July 27, 2005 3:30 PM PDT

Slow start forecast for digital films

After years of haggling, Hollywood studios have settled on a technical standard for replacing the whirring film projectors in theaters with high-tech digital projection systems.

But it isn't going to happen quickly.

Major studios, along with representatives of theater chains and technology companies, announced at a Beverly Hills press conference on Wednesday that the technical part of their job is done. After finishing the core video specifications last year, the critical content-protection aspects are now also complete.

Now comes the business side, and testing. Negotiations are under way with theaters and funding agencies on ways to pay for installation of the new equipment, and a full-scale market test of the equipment will need to happen.

"We don't want to put a significant number of beta systems in the field, and then have to pull them back."
--Jerry Pierce, senior vice president for technology, Universal Pictures

"We don't want to do this wrong," said Jerry Pierce, Universal Pictures' senior vice president for technology. "We don't want to put a significant number of beta systems in the field, and then have to pull them back. It's going to be a slow start over the next year or so as we prove to ourselves that all the systems work together."

Over time, however, the standards that were announced Wednesday represent one of the biggest changes to happen to the moviegoing experience since the introduction of color.

The technology involved is not the digital production systems used to create movies like "Shrek" or the latest batch of "Star Wars" films.

Rather, it is aimed at distributing films in a digital format, so that studios can beam a copy by satellite or high-speed optical network to theaters instead of sending a physical copy of a film.

Today, studios typically pay more than $1,000 for each print, and sending a digital copy instead could cost closer to a few hundred dollars, saving a significant amount of money over time.

The next step will be finding ways to help theater owners pay for the transition to digital formats, which they say will largely benefit the studios financially. According to technology vendors, the equipment for each screen will cost about $75,000, though that figure will come down over time.

A series of complicated agreements are forming, typically in which an outside entity helps pay for the equipment, and then studios help pay that initial cost back with a small amount earmarked for the purpose with every film.

"Finding the business model for the rollout is the remaining big step in order for the transition to begin," said John Fithian, president of the National Association of Theater Owners. "We hope that will be completed by the end of this year."

Finally, the industry will have to test equipment from Texas Instruments, Sony, Barco and other vendors to make sure they are in fact wholly compatible and function flawlessly.

Theater owners are lobbying for a test in a single midsize market, where all theaters in an entire city would be converted to digital at the same time. Studios have agreed that there should be a beta process, but haven't signed on wholeheartedly to the theater owners' suggestion.

The equipment vendors say they're ready, and that they're already creating products that meet the new Hollywood standards.

"We're ready to go," said Glenn Kennel, director of technology development for Texas Instruments' digital cinema group. "This now paves the way to deployment.

 

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