SANTA MONICA, Calif. As many as eight compression schemes will face screen tests in April as they vie for inclusion in the final U.S. specification for digital cinema. The Digital Cinema Initiative (DCI), an effort of seven top U.S. studios, expects to choose one technology by the end of April.
Selecting a compression spec marks one of the last few hurdles before the DCI spec is finalized, probably in September. If studios and theater owners conclude negotiations on how to pay for the digital upgrade in a reasonable timeframe, the upgrades of an estimated 35,000 U.S. theaters could start before the end of the year or early in 2005.
Driving the shift is the promise of dramatically lowered costs for studios to distribute films. Studios could save as much as $800 million a year distributing movies over satellite or terrestrial nets, said Julian Levin, an executive vice president for Twentieth Century Fox, speaking at the Digital Hollywood conference here Tuesday (Match 30).
"The theater is the very last part of the entertainment sector to go digital," said Levin. "Each 35-mm print costs us about $1,500, compared to less than $300 to distribute a digital film," he said.
Digital distribution also will open the door to wrapping advertising content around feature films more easily and cheaply. And unlike 35-mm prints, digital copies will not be subject to scratches after two or three weeks of viewing, he added.
DCI won't reveal any of the compression contenders to be tested at a proof-of-concept system set up at the Pacific Theater in Hollywood, but suggests it includes many open standards such as MPEG, motion JPEG, wavelet and others. One not on the list is Windows Media Video that Microsoft Corp. has elected not to submit for consideration in the standard.
Submissions are still open for companies who want their compression schemes considered. Submissions need to include complete details regarding royalties and intellectual property rights associated with the technology.
About 50 theaters in the U.S. have already switched to digital using a mix of MPEG-2, wavelet and a proprietary compression scheme from Qualcomm Inc. Several theaters in Asia have also gone digital including 54 theaters in China which will add another 50 digital theaters this year, said Doug Darrow, business manager for Texas Instrument's Digital Light Projection (DLP) products which have become the de factor projection standard for DCI.
Beyond fixing on compression scheme, DCI still needs to sort out some business issues that will dictate the security configuration of servers used in the spec. Studios and theater owners also need to define a financing scheme under which studios will reimburse theaters for the costs of the new gear.
Some digital cinema backers hope the technology helps curb piracy of first-run movies. Levin said 70 percent of known piracy stems from copies made using camcorders in theaters, and 70 percent of those copies have been traced to theaters in a six block area of Manhattan.
Darrow said TI is exploring with unnamed third parties technology that could be added to its DLP system to effectively scramble the DLP image when viewed on a camcorder.
Kurt Hall, president and chief executive of Regal CineMedia Corp., said theater owners and moviegoers won't see substantial benefits from the shift. "Most people we tested didn't notice the difference or didn't care, so we won't be able to increase the number of viewers or the ticket costs. There isn't a lot of evidence there will be much benefit to us," Hall said.
The biggest benefit of the shift may be pouring the expected savings back in the pockets of studios in hopes it will lead to more movies and marketing, he added.
There are an estimated 135,000 movie screens worldwide. Digital gear will cost as much as $70,000 per screen mainly for the projectors, Levin estimated. Darrow said some 210 theaters worldwide now use its DLP projectors.