that costs for digital captioning equipment are
the most significant costs for the proposed rule overall. This is due to the fact that 88 percent of
screens are currently exhibiting movies in digital format. Figure
5 and Figure
6 also
show that costs for audio description are a relatively small part of total
15-year costs for the entire rule.
The relative size of costs
for providing captioning versus audio description can be more clearly seen in Table 25. Under Option 1, costs for captioning are
projected to range from $140 million to $190 million over the 15 years,
depending on the baseline scenario, while costs for audio description under the
same baseline scenario and same timeframe are estimated to reach $37 million.
|
Costs
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
TOTAL 15 Year Costs
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
|
Under Baseline 2 Assumptions –
Litigation-Based
|
Under Baseline 3 Assumptions – NATO
Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
Total Captioning Costs
(Digital and Analog)
|
$188.9
|
$154.9
|
$140.9
|
Total Audio Costs
(Digital and Analog)
|
$36.9
|
$36.9
|
$36.9
|
TOTAL
Captioning
and Audio Description Costs
|
$225.9
|
$191.9
|
$177.8
|
*Totals may
not sum due to rounding
The RA estimates per-facility costs for each theater size type. The largest costs per year for any single
movie theater with digital projection would occur in the first year due to the
purchase of necessary equipment. The
first year capital costs for digital Megaplex theaters (those with 16 or more screens
and, for the purpose of the analysis, an average of 18 screens) are estimated
to average approximately $38,547, while comparable costs for digital single
screen theaters would average $3,198 (Table 26).
|
Digital Theater Type/Size
|
Per Theater Initial Capital Costs
(Using
Doremi Technology for Movies in Digital Format)
|
Per Theater Initial Capital Costs
(Using USL
Technology
for Movies in Digital Format)
|
Average Initial Capital Costs for Digital
Theater
(Average
of Different Technology)
|
Megaplex
|
$40,540
|
$36,554
|
$38,547
|
Multiplex
|
$27,880
|
$25,798
|
$26,839
|
Miniplex
|
$10,920
|
$10,252
|
$10,586
|
Single Screen
|
$3,285
|
$3,111
|
$3,198
|
Note: These costs include the costs to purchase and
install: (1) captioning hardware and/or software (one per screen); (2) individual
devices for captioning (ranging from 4 for Single Screens to 34 for
Megaplexes); (3) additional hardware, if needed, to transmit audio description
(from none to one device per screen); and (4) additional audio description
listening devices (ranging from 2 for Single Screens to 18 for Megaplexes).
*Because unit
costs for captioning and audio description equipment have either remained
steady or declined between 2010 and 2013, they are assumed to remain constant
from 2013 (when last researched) to 2015, when the final rule is expected to be
published.
Should the Department proceed under Option 1 and cover analog
screens, costs for analog theaters would be higher than those for digital
theaters for each type/size. The first
year costs for analog single screen theaters would total a little more than
$8,172 (Table 27). The first year costs for digital single
screen theaters would average $3,198 (Table 26). There are no costs for analog theaters under
Option 2.
|
Analog Theater Type/Size
|
Per Theater Initial Capital Costs
(Rear
Window Technology for Analog Films)
|
Megaplex**
|
NA
|
Multiplex**
|
NA
|
Miniplex
|
$31,884
|
Single Screen
|
$8,172
|
Note: These costs include the costs to purchase and
install: (1) captioning hardware and/or software (one per screen); (2) individual
devices for captioning (ranging from 4 for Single Screens to 12 for Miniplexes);
(3) additional hardware, if needed, to transmit audio description (from none to
one device per screen); and (4) additional audio description listening devices
(ranging from 2 for Single Screens to 4 for Miniplexes).
*Because unit costs for captioning and audio description
equipment have either remained steady or declined between 2010 and 2013, they
are assumed to remain constant from 2013 (when last researched) to 2015, when
the final rule is expected to be published.
**Note that the RA assumes that all Megaplexes
and Multiplexes have transitioned to digital projection systems.
A large number of Americans have vision or hearing
disabilities, to varying degrees. The
Department believes that this rule will benefit persons who are deaf or hard of
hearing or are blind or have low vision, as well as those with moderate hearing
loss, who do not currently have consistent access to movie theaters that
exhibit movies with closed captioning and audio description. Many individuals with hearing loss have difficulty
discriminating among competing sounds in movies and understanding what it is they
hear, even if they can hear those sounds.
Sounds from other patrons can also interfere with the ability of a
patron with partial hearing loss to understand all the dialogue in a
movie. Other individuals have difficulty
understanding what is being said if the actors speak with accents or have poor
enunciation, and those patrons who rely even partly on lip reading will miss some
dialogue because they cannot always see the actor’s face. Individuals with hearing loss, who have some
level of improved hearing comprehension aided by hearing aids, middle ear
implants, and cochlear implants, may also experience the same difficulty
discriminating among competing sounds in the movie environment.
[31]
The individuals
who will
directly benefit from this
rule are those persons with hearing or vision disabilities who, as a result of
this rule, would be able for the first time to attend movies with closed
captioning or audio description in theaters across the country on a consistent
basis. Individuals who will indirectly benefit from this rule are
the family and friends of persons with hearing and vision disabilities who
would be able to share the movie-going experience more fully with their friends
or loved ones with hearing and vision disabilities.
The benefits of this rule
are difficult to quantify for multiple reasons, including the following: (1)
the Department has not been able to locate robust data on the rate at which
persons with disabilities currently go to movies shown in movie theaters, (2)
the fact that the number of persons with disabilities who will newly go to
movies will change, (3) the number of persons with disabilities who will go to
movies more often will change, (4) the number of persons who will go to the
movies as part of a larger group that includes a person with a disability will
change, and (5) the number of persons with disabilities who would have gone to
the movies anyway but under the rule will have a fuller and more pleasant
experience will also change—all of which will change by an unknown amount. In addition, the Department does not
know precisely how many movie theaters currently screen movies with closed
captioning and audio description, or how many people with hearing or vision
disabilities currently have consistent access to movie theaters that provide
closed captioning and audio description.
Finally, the Department
is not aware of any peer reviewed academic or professional studies that
monetize or quantify the societal benefit of providing closed captioning and
audio description at movie theaters.
Data on movie-going patterns
of persons who are deaf or hard of hearing or are blind or have low vision is
limited, making estimations of demand very difficult. However, numerous public comments suggest
that many persons who are deaf or hard of hearing or are blind or have low
vision do not go to the movies at all, or attend movies well below the national
average of 4.1 annual admissions per person, because of the lack of auxiliary
aids and services that would allow them to understand and enjoy the movie.
Though we cannot confidently
estimate the likely number of people who would directly benefit from this
proposed rule, we have reviewed data on the number of people with hearing or
vision disabilities in the United States.
The Census Bureau estimates that 3.3 percent of the U.S. population has
difficulty seeing, which translates into a little more than eight million
individuals in 2010, and a little more than two million of those had “severe”
difficulty seeing.
[32] At the same time, the Census Bureau estimates
that 3.1 percent of people had difficulty hearing, which was a little more than
7.5 million individuals in 2010, and approximately one million of them having
“severe” difficulty hearing. Not all of these people would benefit from this
proposed rule. For example, some
people’s hearing or vision disability may not be such that they would need
closed captioning or audio description. Some
people with hearing or vision disabilities may not use the equipment for a
variety of reasons, including finding the equipment uncomfortable to use. Some people with hearing or vision
disabilities may already have consistent access to theaters that screen all
their movies with closed captioning and audio description. And some theaters may not provide closed
captioning and audio description for all their movies because it would be an
undue burden under the ADA to do so. Meanwhile,
some people with hearing or vision disabilities would not attend public
screenings of movies even if theaters provided closed captioning and audio
description simple because they do not enjoy going out to the movies—just as is
the case among persons without disabilities.
[33]
In recent years, a large
number of movie theaters have already invested in equipment to provide closed
captioning and audio description. As
noted earlier in this Regulatory Assessment, NATO estimates that 53 percent of
digital screens are already captioning and audio description enabled. Therefore, a large number of persons with
hearing or vision disabilities may already have access to movies screened with
captioning and audio description. The
Department considered using the data on the number of already accessible movie
theaters to estimate benefits, but notes that this figure would not necessarily
translate into an estimate that about half (or 53 percent) of persons who are
deaf or hard of hearing or are blind or have low vision are now benefiting from
captioning or audio description.There
are multiple reasons why, even if we accept this estimate of the current availability
of captioning and audio description, it does not translate into direct benefits
for all those who could benefit. These
reasons include the following: (1) only
some screens at some theaters may have closed captioning and audio description
capabilities and those may not be showing the movie the person wants to see;
(2) the theater may not be showing the desired movie with captions and audio
description on a convenient day and time; (3) the theater may be located much
farther away from where the person with a disability resides than other, less
accessible theaters, which may result in a decision not to go to a movie
theater at all; or (4) a person may live in a community that has theaters with
closed captioning and audio description capability, but may travel (for
vacation, to visit relatives, for work, or other reasons) to a community that
does not have theaters that are captioning and audio description enabled.
Meanwhile,
not only is the estimate of the number of who might directly benefit from the
proposed rule uncertain, but the individual benefits are not uniform because persons
who are deaf or hard of hearing or are blind or have low vision are likely to
benefit from this proposed rule in different ways and realize benefits in
amounts. The type and amount of benefits
can depend on personal circumstances and preferences, as well as proximity to
movie theaters that otherwise would not offer captioning or audio description
but for this proposed rule. Some persons
with vision and hearing disabilities have effectively been precluded from going
to movies at theaters because the only theaters available to them did not offer
closed captioning or audio description, offered open captioning but only at
inconvenient times (such as the middle of the day during the week), or offered
captioning or audio description for only a few films and not for every
screening of those films. For these
persons, the primary benefit will be the ability to see movies when released in
movie theaters along with other movie patrons, which they otherwise would not
have had the opportunity to do. They
will have the value of that movie-going experience, as well as the opportunity
to discuss the film socially at the same time as the rest of the movie-viewing
public. The amount of benefits
experienced by a person with a hearing or vision disability who previously had
no access to a theater that provided closed captioning or audio description at all
its screenings will be different than the amount experienced by a person with a
hearing or vision disability who previously had access to a theater that did
consistently provide closed captioning and audio description at its
screenings. In addition, the amount of
benefits from this rule experienced by a person who cannot follow a movie at
all without the assistance of closed captioning is likely to be greater than
the amount of benefits experienced by a person who can follow parts of a movie
without the assistance of closed captioning.
There is a social value in
movie viewing for many people, not just an entertainment value. As noted above in Section 1, movies are a part of our
shared cultural experience, “water cooler” talk, and the subject of lunch-time
conversations. The Supreme Court
observed over 60 years ago that motion pictures “are a significant medium for
the communication of ideas” and “may affect public attitudes and behavior in a
variety of ways, ranging from direct espousal of a political or social doctrine
to subtle shaping of thought which characterizes all artistic expression. The importance of motion pictures as an organ
of public opinion is not lessened by the fact that they are designed to
entertain as well as to inform.”
[34] When individuals who are deaf or hard of
hearing or blind or have low vision have the opportunity to attend movies that
they can actually understand because of the availability of captions or audio
description, they are exposed to new ideas and gain knowledge that contributes
to the development of their communication and literacy.
As previously mentioned, some
persons with vision and hearing disabilities may already have access to some
movie theaters with captioning and/or audio description capabilities, but that
access may be limited to only some locations, theaters, and times. Some of these people may be patronizing movie
theaters now, but less often than they otherwise would, and less often than
they would like, if movie captioning or audio description were available consistently
across all theaters. These people may
see more movies and/or save time they currently must spend monitoring those few
accessible theaters or showings and perhaps additional time coordinating trips
to the movie with family and friends. If
all theaters are accessible to those who are deaf or hard of hearing or blind
or have low vision, then some persons will now have greater choice among multiple
locations and can make choices based on other criteria such as location, times,
and other amenities, just as Americans without these disabilities already do.
In addition
to the
direct beneficiaries of the
proposed rule discussed above, others may be indirect beneficiaries of this rule. Family and friends of persons with these
disabilities who wish to go to the movies together as a shared social
experience will now have greater opportunities to do so. More adults who visit elderly parents with
hearing or sight limitations would presumably be able to take their parents on
outings and enjoy a movie at a theater together, sharing the experience as they
may have in the past. The Department
received numerous comments from individuals who are deaf, hard of hearing,
blind, or have low vision in response to its 2010 Advance Notice of Proposed
Rulemaking on Movie Captioning and Video Description in Movie Theaters, 75 FR
43467, (July 26, 2010) (2010 ANPRM), describing how they were unable to take
part in the movie-going experience with their friends and family because of the
unavailability of captioning or audio description. Many individuals felt that this not only
affected their ability to socialize and fully take part in family outings, but
also deprived them of the opportunity to meaningfully engage in the discourse
that often surrounds movie attendance. Parents
with disabilities also complained that they could not answer their children’s
questions about a movie they saw together because the parents did not
understand what had happened in the movie.
There
is also an equity and distributional benefit of this proposed rule, as some
areas are more likely to have theaters with captioning and audio description
capabilities than others. As noted in
the NPRM, it is the Department’s understanding that persons who live in
communities served only by smaller regional movie theater chains are far less
likely to have access to captioned and audio described movies than individuals
with disabilities who live in California, Arizona, or any of the major cities
with theaters operated by Regal, Cinemark, or AMC.
[35] Thus, it is possible that more urban areas,
or certain cities or states, may have greater accessibility than others, creating
or exacerbating geographical differences in opportunities.
Moreover, while not formally
quantified, it is fully expected that this guarantee of access to movies
screened at movie theaters for individuals with hearing or vision impairments
will spur some level of new demand for movie attendance and, therefore, lead to
increased box office receipts. Unfortunately, there is little data on the
demand for movie-viewing in places of public accommodation by persons who are
deaf or hard of hearing or blind or have low vision, and as such preparing
robust estimates of the increase in movie theater attendance is difficult. We seek public input on this issue.
Because the proposed rule
will be setting specific standards for effective communication at movie
theaters, it should also lead to a decrease or near elimination of confusion
regarding what accommodations are required by movie theaters. The current ADA title III regulation does not
contain explicit requirements specifying how movie theaters should meet their
effective communication obligations, and this is one of the reasons behind the
multiple private lawsuits filed throughout the country. Setting explicit requirements at the national
level will lead to harmonization across the country.
And finally, there are
additional benefits of the proposed rule that relate to equity and fairness
considerations generally. See Exec. Order 13563 § 1(c)
(underscoring the importance of agency consideration of benefits “that are
difficult or impossible to quantify, including equity, human dignity, [and]
fairness”). The Department expects that
the proposed regulation will allow for better integration of persons with
disabilities into the American social mainstream. Indeed, several individuals with disabilities
who commented on the ANPRM noted that they had not attended a movie theater in
decades—or, for some, during their entire lifetimes—because the lack of
auxiliary aids and services makes the movie unintelligible. Other commenters noted that movie theaters’
common practice of exhibiting captioned or audio described movies only at
off-peak days and times made them feel like “second class citizens.”
The most significant benefits of the rule relate to issues of fairness,
equity, and equal access, all of which are extremely difficult to monetize, and
the Department has not been able to robustly quantify and place a dollar value
on those. Regardless, the Department
believes the non-quantifiable benefits justify the costs of requiring
captioning and audio description at movie theaters nationwide.
The
Department considered multiple alternatives for this rulemaking. Among those
weighed most heavily for the proposed rule are the two discussed below. (Annual estimates are provided in the Appendix.)
Requiring only 50 Percent of Screens to Have Closed Captioning and Audio
Description
The Department considered proposing limiting the
requirement for closed captioning and audio description to only 50 percent of
movie screens at each theater. This
alternative was discussed in the July 26, 2010, ANPRM. Because the ADA requires places of public
accommodation “to ensure that no individual with a disability is
excluded, denied services, segregated or otherwise treated differently than
other individuals because of the absence of auxiliary aids and services, unless
the entity can demonstrate that taking such steps would fundamentally alter the
nature of the good, service, facility, privilege, advantage, or accommodation
being offered or would result in an undue burden,” 42 U.S.C.
§12182(b)(2)(A)(iii), it would be
inappropriate to only require access to 50 percent of movies being shown. After considering public comment and additional research, the
Department has determined that it is not feasible for movie theaters to meet
their ADA obligation to provide equally effective communication to patrons with
hearing and vision disabilities, unless they have the capacity to show the
movies that are available with captions and audio description at all showings
when those same movies are available to patrons without disabilities. Unless a movie theater showed every movie on
two screens in comparable auditoriums at all times—one screen showing
the captioned and audio described version and the other showing the same movie
without captions and audio description—the Department is concerned that a 50 percent requirement
would regularly lead to the circumstance where a movie theater would have a
captioned or audio described movie, but would have no screen available on which
to show it because all the appropriately equipped auditoriums would be otherwise
in use.
The Department considered whether
it would be possible for movie theaters to meet their effective communication
obligations by switching movies into auditoriums equipped to show movies with
closed captions and audio description when a patron with a hearing or vision
disability needed those accessibility features.
But, the Department’s research indicated that the business agreements
regarding movie exhibitions limit this type of flexibility. Movie theaters regularly negotiate with film
distributors regarding which auditoriums in a theater with more than one screen
will show which films. Generally, if a
film is expected to be very popular, it will open in the largest auditorium or
in several auditoriums within the same complex.
As the popularity decreases, the film will be moved from larger
auditoriums to smaller auditoriums and from multiple auditoriums to a single
auditorium. The timing of such moves
will vary from theater to theater and from film to film.
Those theaters that do have the
flexibility to switch auditoriums upon request to provide closed captioning or
audio description would have other added costs associated with changing the
auditoriums for showings. Costs could
include the additional employee time and resources needed to physically switch
the movie from one auditorium to another, as well as potential lost ticket
sales if a more popular movie is displaced into a much smaller theater that
sells out faster. Additionally,
switching auditoriums to allow use of captioning or audio description equipment
may result in auditorium changes for other patrons after they had purchased
tickets and are possibly already seated.
This would result in an inconvenience to many patrons, including the
possibility that the switch would result in a different viewing experience than
expected when purchasing a ticket due to differing auditorium sizes and comfort
levels.
The Department also believes that
this alternative would carry a much higher litigation risk. Patrons with disabilities would not have any
way of assessing whether the failure to show a particular movie with closed
captions and audio description was because the theater was failing to comply
with its obligations under the regulation to provide these auxiliary aids and
services or because that particular movie was not available with closed
captions or audio description. Whether a
theater had the capacity to move a film to accommodate a patron with a
disability and should have done so upon request, or whether the theater did
everything to meet its obligations under the regulation, would become murky and
create confusion that could result in an increased risk of litigation.
Finally, this alternative favors larger movie theaters
and disadvantages single screen theaters, which are more likely to be small
businesses. Under a 50 percent
requirement, at least one auditorium at every theater must have closed
captioning and audio description capabilities.
Thus, single screen theaters would see no reduction in costs under this
alternative.
As such, the Department has rejected this alternative
due to concerns that requiring only 50 percent of screens to have closed
captioning and audio description capabilities would not comply with the ADA
itself, that this approach would require substantial changes to the movie
theater business model, that the initial perceptions that this approach would
have substantially lower total costs are actually misleading, and that this
approach would not address in any meaningful way the concerns for small
business single screen theaters.
The discounted total costs for the 50 percent
compliance alternative are displayed in the Table
28 and Table
29 below. Total costs for this
alternative range from $101.9 million to $117.5 million under Option 1 and
$76.8 million to $92.4 million under Option 2 when using a 7 percent discount
rate. These costs, however, do not take
account of the potential administrative costs and burdens and potential loss of
revenue discussed above.
|
Discount Rate
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$117.5
|
$108.9
|
$101.9
|
3%
|
$144.4
|
$134.3
|
$126.0
|
|
Discount Rate
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$92.4
|
$83.8
|
$76.8
|
3%
|
$112.8
|
$102.7
|
$94.4
|
Compliance by Analog Theaters Required in Two
Years
The Department considered providing
theaters with analog screens two years after the rule’s publication date to
become compliant, as opposed to the six months compliance date provided for
digital screens. This delay was
considered
for analog movie
screens because such a large number of theaters are in the midst of transitioning
to digital cinema, that additional time might be necessary. In addition, the delayed compliance date
would allow small theaters that remain analog more time to obtain the necessary
resources to purchase the equipment to provide closed captioning and audio
description.Table 30 below presents the 15 year,
discounted costs under this alternative.
These costs, which range from $189.4 million to $237.5 million under a 7
percent discount rate, are higher than the total costs for the proposed rule.
|
Discount Rate
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
TOTAL 15 Year
Costs
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$237.5
|
$203.5
|
$189.4
|
3%
|
$286.5
|
$246.4
|
$229.8
|
As previously discussed, the movie theater industry is
currently undergoing significant changes, among them is the near elimination of
analog films for exhibition. Small
theaters that still have analog projection are more likely to have fewer
financial resources than other theaters. At the same time, smaller theaters are
facing other market pressures, evidenced by an average annual decline of 4.2
percent in their numbers in recent years (see Table 11).
Due to the uncertainty surrounding the future of
analog film and the market pressures that small analog theaters currently face,
the Department rejected this alternative.. As discussed earlier, the Department is now
proposing two options for analog screens: Option 1— a four year compliance
date; or Option 2— deferral of application of the requirements of the rule to analog
screens until a later date.
This Initial
RA estimates the costs and benefits of the proposed rule for revising the ADA
title III regulation concerning movie captioning and audio description. Using industry data on theater
characteristics and manufacturer’s prices (see Section 4 for details), the Initial RA
estimates that under Option 1, total costs for all theaters during the entire
15 years following the publication of the final rule will likely range from $177.8 million to $225.9 million when
using a 7 percent discount rate, and from $219.0
million to $275.7 million when
using a 3 percent discount rate. Under
Option 2, total costs for all theaters during the entire 15 years following
publication of the final rule will likely range from
$138.1 million to $186.2 million
when using a 7 percent discount rate, or from
$169.3 million to $226.0 million
when using a 3 percent discount rate. These
range of cost estimates depend on the assumptions used regarding the extent to which
theaters are or soon will be providing closed movie captioning and audio
description as proposed in this rule, but independent of this rulemaking (see Section
4.2 for details on the baseline
scenarios), as seen in Table
31 and Table
32.
|
Discount Rate
|
TOTAL Costs - 15 Years
|
TOTAL Costs - 15 Years
|
TOTAL Costs - 15 Years
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
|
Under Baseline 2 Assumptions –
Litigation-Based
|
Under Baseline 3 Assumptions – NATO
Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$225.9
|
$191.9
|
$177.8
|
3%
|
$275.7
|
$235.6
|
$219.0
|
|
Discount Rate
|
TOTAL Costs - 15 Years
|
TOTAL Costs - 15 Years
|
TOTAL Costs - 15 Years
|
Under Baseline 1 Assumptions - One Screen
Per-Theater
|
Under Baseline 2 Assumptions –
Litigation-Based
|
Under Baseline 3 Assumptions – NATO
Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$186.2
|
$152.2
|
$138.1
|
3%
|
$226.0
|
$186.0
|
$169.3
|
These estimated costs
consist of (1) the purchase of hardware and/or software to send the captions to
individual captioning devices; (2) the purchase of individual captioning devices
as per the scoping requirements specified in the rule; (3) periodic costs to
replace hardware, software and devices; (4) annual operations and maintenance
costs to cover any storage and management, training, and other recurring costs;
(5) any additional hardware costs to transmit audio description to individual
devices; and (6) the costs to purchase additional individual audio description listening
devices, if needed. These costs are
estimated over a 15 year period, beginning in the first year after publication
of the final rule for digital theaters (2015), and in addition, beginning in
the fourth after publication of the final rule for analog theaters (2018) under
Option 1.
Under Option 1, the
estimated annualized costs of the proposed regulation under each of the three
possible baseline scenarios range from $19.5
million to $24.8 million when using a 7 percent discount rate, or from $18.3 million to $23.1 million when
using a 3 percent discount rate. Under
Option 2, the estimated annualized costs of the proposed regulation under each
of the three possible baseline scenarios range from
$15.2 million $20.4 million when using a 7 percent discount rate,
or from $14.2 million to $18.9 million
when using a 3 percent discount rate. (See Table
33).
[36]
|
|
7% Discount Rate
|
3% Discount Rate
|
|
Baseline 1 Assumptions
(One Screen Per-Theater)
|
Baseline 2 Assumptions
(Litigation-Based)
|
Baseline 3 Assumptions
(NATO Survey Based)
|
Baseline 1 Assumptions
(One Screen Per-Theater)
|
Baseline 2 Assumptions
(Litigation-Based)
|
Baseline 3 Assumptions
(NATO Survey Based)
|
Costs
(million $)
|
Option 1 – Four Year Compliance for Analog Theaters
|
|
$24.8
|
$21.1
|
$19.5
|
$23.1
|
$19.7
|
$18.3
|
Option 2 – Deferred Rulemaking for Analog Theaters
|
$20.4
|
$16.7
|
$15.2
|
$18.9
|
$15.6
|
$14.2
|
Benefits
|
The
proposed rule would address the discriminatory effects of communication
barriers at movie theaters encountered by individuals who are deaf or hard of
hearing or are blind or have low vision. By ensuring that movie
theaters screen those movies that are produced and distributed with the
necessary auxiliary aids and services—captioning and audio description—and
that theaters provide the individual devices needed to deliver these services
to patrons with these particular disabilities, this rule would afford such
individuals an equal opportunity to attend movies and follow both the audio
and visual aspects of movies exhibited at movie theaters. Although the
Department is unable to monetize or quantify the benefits of this proposed
rule, it would have important benefits. For example, it would provide
people with hearing and vision disabilities better access to the movie
viewing experience enjoyed by others; it would allow such persons to attend
and enjoy movies with their family members and acquaintances; it would allow
people with hearing or vision disabilities to participate in conversations
about movies with family members and acquaintances; and it would promote
other hard to quantify benefits recognized in Executive Order 13563 such as
equity, human dignity, and fairness.
|
Costs are estimated for each year
and are not expected to exceed $100 million in any year under either of three
baseline scenarios, regardless of whether the Department adopts Option 1 or
Option 2. The greatest single-year costs
occur in the first year following the expected publication of the final rule
and range from approximately $50 million under the NATO Survey-Based Baseline
to just under $80 million under the One Screen Per-Theater Baseline (see Figure
3
on page
38). Based on these estimates, the Department
concludes that its proposed rule for movie captioning and audio description, as
currently drafted, does not represent an economically “significant” regulatory
action.
[37]
The costs of the requirement
to provide captioning is significantly higher than the costs to provide audio
description (see Table
25 on page
42). Over 15 years, the costs to provide captioning
range from $140 million to $190 million, depending on the baseline scenario,
while the costs to provide audio description are estimated to reach $37
million.
As previously discussed, the
benefits of this rule are difficult to quantify for multiple reasons. Individuals who will directly benefit from this rule include
those persons with hearing or vision disabilities who, as a result of this
rule, would be able for the first time to attend and fully experience movies
with closed captioning or audio description in theaters across the country on a
consistent basis. Such access would allow these people
to attend and enjoy movies with their family members, friends, and
acquaintances, and enable them to participate in conversations about movies
with other individuals. If all theaters are
accessible to those who are deaf or hard of hearing or blind or have low
vision, then some persons will now have greater choice among multiple locations
and can make choices based on other criteria such as location, times, and other
amenities, just as Americans without these disabilities already do.
Though we cannot confidently
estimate the likely number of people who would directly benefit from this
proposed rule, we have reviewed data on the number of people with hearing or
vision disabilities in the United States.
The Census Bureau estimates that 3.3 percent of the U.S. population has
difficulty seeing, which translates into a little more than eight million
individuals in 2010, and a little more than two million of those had “severe”
difficulty seeing.
[38] At the same time, the Census Bureau estimates
that 3.1 percent of people had difficulty hearing, which was a little more than
7.5 million individuals in 2010, and approximately one million of them having
“severe” difficulty hearing. In
addition, there are an unknown number of
indirect
beneficiaries of this rule. These
indirect beneficiaries are those family and friends of persons with these hearing
and vision disabilities who wish to go to the movies as a shared social
experience who will have greater opportunities to do so as a result of this
rule.
The most significant benefits of the rule, however,
relate to issues of fairness, equity, and equal access, all of which are
extremely difficult to monetize, and the Department has not been able to
robustly quantify and place a dollar value on those. Regardless, the Department believes the non-quantifiable
benefits justify the costs of requiring captioning and audio description at
movie theaters nationwide.
Sensitivity Analysis
The Department was able to
find robust data regarding the costs of purchasing and installing closed
captioning and audio description equipment, the number of theaters in the
country and their total number of screens, the expected growth (and decline)
rates of movie theaters by type, and a few other critical variables. However,
it has not found concrete data to estimate operations and maintenance costs for
closed captioning and audio description equipment or the administrative or
training costs associated with the requirements of this rule. No substantive comments with data on these
costs were received in public comments to the NPRM either.
Therefore, the Department
has conducted a sensitivity analysis with two alternative rates—5 percent and 8
percent—for calculating O&M costs, and is also asking for public comment on
these costs. These rates are percentages
of purchase costs and represent standard rates for O&M used by cost
estimators in construction and design/engineering, and were also used in the
Department’s Regulatory Impact Analysis of the Final Revised Regulations
Implementing Titles II and III of the ADA (Sept. 15, 2010).
[39]
Table
34,
Table
35, Table 36
and Table
37 present the total costs for the
proposed rule when using 5 percent and 8 percent of purchase costs to estimate
annual operations and maintenance. These
costs are somewhat higher than the total discounted 15-year costs which assume
a 3 percent for O&M costs. Those
costs range from $177.8 million to $225.9 million under Option 1 using a 7
percent discount rate(see Table
31).
However, if a 5 percent rate is used to calculate O&M costs, the
proposed rule’s total costs over 15 years (using a 7 percent discount rate)
range from $199.7 million to $247.8 under Option 1, depending on the
baseline. If an 8 percent rate is used to
calculate O&M costs, the proposed rule’s total costs over 15 years (using a
7 percent discount rate) range from $232.7 million to $280.8 under Option 1,
depending on the baseline.
|
Discount Rate
|
TOTAL 15 Year
Costs
(5% O&M)
|
TOTAL 15 Year
Costs
(5% O&M)
|
TOTAL 15 Year
Costs
(5% O&M)
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$247.8
|
$213.8
|
$199.7
|
3%
|
$303.9
|
$263.8
|
$247.2
|
|
Discount Rate
|
TOTAL 15 Year
Costs
(5% O&M)
|
TOTAL 15 Year
Costs
(5% O&M)
|
TOTAL 15 Year
Costs
(5% O&M)
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$204.3
|
$170.3
|
$156.2
|
3% |
$249.1
|
$209.1
|
$192.4
|
|
Discount Rate
|
TOTAL 15 Year
Costs
(8% O&M)
|
TOTAL 15 Year
Costs
(8% O&M)
|
TOTAL 15 Year
Costs
(8% O&M)
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$280.8
|
$246.8
|
$232.7
|
3%
|
$346.2
|
$306.2
|
$289.6
|
|
Discount Rate
|
TOTAL 15 Year
Costs
(8% O&M)
|
TOTAL 15 Year
Costs
(8% O&M)
|
TOTAL 15 Year
Costs
(8% O&M)
|
Under Baseline
1 Assumptions - One Screen Per-Theater
|
Under Baseline
2 Assumptions – Litigation-Based
|
Under Baseline
3 Assumptions – NATO Survey Based
|
(millions $)
|
(millions $)
|
(millions $)
|
7%
|
$231.5
|
$197.5
|
$183.4
|
3%
|
$283.8
|
$243.7
|
$227.1
|
When using a 5 percent rate
to estimate different operations and maintenance costs, annual costs never rise
above $80 million in any single year under the One-Screen Per Theater Baseline,
above $61 million in any single year under the Litigation-Based Baseline, or $53
million in any single year under the NATO Survey-Based Baseline. When using an 8 percent rate to estimate
operations and maintenance costs, annual costs never rise above $83 million in
any single year under the One-Screen Per Theater Baseline, above $63 million in
any single year under the Litigation-Based Baseline, or $55 million in any
single year under the NATO Survey-Based Baseline. (Detailed annual estimates are presented in
the Appendix.)
Consistent
with the provisions of the Regulatory Flexibility Act, the Department has also
carefully considered the likely impact of the proposed regulation on small
businesses in the movie exhibition industry.
See RFA § 605(b); Presidential
Memorandum, “Regulatory Flexibility Small Business, and Job Creation,” 76 FR
3827 (Jan. 21, 2011). The Department has determined that this
proposed rule will have a significant economic impact on a substantial number
of small businesses.
For motion picture theaters, small businesses
comprise the vast majority of firms in the industry. The current size standard for a small movie
theater business is $35.5 million dollars in annual revenue. In 2007, the latest year for which detailed
breakouts by industry and annual revenue are available, approximately 98
percent of movie theater firms met the standard for small business, and these firms managed approximately
53 percent of movie theater establishments.
[41] As noted
earlier, the Department is considering two options for analog screens. Option 1 would delay the compliance date for
analog screens for four years after publication of the final rule. Option 2 would defer rulemaking altogether
for analog screens until a later date. The
IRFA estimates for Option 1 the average initial capital costs per firm for
firms that display digital or analog movies. The average costs for small firms
were between approximately 0.7 percent to 2.1 percent of their average annual
receipts for firms with digital theaters, and between approximately 2.0 percent
to 5.7 percent of average annual receipts for firms with analog theaters. The Department has used the IRFA to examine
other ways, if possible, to accomplish the Department’s goals with fewer burdens
on small businesses.The vast
majority of theaters with analog screens are small businesses, and the
Department believes that both of the options for analog screens under
consideration in the proposed rule will result in fewer burdens on small movie
theater businesses with analog screens.
As noted earlier in this Initial RA prepared for this
rule (see Section 1), the Department’s title
III regulation implementing title III’s auxiliary aids provision reiterates the
obligation of covered entities to ensure effective communication with
individuals with disabilities and identifies, among other things, open
captioning, closed captioning, and audio recordings as examples of auxiliary
aids and services. 28 CFR
36.303(a)-(c). Recent technological
changes in the movie theater industry—including wide-spread conversion from
analog (film) projection to digital cinema systems—make exhibition of captioned
and audio-described movies easier and less costly than before. In addition, at this time nearly all first
run motion pictures released by the major domestic movie studios include closed
captioning (and to a lesser extent, audio description). Despite this, patrons who are deaf or hard of
hearing or are blind or have low vision are often shut out from the movie-going
experience and cannot fully take part in movie-going outings with family or
friends, join in social conversations about recent movie releases, or otherwise
participate in a meaningful way in an important aspect of American culture,
because movie theaters do not consistently show those movies with the captioning
or audio description.
The Department is thus
convinced that regulation is warranted at this time to explicitly require movie
theaters to exhibit movies with closed captioning and audio description at all
times and for all showings whenever movies are produced, distributed, or
otherwise made available with captioning and audio description unless to do so
would result in an undue burden or fundamental alteration.
The proposed rule for
captioning and audio description rests on the existing obligation of title
III-covered facilities—such as movie theaters—to ensure that persons with
disabilities receive “full and equal enjoyment” of their respective goods and
services, including, as needed, the provision of auxiliary aids and services
for persons who are deaf or hard of hearing or blind or have low vision. The proposed rule states that a movie theater
owner or operator is required to exhibit movies with closed captioning and/or
audio description for all screenings so long as the movie has been produced by
the movie studio or distributor with captioning or audio description (unless
doing so would result in an undue burden or fundamental alteration). The proposed rule imposes no independent
obligation on movie theaters to provide captions and audio description if the
movie is not available with these features.
The Department expects that
implementation of the proposed rule will lead to consistent levels of
accessibility in movie theaters across the country, and that patrons who are
deaf, hard-of-hearing, blind, or have low vision will be able to use captioning
and/or audio description equipment to better understand movies being exhibited
in all movies theaters.
The Regulatory Flexibility
Act defines a “small entity” as a small business (as defined by the Small
Business Administration Size Standards) or a small organization such as a
nonprofit that is “independently owned and operated” and is “not dominant in
its field.” For motion picture theaters (NAICS Code 512131), small
businesses comprise the vast majority of firms in the industry. The current size standard for a small movie
theater business is $35.5 million dollars in annual revenue.
The latest data that
includes detailed breakouts by industry and annual revenue are from the 2007
Economic Census.
[42] Data for Motion Picture Theaters (except
Drive-Ins) from the 2007 Economic Census is available on both the Small
Business Administration’s Web site and the Census Bureau’s American FactFinder
Web site.
[43]
Although both datasets are from the 2007 Economic Census, the
two datasets contain different estimates of the total number of Motion Picture
Theaters. Each dataset is organized to
have advantages over the other: the SBA dataset
includes a greater number of revenue categories, but the dataset from Census’
FactFinder separates firms that only operated part of the year from those that
operated all year. The SBA dataset also
has a larger proportion of firms in the lowest revenue categories than the
Census FactFinder dataset.
[44]
Given differences between
the two datasets, the calculations for this analysis have been prepared separately
using each dataset. For simplicity of
presentation, this IRFA presents the tables showing interim calculations (Table
38 and Table
41) using the dataset from
SBA’s Web site only. The table of summary
statistics, Table
42, includes estimates
calculated using both databases and presented as ranges. Discussions of the range of the rule’s
potential impact under Option 1 for small movie theater companies draw from
findings using both datasets.
In 2007, approximately 98
percent of movie theater firms met the standard for small business, and these
firms managed approximately 53 percent of movie theater establishments
(calculated using the dataset from SBA’s website).
[45] Data from the 2007 Economic Census and
downloaded from SBA’s Web site, report that 2,004 movie theater firms operated
4,801 establishments that year; of those 2,004 movie theater firms,
approximately 1,965 would meet the current SBA standard for a small business (Table 38). These 1,965 firms operated 2,566 establishments.
[46]
|
Number of firms
|
Number of establish-ments
|
Firms as %
of TOTAL
|
Cumulative total
|
Establish-ments
% of TOTAL
|
Cumulative total
|
Total Firms
|
2,004
|
4,801
|
100%
|
--
|
100%
|
--
|
Firms with sales/receipts/revenue less than $100,000
|
333
|
333
|
16.6%
|
16.6%
|
6.9%
|
6.9%
|
Firms with sales/receipts/revenue of $100,000 to
$499,999
|
703
|
712
|
35.1%
|
51.7%
|
14.8%
|
21.8%
|
Firms with
sales/receipts/revenue of $500,000 to
$999,999
|
318
|
339
|
15.9%
|
67.6%
|
7.1%
|
28.8%
|
Firms with
sales/receipts/revenue of $1,000,000 to $2,499,999
|
386
|
472
|
19.3%
|
86.8%
|
9.8%
|
38.7%
|
Firms with sales/receipts/revenue of $2,500,000 to $4,999,999
|
109
|
197
|
5.4%
|
92.3%
|
4.1%
|
42.8%
|
Firms with
sales/receipts/revenue of $5,000,000 to
$7,499,999
|
40
|
99
|
2.0%
|
94.3%
|
2.1%
|
44.8%
|
Firms with sales/receipts/revenue of $7,500,000 to $9,999,999
|
24
|
60
|
1.2%
|
95.5%
|
1.2%
|
46.1%
|
Firms with sales/receipts/revenue of $10,000,000 to
$14,999,999
|
23
|
106
|
1.1%
|
96.6%
|
2.2%
|
48.3%
|
Firms with sales/receipts/revenue
of $15,000,000 to $19,999,999
|
13
|
105
|
0.6%
|
97.3%
|
2.2%
|
50.5%
|
Firms with sales/receipts/revenue of $20,000,000 to
$24,999,999
|
6
|
50
|
0.3%
|
97.6%
|
1.0%
|
51.5%
|
Firms with sales/receipts/revenue of $25,000,000 to
$29,999,999
|
8
|
79
|
0.4%
|
98.0%
|
1.6%
|
53.2%
|
Firms with sales/receipts/revenue of $30,000,000 to
$34,999,999
|
2
|
14
|
0.1%
|
98.1%
|
0.3%
|
53.4%
|
Firms with
sales/receipts/revenue of $35,000,000+*
|
39
|
2,235
|
1.9%
|
100.0%
|
46.6%
|
100.0%
|
Source: Number of
firms and number of establishments from Small Business Administration,
Statistics of U.S. Businesses, Business Dynamics Statistics, Business
Employment Dynamics, and Nonemployer Statistics. http://www.sba.gov/advocacy/849/12162. (last
visited July 10, 2014). Downloaded from
SBA Web site December 2013.
As part of a larger movement
within the film producing industry, nearly all (if not all) film production is
moving to digital, and most movie theaters likely will convert to the digital
format. Because of the cost of
transitioning to digital, large firms are more likely to have already converted
to digital, or plan to do so soon. For
these same reasons, analog theaters are more likely to be small
businesses. At the same time, per screen
costs of captioning equipment are significantly higher for analog theaters than
for digital theaters.
While the first movie
theaters were facilities with a single screen and auditorium, in recent years
larger facilities are being built, some with a dozen or more auditoriums and
screens each capable of showing movies at the same time. Yet, at this time, many single screen
theaters remain open. The Initial RA
prepared detailed costs estimates, over time, using four theater size
categories based on data presented by the MPAA (see Section 4.3 of the Initial RA for
greater detail on these categories). To
estimate the costs to small businesses, this IRFA examined the percentages of small
businesses, the distribution of theaters and screens by theater size type, and
made estimations regarding the likely prevalence of small businesses among each
size type (see Table 39). No Megaplexes are expected to be small
businesses.
|
Theater Type
|
Projected
Number of Theaters in 2015
|
Annual Growth Rate
|
Likelihood of
Small Businesses
|
Megaplex – 16+
screens
|
718
|
2.0%
|
No small
businesses
|
Multiplex – 8-15
screens
|
1,893
|
2.0%
|
Some small businesses
|
Miniplex – 2-7 screens
|
1,500
|
-4.2%
|
Many small businesses
|
Single Screen – 1
screen
|
996
|
-4.2%
|
Nearly all small businesses
|
TOTAL
|
5,107
|
---
|
|
Source: Estimated using
data for 2008-2012 as in MPAA’s Theatrical
Market Statistics – 2012.
The proposed rule does not apply different requirements
to firms by size. It does, however, include
Option 1 which would delay the compliance date for movie theaters with analog
screens to four years after publication of the final rule (while theaters with
digital screens must comply within six months). Theaters with analog projection are
much more likely to be small businesses than theaters with digital projection.
While
this small business assessment necessarily draws on the Initial RA’s “main”
cost model, it also incorporates data specific to small businesses. As required by the Small Business Act and SBA
regulations, the cost model underlying the Initial RA’s small business
assessment uses SBA-defined small business size standards. The SBA data provided 18 different revenue
size categories, 12 of those categories for firms with estimated annual
receipts of less than the $35.5 million size standard for a small firm in this
industry (the dataset from Census’ FactFinder had 11 revenue categories). These 18 revenue size categories were consolidated
into four categories, with the following three meeting the SBA size standard
for a small business: Firms with
sales/receipts/revenue of (a) $499,999 and under; (b) $500,000-$4,999,999; and (c) $5,000,000-$35,500,000. One of the 18 revenue categories in the SBA
dataset (firms with sales/receipts/revenue of $30,000,000-$34,999,999) had only two firms
included. To prevent the release of
proprietary financial information, the SBA dataset only includes the number of
firms and their establishments in this category; it does not include any
information on sales/receipts or revenues.
Therefore, while the estimate of the total number of small businesses that
could be impacted by the proposed rule (in section 8.3, Small
Business Movie Theaters) includes these two firms,
the calculations for costs of compliance by revenue category in this section do
not.
This
SBA/U.S. Economic Census data, in turn, was incorporated into the Initial RA’s estimation
for impacts on small businesses. First,
receipt data was used to develop assumptions regarding the distribution of
“small businesses” among the four theater size types. The assignment of theater size type is
critical to the estimation because it determines the number of screens and,
therefore, total costs per establishment.
Using
the Initial RA cost model estimation of the number of theaters by size type in
2015 (Table 40), the IRFA distributed the
number of establishments of small business movie theater firms beginning with
all Single Screen establishments and then applied the remaining portion to
Miniplex and Multiplex establishments (
|
Theater Size
Type
|
Number of
Theaters
|
Percentage
|
Megaplex
|
718
|
14.1%
|
Multiplex
|
1,893
|
37.1%
|
Miniplex
|
1,500
|
29.4%
|
Single Screen
|
996
|
19.5%
|
TOTAL
|
5,107
|
100%
|
For
this distribution, Single Screen theaters made up 89.6% of establishments in the
smallest revenue category. The remaining establishments in this category were
assumed to be Miniplexes. All of the
establishments with receipts between $500,000 and $4,999,999 were assumed to be
Miniplex theaters. After allocating those theaters to the two smaller revenue
categories, the remaining Miniplex theaters estimated for 2015 were distributed
to the largest revenue category. Because
there were more theaters in the largest revenue category than the remaining
estimated Miniplex theaters, the other theaters in this revenue category were assumed
to be all Multiplexes (approximately 41 percent). These distributions are summarized in Table 41. These distributions were then used to
estimate the average cost per firm in each of the three consolidated small
business revenue categories.
|
Consolidated
Revenue Group[48]
|
Theater Size
Type
|
$499,999 and under
|
89.6% Single Screen, 10.4% Miniplexes
|
$500,000-$4,999,999
|
100% Miniplexes
|
$5,000,000 to $35,500,000
|
58.8% Miniplexes; 41.2% Multiplexes
|
Using
the average costs per theater developed in the Initial RA (see Section 4.11), we were able to calculate
the average costs per theater and per firm for the three consolidated revenue
groups ($499,999 and under; $500,000-$4,999,999; and $5,000,000-$35,500,000). Costs were first calculated on a
per-establishment basis, and then using the average number of establishments
per firm for each of the three consolidated revenue groups, translated into an
average per firm cost. This cost was
then compared to the average receipts per firm for that consolidated revenue
group.
The
resulting ratio of average costs to average receipts ranges from a low of 0.7
percent (for digital firms with revenues of $5,000,000 to $35,500,000) to a
high of 5.7 percent (for analog firms with revenues of $499,999 or less) (Table 42). The impact on firms with digital projection is
comparatively smaller than the impact on firms maintaining analog projection. The
ratio of average costs/receipts is estimated to range from 0.7 percent to 2.1
percent for all movie theater companies using digital systems. In contrast, the same ratio ranges from 2.0
percent to 5.7 percent for all firms using analog projection.
|
Cost
|
Firms $499,999 and under
|
Firms $500,000 to $4,999,999
|
Firms $5,000,000 to $35,500,000**
|
Average receipts per firm*
|
$188,384 to
$201,973
|
$1,471,549
to $1,484,995
|
$9,705,377
to $12,437,259
|
Average cost per theater*
|
$3,198 to $3,966
|
$10,063 to $10,586
|
$13,984 to $17,281
|
Average cost per firm*
|
$3,233 to $3,992
|
$12,539 to $14,454
|
$81,176 to $103,309
|
Ratio of average cost/receipts*
|
1.6% to 2.1%
|
0.8% to 1.0%
|
0.7% to 1.1%
|
|
Cost
|
Firms $499,999 and under
|
Firms $500,000 to $4,999,999
|
Firms $5,000,000 to $35,500,000**
|
Average receipts per firm*
|
$188,384 to
$201,973
|
$1,471,549
to $1,484,995
|
$9,705,377
to $12,437,259
|
Average cost per theater*
|
$8,172 to $10,638
|
$30,204 to $31,884
|
$43,449 to $54,673
|
Average cost per firm*
|
$8,263 to
$10,706
|
$37,638 to $43,534
|
$252,224 to
$326,844
|
Ratio of average cost/receipts*
|
4.1% to
5.7%
|
2.5% to 3.0%
|
2.0% to 3.4%
|
*The ranges
represent the figures calculated using the two datasets created from data from
the 2007 Economic Census, which breaks out data by revenue category (downloaded
from SBA’s Web site and the Census Bureau’s American FactFinder Web site,
respectively), but which differ slightly. Note that the composition of theater size
types also varies per revenue group depending on the dataset used, and
therefore the average cost per theater varies as well.
** Note that the calculations for this category using the dataset
downloaded from the SBA Web site do not include any data for the two firms in
the revenue category for firms with sales/receipts/revenue of $30,000,000-$34,999,999 because no data on annual receipts for those
two firms was included. The dataset
downloaded from American FactFinder had different revenue categories from those
downloaded from SBA’s Web site. To
estimate those firms meeting the SBA size standards using the dataset
downloaded from the American FactFinder Web site, all the firms with revenues
less than $25 million, and half of those with revenues from $25,000,000 to
$49,999,999 were counted as a way of estimating the number of entities that
fall under $35.5 million within that revenue category.
Note:
See Appendix for greater detail on calculations.
The
Department considered multiple alternatives for this rulemaking with a focus on
choosing the alternative that best balances the requirements of the ADA with
the potential costs to small business movie theaters. Among those alternatives weighed most heavily
for the proposed rule are the three discussed below. (Annual estimates are provided in the
Appendix.)
Requiring only 50 Percent of Screens to Have
Closed Captioning and Audio Description
The Department considered proposing limiting the requirement for closed
captioning and audio description to only 50 percent of movie screens in each
theater. This alternative was discussed
in the July 26, 2010, ANPRM. Because the
ADA requires places of public accommodation “to ensure that no
individual with a disability is excluded, denied services, segregated or
otherwise treated differently than other individuals because of the absence of
auxiliary aids and services, unless the entity can demonstrate that taking such
steps would fundamentally alter the nature of the good, service, facility,
privilege, advantage, or accommodation being offered or would result in an
undue burden,” 42 U.S.C. §12182(b)(2)(A)(iii),
it would be inappropriate to only require access to 50 percent of movies
being shown. After considering public comment and additional
research, the Department has determined that it is not feasible for movie
theaters to meet their ADA obligation to provide equally effective
communication to patrons with hearing and vision disabilities unless they have
the capacity to show the movies that are available with captions and audio
description at all showings when those same movies are available to patrons
without disabilities. Unless a movie
theater showed every movie on two screens in comparable auditoriums at all
times—one screen showing the captioned and audio described version and
the other showing the same movie without captions and audio description—the
Department is concerned that
a 50 percent requirement would regularly lead to the circumstance where
a movie theater would have a captioned or audio described movie, but would have
no screen available on which to show it because all the appropriately equipped
auditoriums were otherwise in use.
The Department considered whether
it would be possible for movie theaters to meet their effective communication
obligations by switching movies into auditoriums equipped to show movies with
closed captions and audio description when a patron with a hearing or vision
disability needed those accessibility features.
But, the Department’s research indicated that the business agreements
regarding movie exhibitions limit this type of flexibility. Movie theaters regularly negotiate with film
distributors regarding which auditoriums in a theater with more than one screen
will show which films. Generally, if a
film is expected to be very popular, it will open in the largest auditorium or
in several auditoriums within the same complex.
As the popularity decreases, the film will be moved from larger auditoriums
to smaller auditoriums and from multiple auditoriums to a single
auditorium. The timing of such moves
will vary from theater to theater and from film to film.
Those theaters that do have the
flexibility to switch auditoriums upon request to provide closed captioning or
audio description would have other added costs associated with changing the
auditoriums for showings. Costs could
include the additional employee time and resources needed to physically switch
the movie from one auditorium to another, as well as potential lost ticket
sales if a more popular movie is displaced into a much smaller theater that
sells out faster. Additionally,
switching auditoriums to allow use of captioning or audio description equipment
may result in auditorium changes for other patrons after they had purchased
tickets and are possibly already seated.
This would result in an inconvenience to many patrons, including the
possibility that the switch would result in a different viewing experience than
expected when purchasing a ticket due to differing auditorium sizes and comfort
levels.
Importantly, the Department also believes
that this alternative would carry a much higher litigation risk. Patrons with disabilities would not have any
way of assessing whether the failure to show a particular movie with closed
captions and audio description was because the theater was failing to comply
with its obligations under the regulation to provide these auxiliary aids and
services or because that particular movie was not available with closed
captions or audio description. Whether a
theater had the capacity to move a film to accommodate a patron with a
disability and should have done so upon request, or whether the theater did
everything to meet its obligations under the regulation, would become murky and
create confusion that could result in an increased risk of litigation.
Finally, this alternative favors larger movie theaters
and disadvantages single screen theaters, which are more likely to be all small
businesses. Under the 50 percent
requirement, at least one auditorium at every theater must have closed
captioning and audio description capabilities.
Thus, single screen theaters would see no reduction in costs under this
alternative.
As such, the Department has rejected this alternative
due to concerns that requiring only 50 percent of screens to have closed
captioning and audio description capabilities would not comply with the ADA
itself, that such a proposal would require substantial changes to the movie
theater business model, that the initial perceptions that this approach would
have substantially lower total costs are actually misleading, and that this
approach would not address in any meaningful way the concerns for small
business single screen theaters.
Compliance by Analog Theaters Required in Two
Years
The Department considered providing
theaters with analog screens two years after the rule’s publication date to
become compliant, as opposed to the six months compliance date provided for
digital screens. This delay was
considered
for analog movie
screens because such a large number of theaters are in the midst of transitioning
to digital cinema, that additional time might be necessary. In addition, the delayed compliance date would
allow small theaters that remain analog more time to obtain the necessary
resources to purchase the equipment to provide closed captioning and audio
description. The 15-year, discounted costs for this
alternative range from $189.4 million to $237.5 million under a 7 percent
discount rate, which are higher than the total costs for the proposed
rule.
Upon review of the
higher cost burden for firms still using analog projection and with
consultation from the Small Business Administration’s Office of Advocacy, and
as previously discussed, the Department is considering two alternative
options: (1) a four-year compliance date
for theaters with analog screens (Option 1); or (2) deferring compliance for
analog screens until a later date (Option 2).
In making the decision, the Department also took into consideration the
fact that those movie theaters that have not yet made the transition to digital
systems are more likely to be small businesses than those movie theaters that
are already exhibiting in digital format.
The Department also considered the fact that movie studios are in
the process of phasing out analog film, and it is anticipated that by 2015,
studios will not be producing analog prints of first run films. On the basis of this information, it appears
likely that movie theaters that rely on first run films for revenue will either
convert to digital or go out of business before the four year compliance date
(sometime in 2018 or 2019), and thus there will actually be many fewer analog
theaters that will need to comply with the rule if the Department proceeded
under Option 1. If the Department decides to adopt Option 2 for the final rule
and defer application of the requirements of the rule for analog screens, the
costs for small businesses will be significantly less since the rule will only
apply to small business digital theaters.).
Sony’s Entertainment Access Glasses and Audio
Description receivers are a recent entrant into the market; first available in
2012. Sony’s Glasses have multiple capabilities;
including providing closed captioning to the wearer. Because Sony’s Glasses are a new and
expensive product in a market when other less expensive and more established
options are available (including similar glasses from USL), they have not been
included in the main estimation.
Instead, preliminary cost estimates for Sony glasses for their
captioning capabilities are presented in this appendix
While the Sony hardware is only
$500, the glasses are retailing (in mid-2013) for $1,250 each (Table 45).
Telephone
interview with manufacturer, July 2013.
Sony’s Access Glasses device costs for the individual
glasses make the overall per theater average capital costs for the first year
notably higher than the average USL/CaptiView equipment capital costs (Table 46). This is particularly notable for Megaplexes,
for which Sony’s system would cost an average of $51,500 (mid-2013 retail
prices), approximately two thirds higher than the average of $31,176
USL/CaptiView (average of the two systems) captioning equipment.
If all theaters that still needed to purchase
captioning systems as estimated under baseline scenarios number 2
(Litigation-Based) and number 3 (NATO Survey Based) purchased Sony equipment,
the total captioning equipment costs for all theaters during the entire 15
years following the publication of the proposed rule would likely total between
$250.9 and $277.2 million when using a 7 percent discount rate, and between
$310.4 and $341.7 million when using a 3 percent discount rate, as seen in Table 47. The largest single year costs, which would
occur in the first year, would likely reach between $70.9 million and $83.5
million, depending on the baseline conditions.
