At the Movies: Digital Delivery Takes Off, Part 1
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By Andrew K. Burger
TechNewsWorld
05/22/07 4:00 AM PT
"These milestones demonstrate that we are solving critical issues for theater operators and that there's no barrier -- only advantages -- for embracing digital. We're well on our way to meeting our goal of 4,000 screens by the end of the year," said Chuck Goldwater, president of AccessIT's Media Services Group.
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It was a time-tested tactic during ancient Roman times for generals to embrace their adversaries and bring them into the fold when they represented significant threats to the Empire that they could not otherwise defend against.
A modern variation of this practice is becoming common across the media and communications landscape. Long-established industry leaders -- telecom providers; TV, cable or radio network operators; and film studios and distributors -- are increasingly embracing the profusion of emerging new digital media production and distribution technologies available in today's fast-changing media markets.
This is certainly the case in Hollywood, where new digital technologies and tech-minded upstarts are shaking up the film industry. However, persistent controversy over digital rights management and ongoing piracy problems are pulling major studios, their distribution partners and cinema operators in the opposite direction, making it difficult for them to fully embrace the fast-moving and elusive digital demon.
Distributors and exhibitors may have a winner on their hands, though. Preliminary indications suggest that a new generation of digital production, distribution and projection technologies have enough of a wow factor to reel in audiences as never before and keep the film industry going strong for years to come.
Source: Tech News World
http://www.technewsworld.com/story/57489.html
May 22, 2007
Coming Soon to a Theater Near You
The momentum behind the digital distribution model is building toward a rapid growth phase in the U.S. and around the world.
"Digital cinema promises a new world of programming flexibility, picture quality and image consistency," AMC Entertainment Group's Sun Dee Larson told TechNewsWorld. "It is expected to expand alternative, nontraditional theater programming, ultimately providing more choice to moviegoers."
AMC -- along with Cinemark USA and the Regal Entertainment Group -- is a member of Digital Cinema Implementation Partners (DCIP), a consortium of cinema operators that has joined with Universal Pictures and Warner Bros. 
to build out a nationwide digital cinema distribution network in the U.S.
So, how widespread are digital cinema platforms? "Not very," Dodona Research analyst Karsten-Peter Grummit told TechNewsWorld.
"At the start of this year, the U.S. exhibitor Carmike accounted for approximately half of all installations worldwide," he noted. "Until six months ago, it was possible to categorize all installations as 'experimental.' However, now serious deployment has started, we expect to see digital distribution become dominant in some territories within three to five years."
By current count, there are only in the neighborhood of 3,000 digital cinemas in the U.S. and a little over 1,000 screens outside, according to DigDia research analyst Gary Sasaki. These are so-called 2K screens, he noted. "There are a few hundred more 'digital screens' if you count older 1.3K screens. 2K screens are the minimum resolution for conforming to digital cinema today: 1,080 x 2,048," he explained.
That said, ongoing development, pilot tests and announcements such as the Universal, Warner, DCIP partnership indicate progress is likely to start accelerating sooner rather than later.
Even the paltry total of 3,000 U.S. screens "is somewhat remarkable, given that exhibition is a large, well established, and complex industry -- and there were no digital screens just a few years ago," Bob Mayson, general manager and vice-president of Kodak Digital Motion Imaging, told TechNewsWorld. "Now [that] the pace is increasing, a few companies -- including Kodak -- are gaining traction, and we expect continued growth."
A Tripartite Alliance
On March 8, Universal, Warner Bros. and DCIP announced plans to build out a digital film distribution network that will enable the studios and their distribution arms to distribute films to DCIP member cinemas faster, cheaper and more securely than has ever been possible.
"The DCIP partnership will not only jump-start national distribution of digital cinema, but it will also accelerate wide-scale deployment," AMC's Larson said. "We are in the process of testing a variety of digital cinema equipment through our relationship with DCIP. When the testing is satisfactorily completed, DCIP plans to begin installation of digital cinema systems in exhibitor partners' new build facilities, beginning in late 2007, and in existing locations on a market-by-market deployment beginning in early to mid-2008. Retrofitting theaters will take three to four years to complete."
Digital Cinema Initiatives (DCI) is a key enabler in this process. Created in 2002, DCI is a joint venture of Disney, Fox, Paramount, Sony Pictures, Universal and Warner Bros. It says its primary purpose is "to establish and document voluntary specifications for an open architecture for digital cinema that ensures a uniform and high level of technical performance, reliability and quality."
Earlier this month, DCI announced that it will work with CineCert to take the former's digital cinema equipment compliance test program to its next and final level.
A Massive Undertaking
Such plans has been long in the making and for good reason -- there's a lot involved and some unique, difficult problems to overcome when you're talking about beaming upwards of 50 gigabytes of digital data per film to cinemas nationwide, DigDia's Sasaki noted.
Warner, Universal and DCIP's undertaking is by no means the only film-to-cinema digital distribution network in the works, however, or even the most advanced in execution. AccessIT, Thomson-Technicolor, Kodak, Panasonic, and other digital film production and equipment manufacturers, as well as terrestrial and satellite communications network providers, are among those deeply involved in the process of assembling a new generation of digital distribution networks for the cinema film industry.
AccessIT (Access Integrated Technologies) earlier this month reported that as of April 30 it had completed 1.8 million digital showings on the more than 2,500 networked digital cinema systems it has installed in 30 states to date.
"Four years of in-house software development and testing, many millions of dollars in hardware, 24/7 support, real-life implementation and [continual] reworking," have been invested in building out the satellite-based digital cinema delivery platform, Bud Mayo, the company's president and CEO, told TechNewsWorld.
Technicolor Digital Cinema has a rollout plan that includes the installation of 5,000 DCI-compliant digital projection systems over the next three to four years, with a total rollout of 15,000 systems in the U.S. and Canada over the next decade. The company is also developing plans for a similar rollout in Europe.
Bearing Fruit
"These milestones demonstrate that we are solving critical issues for theater operators and that there's no barrier -- only advantages -- for embracing digital. We're well on our way to meeting our goal of 4,000 screens by the end of the year," said Chuck Goldwater, president of AccessIT's Media Services Group.
"In the entertainment industry, enduring changes need to meet technical, operational, creative and business needs, and the industry has been dealing with issues in all areas since digital cinema began in earnest in 1999," noted Kodak's Mayson.
"One issue that crosses several of those areas involves distribution. Today, most digital prints are delivered on hard drive -- for several reasons, including the fact that satellite connections to theaters are not widely available," he explained, "but, there are other reasons also. For example, a typical two-hour movie takes about 40-minutes to load into the server from a hard drive; it can take 16 hours to be received via satellite. So there are several challenges to deal with, but the industry is working at them and solving them -- often creatively -- one by one." 
Digital cinema distribution and projection systems are gaining momentum, while the film industry is seeking new ways to pack theaters. As Part 1 of this two-part series points out, the new formats not only offer film studios, distributors and cinema operators significant cost reductions, but also provide unrivaled viewing experiences that competing media will find difficult to match.
The growth of digital cinema system platforms, along with the latest generation of 3D stereoscopic technology, promises to provide cinema operators with unparalleled flexibility. By drawing on a wide range of digital entertainment and advertising content, movie houses will have unique presentation options and can customize their programming schedules based on a wide variety of factors.
Both Feet in the Water
The number of screens converted to digital in the United States increased more than sixfold last year, aided by consolidation and the collaboration of the top three U.S. theater chains: Regal, AMC and Cinemark. The trio has joined to form Digital Cinema Implementation Partners (DCIP).
The DCIP partners collectively own 36 percent of U.S. cinema screens, according to a report released by Screen Digest in April. Worldwide, the number of digital cinema screens grew 253 percent last year, from 848 to 2,996, doubling between the end of the first and second halves of the year.
The Technicolor Digital Cinema (TDC) project is still in beta testing but gathering affiliates.
The trend among multiplexes in the United States and the United Kingdom toward switching to digital formats is a strong signal that the "toe-in-the-water" days of testing the new technology are over, suggests the Screen Digest report.
"This is great for cinema for a couple of reasons," noted Screen Digest senior analyst David Hancock. "You couldn't actually pirate it at first, but that can now be done -- though it's more difficult, and you can't readily watch it at home."
Cinema attendance is seeing steady growth, Hancock said. The transition to digital technology comes at a time when home entertainment is getting better, and the movie theater industry has to struggle to compete.
"Now digital cinema is raising the bar again -- there's a reason to go to the cinema," Hancock added.
Moving Up and Out
"Several factors are driving the industry's transition to digital cinema," Bob Mayson, general manager and vice president at Kodak Digital Motion Imaging, told TechNewsWorld.
"Major studios are releasing about 90 percent of all movies in digital prints, and smaller distributors are following their lead," he pointed out. "The price of the systems has come down, and new business plans are making them more affordable. Also, alternative content -- local language movies, documentaries, sports and music programming, 3D entertainment -- is increasing in diversity and availability. Exhibitors aware of this are becoming more serious about digital investments."
Commercial d-cinema screens in the United States experienced a growth rate of 506.6 percent between 2005 and 2006, observes Screen Digest's report. This compares with 268.9 percent between 2004 and 2005, and only 9.6 percent the previous year. The rate of change is attributable, in large part, to an industrial scale rollout in the U.S.
Digital software and service provider AccessIT is driving this progress and has now exceeded 2,000 of the 4,000 installations the company set as its initial target.
"AccessIT's 24/7 Network Operations Center monitors the transmission and receipt of the content via the satellite delivery so the theater manager does not have to deal with the logistics of physical delivery and ingest of the movie," Chuck Goldwater, president of AccessIT's media services group, told TechNewsWorld.
It does not take 16 hours to send a movie by satellite, Goldwater emphasized. AccessIT is delivering films every week to almost 160 sites where it has satellite systems installed.
"On average, it takes between four to eight hours to transmit a movie by satellite," he explained. "There is an additional one to three hours of processing time when the file is received at the theater."
The process takes place electronically and is managed by AccessIT's Theater Command Center software. It is typically managed outside theater operating hours, so that the entire process requires no involvement by theater staff, he added.
The Business Case
Operational efficiency and the ability to provide unique premium content are digital cinema's main business drivers.
"Most of the immediate benefits are in distribution costs, not increased revenue," Digdia President Gary Sasaki told TechNewsWorld. "Stereoscopic screens have shown that they will bring in more revenue, but there are not enough of them yet."
After exhibitors absorb the expense of converting to digital formats, the industry will see a distribution cost savings of 90 percent, he estimated. In the meantime, costs are actually higher because distributors must also handle film prints.
Digital film distribution "involves more than just getting bits to the theater," Sasaki added. For security 
, there is a management system known as the "key delivery message."
"The KDM locks the digital cinema package -- the 'bits', if you will -- to the specific equipment found in a specific theater, to be shown within a specific time window. All this is to prevent theft," remarked Sasaki.
The KDM can be delivered through e-mail, USB (universal serial bus) stick or by other means. If a piece of equipment changes within a theater, the operator must have a new KDM. Europe's CinemaNet is slightly different, as it appears to be aimed at independent screens, transporting content via asymmetric digital subscriber line (ADSL), he pointed out.
The Technology
AccessIT's vendor neutral system is 3D-ready and includes a Library Management Server (LMS) with a large storage array, an Ethernet switch, and dual high-end servers with AccessIT's Theatre Command Center software (TMCC), said Bud Mayo, AccessIT's president and CEO.
"Each auditorium gets a 2K DLP (digital light processing) digital cinema projector and a JPEG 2000 media player which is networked and managed by the LMS (LAN, or local area network, management system). The LMS is the single point of ingest for all deliveries of content, which may be by satellite or by hard drive manually. Connected to the LMS is AccessIT's satellite VSAT motorized dish and receiver, which allows 24/7 monitoring of the system at AccessIT's NOC (network operations center), which also provides help desk support," Mayo told TechNewsWorld.
The operational advantages cinema operators garner through the use of digital systems include consistent, improved image quality; ease of scheduling; drag and drop functionality with full automation; and compiling and editing program offerings using keystrokes instead of splicing tape, according to Mayo.
"Seat utilization in theaters ranges from 10 to 15 percent, with highest attendance on weekends and holidays. Digital cinema offers alternative content choices such as those AccessIT distributes -- faith-based movies, kidtoons, anime, concerts and sporting events -- to fill seats that are otherwise empty. Also, 3D movies require a digital system platform," he noted.
"These choices provide incremental revenues at the box office [and] concessions stands, and from advertising -- all driven by increased attendance," Mayo said.
Preventing Theft and Piracy
Improved security and a significant increase in piracy deterrence are other benefits, Mayo continued.
With digital satellite delivery, film content can be broadcast worldwide to theaters in every language simultaneously, eliminating the window between domestic and international distribution, and thereby reducing the demand for pirated DVDs and downloads.
Also, forensics tactics, such as watermarking, can trace a videotaped copy to the source theater screen and time of showing.
That said, "it probably does not make a lot of difference either way to the piracy problem unless someone figures out a really effective way of applying technology to counter camcording," acknowledged Dodona Research analyst Karsten-Peter Grummit.
In the long run, the cost reduction will equal a substantial proportion of the cost of film prints.
Revenue gains will vary from territory to territory -- depending, essentially, on the extent to which markets for films are distorted by current distribution practices," he told TechNewsWorld.
Boon to Independents
Digital film technology continues to change the way films are made. Likewise, the technology lowers production costs and enables more independent filmmakers to enter the market. Digital cinema systems are spurring new collaborative viewing events and providing small independents greater opportunities to market and distribute their films.
Operating out of the Scottish Documentary Institute at the Edinburgh College of Art, Docspace has hosted interactive master classes that allow international documentary directors to communicate with geographically dispersed audiences at one screening, said founder Amy Hardie.
"The response from directors and audiences has been enthusiastic, welcoming the transformation of local communities to national and international communities -- even if only for one day," Hardie told TechNewsWorld.
South African actor and independent film producer Brendan Jack said his plan is to distribute only to digital projection sites.
"The footprints are growing bigger and should be substantial when we release in September. We have seen a few screenings on digital screens and it looks great," he told TechNewsWorld.
Having previously played a central role in the production and distribution of "Crazy Monkey Presents: Straight Outta' Benoni," Jack and company are now working to promote and distribute their latest film, "Footskating 101."
"That said, you still, obviously, need a product that people will want to see," he added. "There are many films that sit on shelves, never seeing the light of day, and this will hopefully enable more storytellers' voices to be heard."
The Bottom Line
The main question still remains: Will digital cinema systems keep people going to theaters?
"Emphatically yes, because of the many advantages: clearer image and sound that doesn't deteriorate; more choices aimed at target audiences to fill seats during times of minimal utilization; and ease of operation in a fully networked solution -- the only one of its kind," asserted AccessIT's Mayo.
As with any major technology shift, many benefits are yet to be discovered or realized, Sasaki said.
"[Digital cinema] will probably enable some new business model that the industry does not yet fully appreciate. It will be interesting, for example, to watch how ODS (other digital stuff) plays out in the future when you have really good bandwidth to thousands of DC screens," he added.
"You still need a good movie, however," Sasaki concluded.
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