Cinema Expo 2006

As the global exhibition sector descends on Amsterdam, insiders say the digital cinema era finally has arrived.

LONDON -- When a maverick, media-shy filmmaker responsible for the biggest boxoffice hit of all time emerges from the shadows long enough to put his tech-savvy stamp of approval on a new way to screen movies, chances are he's going to draw a little attention -- exactly the response for which organizers of this year's Cinema Expo International are hoping.

As the keynote guest at this year's confab, set to begin Monday and conclude June 29 at Amsterdam's RAI Exhibition and Congress Center, James Cameron -- a perfectionist with a long history of incorporating cutting-edge technology into his work -- will send a clear message to the European exhibition sector: Digital cinemais the future, and anyone who fails to embrace it does so at his or her own peril. He is not the only Hollywood A-lister extolling the virtues of d-cinema.

"There's a brave new world out there, and some of the world's top directors are giving d-cinema their blessing," says Tim Richards, president and CEO of U.K. exhibitor Vue Entertainment. "George Lucas and Peter Jackson plan to shoot their next movies in digital 3-D."

While numbers for the global d-cinema market appear minuscule compared with Internet and cell-phone penetration figures that count millions and billions of subscribers, the technology is building steady momentum. Of the world's estimated 160,000 cinema screens, only 849 were digital by the end of 2005, according to Screen Digest. Still, that figure marked 150% growth from the previous year, an indication of the potential to go mainstream. About 17,000 new d-cinema screens are forecast to be in place by 2010.

"A few years ago, no one knew what to do about the market -- everything was vague," says Katharine Wright, research director at U.K.-based Dodona Research. "Now, because there are more (digital) films and more alternative content, the market is starting to take off. In five years, you'll see a big difference in the number of digital cinemas out there."

The consensus among European industry experts is that the U.K., the Benelux nations, the Scandinavian region, Italy, Germany and Spain will spearhead d-cinema. Among the local sector's biggest movers and shakers is the Luxembourg-based Utopia Group, which operates 100 theaters -- 30 of which have digital projectors -- in the Benelux nations and France.

"Our investment began 11?2 years ago," says Utopia CEO Nico Simon, a scheduled Cinema Expo panelist. "We're convinced that cinema is the best way for seeing movies, and digital is the future."

Along those lines, Belgium-based exhibitor Kinepolis -- which also operates theaters in France, Poland, Spain and Switzerland -- began to invest in d-cinema technology in 1993.

One of the most radical European d-cinema initiatives has been kick-started by the U.K. Film Council, which established the Digital Screen Network to digitize 240 British screens by this time next year. The council granted a three-year, $20 million contract to U.K.-based digital-services provider Arts Alliance Media to overhaul the theaters, of which the first 50 were completed in March and the next 50 are set to be finished by summer's end.

Norway's government is supporting the Kristiansand Digital Cinema Alliance, a consortium of exhibitors, distributors and technology companies seeking to distribute films digitally via fiber-cable networks. AAM, which recently forged a partnership with the KDCA, already has rolled out 10 digital screens in Norway.

Given the range of advantages offered by d-cinema, it is no wonder the European exhibition sector is ramping up its development. A digital film -- the content of which has been compressed, encoded, encrypted and stored on a computer -- is much lighter than its bulky, canned-celluloid analog counterpart. In addition, a digital movie cannot degrade and can be transmitted online via satellite or cable -- whereas the quality of film, which can get scratched, begins to decline after only two weeks of use.

At a time when film prints can cost $1,000-$1,500 apiece (and foreign-language copies $3,000 each because of subtitles), the price for a digital print can be as low as $200 -- making digital movies more cost-efficient and easier to show on as many screens as possible. In addition, digital projectors can be managed centrally, with no laborious manual work required.

But d-cinema's advantages are not limited to cost and quality.

Digital systems allow exhibitors to turn their theaters into multifunction venues that can transmit sports and other events, and theaters in the Vue and Utopia chains are offering live broadcasts of matches from the current men's World Cup soccer tournament.

Kate Cox, film marketing manager at U.K. exhibitor Cineworld, believes that d-cinema is so versatile that even tech-impaired devotees of art house titles will come to see its benefits.

"We frequently have European directors visiting to host Q&A sessions with their fans and admirers in the audience," she says. "With film, it was difficult for us to show clips of classics admired by these directors, (but) digital will enable us to do more such retrospectives."

Similarly, independent distributor Tartan Films notes that the lower cost of d-cinema benefits the company's investments in indie and foreign-language productions. "At the moment, we are able to release our films both in 35mm (film) and/or digitally," Tartan managing director Laura De Casto says.

John Hillcoat's Australian Western "The Proposition" is one of four films to be digitized as part of Tartan's recent deal with AAM.

European distributors also can broaden their options by screening digital 3-D movies. U.S.-based 3-D specialist Real D has supplied systems for films shown in digital theaters at Germany's Cinecitta Multiplex-Kino and Cinema-Filmtheater, as well as some Odeon houses in the U.K.

"We've gone beyond the gimmick of needing to wear red-and-green glasses that have been around for 100 years," Real D co-founder and chairman Michael Lewis says. "What we offer is a new way of telling a story."

Burbank-based Anthony Marcoly, executive vp distribution and acquisitions at Buena Vista International, believes that premium-quality 3-D will bring the magic back to cinema.

"If you can make your film look better on the screen, it's another way of differentiating your product -- and there are definitely going to be more opportunities to do so in the future," he says, adding that numerous Disney titles including 1993's "Tim Burton's The Nightmare Before Christmas," 2005's "Chicken Little" and the planned 2007 release "Meet the Robinsons" soon will be available for digital 3-D screenings in Europe.

The confidence expressed by European exhibitors and distributors can be attributed in part to the Digital Cinema Initiatives, a consortium of major U.S. studios that was established to standardize d-cinema technology requirements.

"The DCI standards were completed and approved in August 2005, and they ensure that distributors can provide film that can play on any DCI-compliant projection system," says Los Angeles-based Julian Levin, executive vp digital exhibition and nontheatrical sales at 20th Century Fox and a scheduled Cinema Expo speaker. "Digital's reliability still needs to be tested. You are competing with film, a technology that is 100 years old and has proven to be reliable anyway, so you need a new technology that is going to last 10-15 years because you can't upgrade or replace it every day."

AAM CEO Howard Kiedaisch believes that the DCI standards will make life easier for all concerned.

"With the DCI completed, everyone understands what the standards are," he says. "There isn't too much grayness in terms of technology."

Nonetheless, some European distributors and exhibitors are not thrilled about adhering to a system developed by Hollywood studios.

"There are still many issues to resolve, such as who is going to pay for all the equipment needed," says Steve Perrin, the U.K. Film Council's deputy head of distribution and exhibition.

Peter Wilson, chairman of the European Digital Cinema Forum's technical module, also voices concern.

"If it's the cinema or art house that does not show a Hollywood movie every day, it is hard to see if they'll get enough print fees to pay for the equipment," he says.

Simon explains the caution required as the European digital-cinema rollout begins in earnest.

"In Europe, we must not wait too long to allow outside developments to influence us," he says. "The U.S. majors have their place, but we need purely European business models because diversity (in content) is part of our strength."
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