Digital cinema distribution and projection systems are gaining momentum, while the film industry is seeking new ways to pack theaters. AsPart 1 of this two-part series points out, the new formats not only offer film studios, distributors and cinema operators significant cost reductions, but also provide unrivaled viewing experiences that competing media will find difficult to match.
The growth of digital cinema system platforms, along with the latest generation of 3D stereoscopic technology, promises to provide cinema operators with unparalleled flexibility. By drawing on a wide range of digital entertainment and advertising content, movie houses will have unique presentation options and can customize their programming schedules based on a wide variety of factors.
Both Feet in the Water
The number of screens converted to digital in the United States increased more than sixfold last year, aided by consolidation and the collaboration of the top three U.S. theater chains: Regal, AMC and Cinemark. The trio has joined to formDigital Cinema Implementation Partners (DCIP).
The DCIP partners collectively own 36 percent of U.S. cinema screens, according to a report released by Screen Digest in April. Worldwide, the number of digital cinema screens grew 253 percent last year, from 848 to 2,996, doubling between the end of the first and second halves of the year.
TheTechnicolor Digital Cinema (TDC) project is still in beta testing but gathering affiliates.
The trend among multiplexes in the United States and the United Kingdom toward switching to digital formats is a strong signal that the “toe-in-the-water” days of testing the new technology are over, suggests the Screen Digest report.
“This is great for cinema for a couple of reasons,” notedScreen Digest senior analyst David Hancock. “You couldn’t actually pirate it at first, but that can now be done — though it’s more difficult, and you can’t readily watch it at home.”
Cinema attendance is seeing steady growth, Hancock said. The transition to digital technology comes at a time when home entertainment is getting better, and the movie theater industry has to struggle to compete.
“Now digital cinema is raising the bar again — there’s a reason to go to the cinema,” Hancock added.
Moving Up and Out
“Several factors are driving the industry’s transition to digital cinema,” Bob Mayson, general manager and vice president atKodak Digital Motion Imaging, told TechNewsWorld.
“Major studios are releasing about 90 percent of all movies in digital prints, and smaller distributors are following their lead,” he pointed out. “The price of the systems has come down, and new business plans are making them more affordable. Also, alternative content — local language movies, documentaries, sports and music programming, 3D entertainment — is increasing in diversity and availability. Exhibitors aware of this are becoming more serious about digital investments.”
Commercial d-cinema screens in the United States experienced a growth rate of 506.6 percent between 2005 and 2006, observes Screen Digest’s report. This compares with 268.9 percent between 2004 and 2005, and only 9.6 percent the previous year. The rate of change is attributable, in large part, to an industrial scale rollout in the U.S.
Digital software and service providerAccessIT is driving this progress and has now exceeded 2,000 of the 4,000 installations the company set as its initial target.
“AccessIT’s 24/7 Network Operations Center monitors the transmission and receipt of the content via the satellite delivery so the theater manager does not have to deal with the logistics of physical delivery and ingest of the movie,” Chuck Goldwater, president of AccessIT’s media services group, told TechNewsWorld.
It does not take 16 hours to send a movie by satellite, Goldwater emphasized. AccessIT is delivering films every week to almost 160 sites where it has satellite systems installed.
“On average, it takes between four to eight hours to transmit a movie by satellite,” he explained. “There is an additional one to three hours of processing time when the file is received at the theater.”
The process takes place electronically and is managed by AccessIT’s Theater Command Center software. It is typically managed outside theater operating hours, so that the entire process requires no involvement by theater staff, he added.
The Business Case
Operational efficiency and the ability to provide unique premium content are digital cinema’s main business drivers.
“Most of the immediate benefits are in distribution costs, not increased revenue,”Digdia President Gary Sasaki told TechNewsWorld. “Stereoscopic screens have shown that they will bring in more revenue, but there are not enough of them yet.”
After exhibitors absorb the expense of converting to digital formats, the industry will see a distribution cost savings of 90 percent, he estimated. In the meantime, costs are actually higher because distributors must also handle film prints.
Digital film distribution “involves more than just getting bits to the theater,” Sasaki added. For security, there is a management system known as the “key delivery message.”
“The KDM locks the digital cinema package — the ‘bits’, if you will — to the specific equipment found in a specific theater, to be shown within a specific time window. All this is to prevent theft,” remarked Sasaki.
The KDM can be delivered through e-mail, USB (universal serial bus) stick or by other means. If a piece of equipment changes within a theater, the operator must have a new KDM. Europe’sCinemaNet is slightly different, as it appears to be aimed at independent screens, transporting content via asymmetric digital subscriber line (ADSL), he pointed out.
AccessIT’s vendor neutral system is 3D-ready and includes a Library Management Server (LMS) with a large storage array, an Ethernet switch, and dual high-end servers with AccessIT’s Theatre Command Center software (TMCC), said Bud Mayo, AccessIT’s president and CEO.
“Each auditorium gets a 2K DLP (digital light processing) digital cinema projector and a JPEG 2000 media player which is networked and managed by the LMS (LAN, or local area network, management system). The LMS is the single point of ingest for all deliveries of content, which may be by satellite or by hard drive manually. Connected to the LMS is AccessIT’s satellite VSAT motorized dish and receiver, which allows 24/7 monitoring of the system at AccessIT’s NOC (network operations center), which also provides help desk support,” Mayo told TechNewsWorld.
The operational advantages cinema operators garner through the use of digital systems include consistent, improved image quality; ease of scheduling; drag and drop functionality with full automation; and compiling and editing program offerings using keystrokes instead of splicing tape, according to Mayo.
“Seat utilization in theaters ranges from 10 to 15 percent, with highest attendance on weekends and holidays. Digital cinema offers alternative content choices such as those AccessIT distributes — faith-based movies, kidtoons, anime, concerts and sporting events — to fill seats that are otherwise empty. Also, 3D movies require a digital system platform,” he noted.
“These choices provide incremental revenues at the box office [and] concessions stands, and from advertising — all driven by increased attendance,” Mayo said.
Preventing Theft and Piracy
Improved security and a significant increase in piracy deterrence are other benefits, Mayo continued.
With digital satellite delivery, film content can be broadcast worldwide to theaters in every language simultaneously, eliminating the window between domestic and international distribution, and thereby reducing the demand for pirated DVDs and downloads.
Also, forensics tactics, such as watermarking, can trace a videotaped copy to the source theater screen and time of showing.
That said, “it probably does not make a lot of difference either way to the piracy problem unless someone figures out a really effective way of applying technology to counter camcording,” acknowledgedDodona Research analyst Karsten-Peter Grummit.
In the long run, the cost reduction will equal a substantial proportion of the cost of film prints.
Revenue gains will vary from territory to territory — depending, essentially, on the extent to which markets for films are distorted by current distribution practices,” he told TechNewsWorld.
Boon to Independents
Digital film technology continues to change the way films are made. Likewise, the technology lowers production costs and enables more independent filmmakers to enter the market. Digital cinema systems are spurring new collaborative viewing events and providing small independents greater opportunities to market and distribute their films.
Operating out of the Scottish Documentary Institute at the Edinburgh College of Art,Docspace has hosted interactive master classes that allow international documentary directors to communicate with geographically dispersed audiences at one screening, said founder Amy Hardie.
“The response from directors and audiences has been enthusiastic, welcoming the transformation of local communities to national and international communities — even if only for one day,” Hardie told TechNewsWorld.
South African actor and independent film producer Brendan Jack said his plan is to distribute only to digital projection sites.
“The footprints are growing bigger and should be substantial when we release in September. We have seen a few screenings on digital screens and it looks great,” he told TechNewsWorld.
Having previously played a central role in the production and distribution of “Crazy Monkey Presents: Straight Outta’ Benoni,” Jack and company are now working to promote and distribute their latest film, “Footskating 101.”
“That said, you still, obviously, need a product that people will want to see,” he added. “There are many films that sit on shelves, never seeing the light of day, and this will hopefully enable more storytellers’ voices to be heard.”
The Bottom Line
The main question still remains: Will digital cinema systems keep people going to theaters?
“Emphatically yes, because of the many advantages: clearer image and sound that doesn’t deteriorate; more choices aimed at target audiences to fill seats during times of minimal utilization; and ease of operation in a fully networked solution — the only one of its kind,” asserted AccessIT’s Mayo.
As with any major technology shift, many benefits are yet to be discovered or realized, Sasaki said.
“[Digital cinema] will probably enable some new business model that the industry does not yet fully appreciate. It will be interesting, for example, to watch how ODS (other digital stuff) plays out in the future when you have really good bandwidth to thousands of DC screens,” he added.
“You still need a good movie, however,” Sasaki concluded.