By Marty Shindler

I have been following digital cinema for nine years, during which time it has always been on the horizon, promising to change the way films are distributed and to provide theaters with alternative programming.

Recently I saw the latest in digital cinema technology at the Digital Cinema Lab, part of the Entertainment Technology Center of the University of Southern California.

The first presentation was Kodak’s prototype high-resolution Digital Cinema Projector based on the JVC 2048x1536 D-ILA chip. Unfortunately, much of the material was not color corrected, which cast a long shadow on the presentation. The image was rock steady and sufficiently bright, but the overall presentation was poor, and not typical of Kodak. I understand the prototype was sent back to Rochester for more work, and knowing Kodak, I expect they will get it right. It may just require some time and, of course, money.

The second demo, from Texas Instruments, was much better. The material was prepped correctly and it showed on the screen. Of particular note was the presentation of their 2K chip in what included, for select footage, a side by side comparison with the older DLP 1280 x 1024 chip. The 2K chip was noticeably better.

Producers, distributors, and exhibitors have different goals. The primary motivation for distributors is the savings that would be realized by not producing and shipping thousands of release prints.

Exhibitors on the other hand are primarily interested in getting people into seats. Spending $150,000 or more on a d-cinema projector is prohibitive when a 35mm projection system, with many bells and whistles, is generally less than $50,000. Why would the chains want to spend that kind of money when customers rarely ask what kind of projector is being used?

But d-cinema is getting closer, thanks to the efforts of three organizations.

The Digital Cinema Initiative, a collaboration of the major studios, was organized last year to set the standards for the eventual rollout of digital cinema. In addition to technical standards, the group is expected to develop and propose a business model that can work across the board. The former is feasible, but the latter seems to me to be much more difficult. Return on investment is a long-term, not short-term proposition.

The Digital Cinema Providers Group, a consortium of vendors that includes Texas Instruments, Barco, Christie Digital Systems, Dolby, QuVis and others, has been formed to represent the interests of the members, who have already made significant investments in d-cinema.

Exhibitors are represented by the National Association of Theater Owners. With the many bankruptcies that occurred in the past few years, this group appears to be spending only where a clear path to profitability can be found.

"On average, we operate on slim margins. Finding other ways to supplement that revenue base so we can keep ticket prices affordable is an important part of the business plan of our members," said John Fithian, president of NATO in a recent Associated Press article. He was referring to ads and other forms of pre-show programming.

Circuits are attempting to squeeze as much money out of their venues as possible using low-cost digital video projectors, with lower resolution than d-cinema units. Recently, theater chains have been showing commercials – with both video and film projectors – before the feature presentation. But this has become controversial, and class-action lawsuits have been by theater patrons alleging deceptive business practices and breach of contract.

However, Variety reports that exhibitors earned $250 million from pre-show ads in 2001. Furthermore, the Cinema Advertising Council projects 30% growth in cinema advertising this year, compared with 20% in 2002.

A recent Variety survey reported the following results:

1. Are there too many commercials before the film? Yes 97%. No 3%.

2. Have you ever been inspired to buy a product based on those commercials? No 98%. Yes 2%.

3. Do you find they are part of the theater-going experience or do you feel hostage to them? Hostage 97%.    Part of experience 3%.
4. Would you be willing to go to the Arclight [and] pay a couple of dollars more [to] not be subjected to them? No 100%. (The Arclight is an upscale theater in L.A. that charges more per head and offers very nice amenities. The LFCA held a part of its conference there last year.)   

The answers to the last question are very revealing. It’s fine to complain about the commercials, but people apparently do not want to spend more per ticket to avoid them. Premium pricing may not be as lucrative as some may hope.

Perhaps LF theaters and institutions that have been facing fiscal difficulties should consider some forms of advertising beyond simple sponsors’ thank-you slides. Courting advertisers that were germane to the institutions and their audiences would create less backlash. Emphasizing that the ads help keep ticket prices down would add to the positive spin.

The transition is underway. Where and when digital cinema gets rolled out on a broader basis remains to be seen. Nevertheless, with several organizations attempting to represent their members’ interests and to resolve differences with the other groups, d-cinema is moving along.

Copyright 2003 by Cinergetics, LLC. All rights reserved. Used by permission