Video | Business Headlines | Internet | Science | Scientific Ethics | Technology | Search


Digital cinema is moving but obstacles remain

Press Information for Immediate Release

At last, digital cinema is moving but big obstacles remain

A wave of 3D film releases in 2009 will see 20% of the world’s cinema screens converted to digital projection, according to a new report* from analysts Dodona Research, but serious doubts remain over when business conditions are likely to allow completion of the process with the conversion of the remaining four-fifths of screens.

In a new Digital Cinema Briefing report Dodona say there are currently close to 12,000 screens converted to digital projection worldwide, with 5,000 of these 3D enabled, numbers which will rise to 18,000 and 10,000 respectively by the end of this year – in time for the release of James Cameron’s Avatar. Further out, Dodona see scope for the number of 3D screens to continue to climb over the next few years, perhaps representing 20% of the 110,000 cinema screens worldwide by 2012. But beyond this the company is more sceptical, pointing to the fact that a wholesale shift to 3D on the part of the film production industry seems unlikely in such a short timescale, and to the apparent absence of an alternative driver of conversion.

For both film distributors and exhibitors running dual systems to accommodate both 35mm and digital film prints causes unwanted complications and makes costs higher than they would be using either technology alone. In particular, the significant cost and environmental benefits arising from replacing 35mm with digital technology are largely neutralised.

But while 3D offers a compelling business case, based on audience enthusiasm for the technology and the consequent ability to sell premium price tickets to pay for it, to date no such model has emerged to finance 2D conversion. Despite distributor contributions in the shape of virtual print fees, where distributors make a payment every time a digital print is substituted for a 35mm one, and new revenue streams from showing opera, popular music concerts and sporting events, cinema owners find it hard to justify replacing their 35mm projectors with more expensive digital equipment.

Tougher financing terms since the onset of the banking crisis last year make this doubly difficult, and have revealed the flaws in the business models put forward so far. Dodona observes, for example, that integrators – firms which finance, install and service equipment at the same time as running networks to distribute product to cinemas – do not yet appear to be making acceptable returns, or to be able to raise finance in sufficient quantities to roll out installations quickly. The five largest VPF deals integrators have struck with studio distributors potentially cover conversion of 35,000 screens, but out of these only around perhaps 7,000 installations have been completed.

In the end it seems likely that some movement in the financial goalposts will ultimately be necessary to kick start a rapid shift towards complete conversion, either in the shape of lower equipment prices or a bigger contribution from the distribution sector (in the long run distributors stand to make the biggest savings as it is they who today pay for thousands of costly 35mm film prints each year). Encouragingly, widespread suspicions that Sony’s recent deals with AMC, Regal and other circuits have been the result of big discounts, suggest that some of the preconditions for real progress are at last being met.

Equally, the report points out, the deals struck between AMC, Regal and Sony emphasise the early stage nature of the digital cinema equipment market. Until a few weeks ago Texas Instruments’ DLP technology almost completely dominated the market with more than 95% of installations. Adding the 10,000-plus screens of Regal and AMC to its order book gives Sony a potential installed base of projectors almost equal to that of Christie, Barco and NEC - the three Texas licensees – combined.

A similar battle is emerging in 3D. While the first mover and market leader, Real D, appears to have an unassailable lead in the important United States market, elsewhere in the world alternative products from Dolby, XpanD and MasterImage are likely to make a much stronger showing.

As report author Karsten Grummitt observes, “There has been so much discussion about digital cinema for so long that it is easy to forget that the commercial deployment of the technology is really still only beginning. Everything about this market is still to play for. Nothing is settled yet.”

*Digital Cinema Briefing £595 from Dodona Research


Notes to Editors

Dodona Research is a leading provider of information and independent analysis concerning the cinema industry worldwide. Our client list includes film distributors and exhibitors, financial institutions, government bodies, industry suppliers, real estate firms, consultants, advertising agencies and others, in over 50 countries.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Forest And Bird: Misinformation Circulating On Biodiversity Policy

Forest & Bird is concerned at misinformation circulating regarding a policy statement aimed at protecting New Zealand’s unique biodiversity. The National Policy Statement for Indigenous Biodiversity is being consulted on by the ... More>>


NIWA: Scientists Say Methane Emitted By Humans ‘vastly Underestimated’

NIWA researchers have helped unlock information trapped in ancient air samples from Greenland and Antarctica that shows the amount of methane humans are emitting into the atmosphere from fossil fuels has been vastly underestimated... More>>


SMC Expert Reaction: Record Dry Spells And Effects On Forests

With no rain forecast before Sunday, Auckland is about to break a record for the city's longest dry spell. Niwa says Auckland is likely to hit 40 consecutive days without rain this weekend . The upper North Island is seeing severe meterological ... More>>


Reserve Bank: Official Cash Rate Remains At 1.0 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2 percent mid-point of our target range. ... More>>


Science Media Centre: Novel Coronavirus Detected In China – Expert Reaction

The virus was detected after more than 40 people were hospitalised with pneumonia in Wuhan City, China and the outbreak traced to a large animal and seafood market. The Centers for Disease Control and Prevention reports that person-to-person transmission ... More>>


NZ First: Launch Of Parliament Petition To Remove Aluminium Dross

This afternoon to a crowd of over 100 people in Mataura -- Mark Patterson, New Zealand First List MP based in Clutha-Southland launched a parliamentary petition regarding the aluminium dross issue in Mataura, Southland. The petition asks that the House ... More>>