July 27, 2005

Major studios set digital movie standards

BEVERLY HILLS, Calif. (Reuters) - Hollywood's major studios
on Wednesday finalized technology standards for digital
projection systems in a first step toward a global roll-out of
networks that could revolutionize the way movies are shown.

Widespread installations of digital systems -- which
promise audiences sharper pictures and film studios lower
distribution costs -- are unlikely to occur until late 2006 or
early 2007, industry officials said at a news conference here.

Business plans covering how to pay for large deployment are
still being worked out between the studios and theater owners,
and theater owners want to see systems tested on a wide scale
before they commit to digital systems, officials said.

"This is an historic transition that is just beginning,"
said Bob Lambert, senior vice president of media technology and
development at The Walt Disney Co. .

The new standards cover "2K" and "4K" resolution, which is
a way to judge picture sharpness, and offer specifications for
digital compression, copy protection and packaging.

For audiences, new digital cinema systems offer the same,
crisp picture the 100th time a movie is projected as the first
time. By contrast, filmstrips get scratched each time they run
through a projector and picture quality suffers as a result.

Moreover, filmmakers are developing new three-dimensional
technology for digital cinema that is expected to enhance
action flicks, and the new digital networks allow live events
like music concerts to be beamed into movie theaters, which
could help boost theater revenues during slow periods.

For studios, digital cinema is expected to sharply lower
film distribution costs because they will not have to ship film
canisters to thousands of theaters. Instead, they will send
digital files via satellite or high-speed cable.

But who pays for the transition remains a key sticking
point. The cost to distribute a single film print can run from
$1,000 to $1,200, whereas a digital file can be copied,
protected against piracy and beamed around for $300.

Theater owners say studios will save so much on
distribution that they should pay, but studios want theater
owners to shoulder at least some of the costs.

Officials from Hollywood's six major studios all declined
to comment on financial matters and business models.

John Fithian, who heads the U.S.-based National Association
of Theater Owners, also declined to discuss business details.
But he did say his members, who operate more than 26,000 movie
screens globally, fully backed the setting of standards.

"We suffered chaos when digital sound systems were
implemented," he said.

When theaters switched from analog to digital sound years
ago, many technologies competed and several types of digital
sound systems had to be installed in each theater, which was
expensive for exhibitors and distributors.