Digital Cinema Systems Rollouts Announced

The much vaunted age of digital cinema projection — replacing current light projection methods with roots reaching back to a system created by France’s Lumiere brothers in 1895 — is a big step closer as Technicolor Inc. announced plans today to roll out at least 15,000 digitally equipped screens in the U.S. and Canada over the next decade – 5,000 possibly as soon as next year.

Technicolor, a film services provider and subsidiary of France’s Thomson, has reached nonexclusive agreements with DreamWorks, Sony Pictures Entertainment, Universal and Warner Bros. — and pending agreements with Twentieth Century Fox, New Line Cinema and the Weinstein Company — that call for the participating studios to pay a “virtual print fee” for screens equipped with Technicolor-designed digital systems. These studies account for $5.4 billion of the $7.2 billion total year-to-date box office revenue in North America in 2005.

Technicolor/Thomson is also in ongoing discussions with regional and national exhibition chains to finalize plans to begin the deployment of digital cinema installations in early 2006.

Thomson estimates that opportunities from the market for digital cinema services will be at least $1.5 billion per year and it aims for a 40 to 45 percent share of 36,000-screen U.S.-Canadian market. Current estimates of the total cost of installed digital cinema systems are in the $90,000 – 100,000 range per screen.

Just last week, a competing coalition led by AccessIT, a software firm, and Christie, a projector maker, announced that it hoped to install the first 150 digital projection systems of an eventual 4,000-screen rollout plan by Dec. 31. The coalition has signed distribution agreements with Disney, Fox and Universal.

“We expect all the studios [in the Technicolor announcement] to be part of our plans as well,” Bud Mayo, chief executive of AccessIT, told the LA Times.

The significance of these moves is twofold: Studios and theaters hope digital projection will help draw moviegoers back to theaters with crisp pictures that don’t fade or scratch with repeated playing. Theater attendance has declined since 2002 from 1.63 billion to 1.53 billion in 2004, according to the most recent statistics from the National Association of Theater Owners. Digital distribution is also expected to save studios millions of dollars spent to make and distribute film prints.

“We are pleased to be part of the Technicolor Digital Cinema rollout,” said Jim Tharp, Head of Distribution at DreamWorks. “The Technicolor business model makes the transition to digital cinema economically sensible. In addition, we believe that theatre owners and the movie-going audience will enjoy the vibrant picture and sound available through digital distribution as each subsequent showing will look as good as the first.”

The announcements come a few months after the July publication of the Digital Cinema Initiatives LLC (DCI) industry specifications for digital cinema. DCI is a partnership between Disney, Fox, MGM, Paramount, Sony Pictures Entertainment, Universal and Warner Bros. Studios formed in March 2002 to “establish and document specifications for an open architecture for Digital Cinema components that ensures a uniform and high level of technical performance, reliability and quality control.”