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Is A Digital Cinema Rollout Eminent?

Every so often, and certainly more often than is reported in the press, one hears that a new group or entity is planning to roll out digital cinema. Sometimes these announcements are timed for trade shows, where the proponents can make a big splash. Sometimes these announcements are timed for the release of a movie. The release of Star Wars: Episode II in April of 2002 got a lot of attention in the US press in the producer's quest to show the movie on digital cinema screens.

Those who have seen a movie digitally, or heard of cinemas buying digital motion picture projectors, may think that digital movie screens are already rolling out. In fact, this is not the case. Currently, there are 249 digital cinema screens in the world employing DLP Cinema™ projectors, 114 of which are in the Asia Pacific region. When compared in number to the approximately 150,000 commercial cinema screens worldwide, less than 0.2% utilize first-release-motion-picture-worthy digital technology. That hardly makes the current lot of digital cinema systems a trend, let alone a rollout. Recognizing this fact, digital cinema installations today are referred to as "trial systems". They are important test sites for proving new technology - but they are not the beginning of a rollout.

The real technology for a digital cinema rollout is yet to come. The Society of Motion Pictures Engineers (SMPTE), along with Digital Cinema Initiatives in Hollywood, are still in the process of finalizing industry specifications for systems worthy of a large scale rollout. The process for determining baseline specifications could take up to another year, and it will take a few years longer to finalize these specifications in worldwide standards. Recognizing this, the major Hollywood studios are extending their jointly financed Digital Cinema Initiatives through September of 2005. As it will take one to two years following the determination of final specifications to implement real products, digital cinema could be in trial mode for some years to come.

However, these facts only represent the technology side of digital cinema. The business side of digital cinema also has its own hurdles to cross. For business issues, we must first look to the US. North America is the clear economic market leader in world cinema, as it generates nearly 50% of the world box office with only a quarter of the world's screens, and a fifth of the world's admissions. Business issues that need to be addressed are the financing of equipment (as digital equipment costs several times that of film equipment), abating exhibitor concerns for early technology obsolescence that will require continued investment, and the need for a structured rollout so that small business owners are not disadvantaged. Some business issues cross-over with technology, such as concern for how secure digital cinema equipment will be certified, managed, and maintained. This dialog has begun in part, but much more work in this area remains.

Three years ago, in late 2001, many vendors began ramping up to provide digital cinema equipment to the world in preparation for the movie Star Wars: Episode II. The technology that Lucasfilm encouraged cinema owners to acquire at the time employed MPEG2 image compression having 8-bit color representation, and DLP Cinema™ projectors with image resolutions of 1280 x 1024 pixels - commonly referred to as "1.3K" projectors. Since that time, a higher resolution version of DLP Cinema™ became available with a resolution of 2048 x 1080 pixels, approximately 70% more pixels than the original version. This is called "2K" projection technology, of which some 40 are now installed in the Asia Pacific region. Most notable are the 20 Eng Wah installations throughout Singapore. Prototypes of 4K projectors are also being demonstrated. While the 4K prototype projectors do not use DLP? projection technology, they will be designed for use in the commercial cinema market. The industry has also raised the bar for color representation to 12-bit color, of which the newer projection technologies are capable of supporting.

Obviously, had exhibitors bought into 1.3K projectors 2 ? years ago, they would be sitting on technology that would be considered obsolete today. This is a humbling thought, and sits heavily on the minds of exhibitors today. Soon they will be encouraged to buy 2K projectors so that the 2005 release of Star Wars: Episode III can be displayed in digital. While 2K digital projection of this movie will surely provide excellent results, these same exhibitors will be thinking about the 4K projection technology that is appearing on the horizon, while thinking back to the push they experienced to buy now obsolete 1.3K projectors 2 ? years ago.

Film has been with us over 100 years. The maturity of the technology has allowed the movie exhibition business to operate on narrow margins that only allow cinema owners to upgrade their equipment every 15 years or so. In the US, where there are no public funds available for subsidizing digital cinema equipment purchases, exhibitors have to be cautious about the investments they make. Even where public funds are used for digital cinema purchases, caution must be used to leverage those funds in the best possible way. The UK Film Council's Digital Screen Network (DSN) project, which will install up to 250 2K DLP Cinema projectors, is a well-managed example of a publicly-funded project. The DSN seeks digital cinema installations today, but requires the vendor to upgrade the systems at a future date to industry standards, with the expectation that industry specifications will mature in the chosen time frame. (Karagosian MacCalla Partners is a senior technology consultant to the UKFC.)

Even if the major Hollywood studios were to offer subsidies for US equipment purchases, those subsidies could not be counted on for the eventual technology upgrades that will be required. Nor can the major Hollywood studios be counted on to subsidize equipment purchases outside the US. Thus, there is serious concern by exhibitors over the maturity of digital cinema technology, which follows their concern for the long-term financial impact of this transition. When coupling these concerns with the fact that a US-led rollout is needed to launch a stable transition to digital cinema world-wide, the stars do not bode well for a near-term worldwide rollout.

But then, you may have a different opinion. I'd like to learn your thoughts. Star Wars: Episode III will offer a classic example of a drive for digital cinema. Do you feel the pending release of this movie will cause a new wave of digital cinema installations? Write using the contact page of this site. I'll discuss the best of your responses anonymously in an upcoming issue.

*****
Published in the October 2004 issue of INS Asia Magazine

         

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