Financial Pact Set for Digital Cinema

By Robert Marich
   Oct. 2, 2008 – Four major studios and the biggest independent agreed this week to help fund a consortium of movie theater owners to convert to electronic digital film projection to replace mechanical projectors.
   Digital cinema has been stalled for a decade, because of questions if the technology was not ready, making movie companies unwilling to invest in what could be soon-obsolete equipment. Also, it wasn’t clear who would pay because it is theater equipment that saves money for film distributors, which no longer would have to supply bulky and costly film release prints.
   The money part is now fixed because distributors this week agreed to share some of their savings from elimination of release prints to theaters, thus co-financing installation of digital cinema equipment.
   Noted a Wall Street Journal article by Peter Sanders: “Digital projectors are also crucial to the rollout of equipment needed for three-dimensional movies, which Hollywood is increasingly planning to produce.” Earlier this year, the surprisingly success of youth music movie Hanna Montana/Miley Cyrus: Best of Both Worlds Concert electrified theater operators about the financial potential of 3-D movies.
   The film distributors signing on are Paramount Pictures, Twentieth Century Fox, Universal Pictures, Walt Disney and indie Lionsgate. Meanwhile, Warner Bros. and Sony Pictures/Columbia are in talks but not committed and, as usual, Sony is developing its own technology.
   Theater owners are working via a consortium called Digital Cinema Implementation Partners. DCIP includes biggies AMC, Cinemark and Regal Cinemas (largest U.S. circuit). The goal is to outfit 20,000 screens with digital projection, which is about half of U.S. screens.
   “Studio executives have embraced the technology, saying it offers a new viewing experience that’s compelling enough to coax people out of their living rooms and staunch declining theater attendance,” says a Los Angeles Times article by Dawn C. Chmielewski. “Indeed, Walt Disney Co., 20th Century Fox and DreamWorks Animation SKG each have committed to releasing upcoming animated films in 3-D.”
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