by Bob Smith from Live from NAB
Leading members of the exhibition community took pains to make clear that until digital cinema equipment is standardized and business models between distributors and exhibitors are worked out, a wide-scale roll-out of digital cinema in theaters will not happen.
The cautionary words from exhibitors came amid indications that technology vendors looking to commoditize the exhibition industry — and thereby gain from an unorganized d-cinema rollout — are threatening to slow down and confuse the standardization process.
These and other issues were raised at the Society of Motion Picture and Television Engineers second annual digital cinema summit held Saturday at the National Association of Broadcasters convention.
“There are industry proponents that are companies that would very much like the standardization process to fall apart,” said John Fithian, president of National Association of Theater Owners, during an NAB ?state of the industry? address.
“We will fight very hard to have this transition happen in an organized fashion because the unorganized format means the quality of digital cinema is worse for everybody.”
Contributing to the confusion of the rollout is loose usage of the term ?digital cinema,? Fithian said. Lately ?digital cinema? has been mistakenly applied to endeavors that are not actually cinema quality presentations.
To combat rampant misperceptions about what is and what isn?t legitimate digital cinema, Fithian only half-jokingly coined a new term.
“?Other digital stuff? or ?ODS? is what I call what Kurt Hall and Regal CineMedia are doing (with low-resolution pre-show advertising),” Fithian said.
“It’s what Landmark and Microsoft are planning on doing (with low-quality independent film screenings).
There are very important and viable business plans for ?other digital stuff? — but I do not consider those efforts digital cinema.”
During his keynote address, Hall, who is president of Regal, concurred with Fithian and made clear that his company’s network of nearly 5,000 theater screens — currently exhibiting digital pre-show content — are not in fact screening at cinema quality resolution.
“We’re offering the new, more entertaining and high quality digital pre-shows, alternative digital programming and other businesses that can be integrated with or coexist with the higher quality digital cinema projectors when they are available,” Hall said.
Both executives made clear that since there will be improvements in resolution quality over time, any investment model pursued today could not withstand a future that renders those investments obsolete when the studios finally determine their initial resolution standard.
Hall and Fithian also noted that talks about fair d-cinema business practices had begun between the studios and theater owners and there is some evidence that distributors are planning to finance the transition.
“Studios stand to save between $800 million to one billion dollars per year in print costs and distribution with the transition to digital cinema,” Fithian said.
“Studios know that they have to finance this transition. I am encouraged that we have finally begun discussion for negotiations on the business issues after 3-4 years of jockeying and arguing with lawyers.”
By the end of this calendar year, Fithian expects that everything will be in place “to begin to look at the transition to digital cinema”
He warned that the transition may be a long, slow process because the equipment must be guaranteed to work and must be able to develop with advances in technology.
Hall said the more optimistic projections on timing for the transition are coming from manufacturers looking to create or expand product lines or certain companies looking to create new businesses.
“Given what has yet to be accomplished we believe the timing of any wide scale rollout will be at the longer end of the estimates currently talked about in the industry,” Hall said, alluding to the fact that it may take well over a decade before d-cinema comes into focus on the world’s 150,000 screens.
“We are working very hard to keep this process on track and I amm encouraged that it is,” Fithian said.
Still, beneath express hopes for orderly progress, both Fithian and Hall worried aloud that technology vendors were actively working behind the scenes to derail standardization efforts.
“We are clearly at the doorstep of the evolution of our business,” Hall said. “And like all revolutions that are driven by technological change, if we are not careful, rather than using the technology to create better business models we may find that our businesses have become commoditized by that technology.”