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Prime 3D evangelist Jeffrey Katzenberg, NATO president John Fithian and Classic Cinema's Chris Johnson talked 3D at ShowEast Tuesday.

Katzenberg was enthusiastic:

(T)he advent of 3-D filmmaking and exhibition also is "an opportunity for a game-changer for your business," he told exhibitors filling a large ballroom at the Orlando Marriott World Center.

But unlike digital cinema systems, distributors are unwilling to pay for the installation of 3D equipment. Katzenberg asserted that exhibitors will be able to charge a premium for 3D content of at least $1 a ticket. Classic Cinema's Johnson noted

With "Chicken Little," the chain enjoyed grosses more than one-third higher than would have been true without 3-D availability, Johnson said.

"Literally, with one picture, you will have paid for the cost of the installation of one screen," Katzenberg said.

Johnson, however, couldn't let the opportunity for some good-natured ribbing of his podium partner slip by.

"The unfortunate part is, you have to share some of that (extra) gross with the studio," he jibed.

NATO's Fithian made the point that a broad and stable base of digital cinema systems is the first priority, both as a requirement for 3D and for the health of the industry - a point backed up by an independent exhibitor in the audience.

The majors have agreed to underwrite the rollout of thousands of d-cinema systems by paying third-party installers the equivalent of what distributors will save in print costs during the next few years. Such agreements have been dubbed virtual film print agreements, or VPFs.

"Let's remember that digital is the dog, and 3-D is the tail -- a very important, wagging tail," Fithian said.

Katzenberg replied that the metaphor might fairly be reversed and went on to predict that within just a few years two-thirds of all major movies will be released in 3-D -- about 40 or more 3-D titles per year.

"Let's get the digital-cinema platform there, so we're not doing hodgepodge 3-D installations," Fithian said.

Indeed, exhibitors in smaller markets are still waiting for help with digital startup costs.

Greg Razmus, who operates an eight-screen theater in Corbin, Ky., said the closest digital screens in his area are in distant Lexington, Ky., and Knoxville, Tenn.

"We're still struggling with digital," Razmus said. "I think the 3-D part of that is going to be great, but at this point it's still a dream."

So, is 3D the tail wagging the dog - or will it be the dog that didn't bark?

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Focus Features' head and Lust, Caution screenwriter James Schamus was interviewed on KCRW's The Business this afternoon and calmly and genially eviscerated every myth surrounding the NC-17 rating.

A few highlights:

• Very few newspapers have refused ads for the movie.
• Television advertising and standards & practices execs are eager to work with them should Focus choose to advertise on TV.
• The two difficulties he cites are audience perceptions of a stigma surrounding the rating, and a single major theater chain that has a blanket policy against screening NC-17 films.

I highly recommend you listen. His take on the process is refreshing, light-hearted and hypocrisy-free.

The film has taken in $1.3 million through its third weekend in release and is playing in 77 locations in the top 20 markets.

Update: Two newspapers weigh in on Lust, Caution and NC-17.:

The Naperville Sun in Illinois wonders whether the film will play in the suburbs. The upshot?

In either case, it seems to be the audience, not the theaters, that will determine if an NC-17 film will be played in local venues. Like any other foreign, independent or art film, they will show it - but only if you come.

In the Hartford Courant, NATO president John Fithian continues his campaign for broader acceptance of the rating:

Fithian's support for the rating is a matter of integrity.

"A lot of studios just require their filmmakers to produce a film that is not an NC-17. We think that is a mistake. By not using the rating appropriately, the pressure to cram films into the R rating is too great," Fithian says. "What we see is filmmakers making just enough cuts in their movie to fit into an R.

"This damages the integrity of their movie and is a potential abuse of the rating system," he continued. "As a consequence, the R rating is too broad. The soft end of R and the hard end of R are too different. If NC-17 were used correctly, ratings would make a lot more sense."

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Lust, Caution smashed records in its exclusive opening weekend iat New York's Lincoln Plaza Cinema. according to Variety:

"Lust," carrying the ultra-restrictive NC-17 rating and clocking in at 158 minutes, grossed an estimated $61,688 for Focus Features in its exclusive run at the Lincoln Plaza Cinemas. Among exclusive openings, it nabbed the best debut ever for a foreign-language film, as well as one of the best showings ever for a live-action film.

Per-screen average is the best on the books for an NC-17 film, whether in an exclusive or limited run. Focus topper James Schamus co-penned the screenplay based on a story by Eileen Chang.

"What does this mean? It means that the running time, the foreign language and the rating just didn't have an impact on the opening," Focus prexy of distribution Jack Foley said. "It just cranked to that level."

Ang Lee's film goes into wider limited release Friday.

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The L.A Times takes a front-page look into Lust, Caution's attempt to remove the perceived stigma and misconceptions of the NC-17 rating. Reporter Lorenza Muñoz goes deep into the weeds with studio executives and uncovers some new misconceptions perpetuated by the executives themselves.

In addition, the lingering association between NC-17 and X-rated fare can take a toll at the box office. Films labeled as NC-17 sell as many as 25% fewer tickets, studio executives said. The highest-grossing NC-17 film was "Showgirls," a 1995 film that brought in $20.4 million.

It is difficult to conceive on what basis anyone can make such a comparison. There will need to be more than a dozen or so NC-17 rated films before there is enough data to make a such an assertion. If one can make an assertion, the available evidence points in the opposite direction:

NC-17 rated films take in, on average, $2.1 million more than unrated films - the preferred form for releasing films that might otherwise be rated NC-17. In other words, one might make the reckless assertion that the stigmatic NC-17 increases box office take by more than 100 percent.

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Muvico' s Rosemont 18 outside of Chicago, is causing a bit of a buzz.

The L.A. Times features it in an article about movie theaters luring back patrons with luxury, alcohol and adults-only seating. This isn't an entirely new trend, NATO's former magazine covered the trend of alcohol service and cinema eateries (also here) in 2005 and 2006.

What seems to be catching on is the added intangible of an adults-only policy required by alcohol service.

From the Times article:

"This is a little bit of heaven," said Tricia Holman, who works for a technology firm and lives in the Chicago suburb of Evanston, Ill. For a $15 ticket on a weekend evening, she said, it's "just me, my husband and the big screen. And no teenagers."

In an attempt to entice grown-ups back to the nation's movie theaters, Florida-based Muvico opened the luxury Rosemont 18 in this Chicago suburb just east of O'Hare International Airport. The theater has a clear goal: to cater to those weary of watching films accompanied by a soundtrack of fussy babies and gossiping teens.

One screen is entirely dedicated to customers old enough to buy a cocktail. Five other screens have all-ages seats on the ground level -- and separate, adults-only balconies reached through the bar inside the theater. Customers can lounge on love seats, eat gourmet concessions such as filet-mignon mini-burgers and sip alcoholic drinks during the movie.

Not all movie-goers are thrilled with the idea:

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Not content with simultaneous release of films in theaters, VOD and DVD, Mark Cuban's newest idea is to release films to VOD up to three weeks before making it available to theaters.

Who benefits? Cable operators, perhaps. Maybe subscribers to Cuban's own HDNet. Who else? Oh yes - Mark Cuban.

The importance of this strategy can't be overstated, he said. All of his clients, he continued, have stressed to him "that the ability to watch movies while they are in theaters is at the top of the requests in their research" from consumers. "Because we are the only studio to own a national theater," he added, "we are in a unique position to do this." Cuban owns Landmark Cinemas.

Cuban said his goal with Ultra HD is to "tilt the economics" so that each of the movies distributed by Magnolia Pictures makes about the same amount of money in each of the three platforms -- theaters, TV and DVD -- on which it's simultaneously released.

If history is any guide, just about the only theaters taking him up on the offer will be the ones he owns.

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Two stories in the news focusing on the continued strength of the more than 400 independent theater owners as a force in the industry.

Friday, the Springdale Morning News in Arkansas profiled the new Blackhawk Theatre in Pea Ridge, a small but burgeoning town in the extreme northwest corner of the state.

Pea Ridge Mayor Jackie Crabtree thinks that's a wonderful idea.

"I think it is a great opportunity he is taking. He has done a lot of work on that building," Crabtree said.

Crabtree said Pea Ridge is a bedroom community that is growing like others in Benton County. Numerous businesses are opening up there, including several banks and fast-food outlets.

"We're about to hit the big time. We're about to get a McDonald's," Crabtree said with a laugh.

Today, the Knoxville News Sentinel takes a look at the growing number of independent theaters in East Tennessee. In addition to profiling five area independents, the story also checks in with a former independent theater owner who made it big. Really big. Mike Campbell.

Campbell started Regal Cinemas with a 50-year-old theater in Claiborne County in 1982.

“There still is a niche for independents,” Campbell said.

Regal does not have to compete with independents in too many markets, but when they do, independents can prove to be “significant competition,” Campbell said.

Movies on the Parkways' Todd Holt believes it's the independent owners' connection to the local community that is their greatest strength.

Movies on the Parkway, like the rest of East Tennessee’s independent theaters, all work to create a family-friendly atmosphere. Part of that means dealing with what Holt and his staff refer to as the “Middle School Mafia,” groups of unruly patrons who often send text messages to each other during the movies or create other distractions.

Holt believes the independent theater is more capable of catering to the local crowds than the large theater chains. Instead of someone sitting in a corporate office far away, he and his staff make the decisions and rules based on community personality.

“The staff is what makes me. Without them, I would be nothing.” Holt said.

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One of the big hopes for digital cinema is the opportunity it provides for alternative content.  If it can be digitized, it can be shown in a digitally-equipped movie theater.

The L.A. Times takes a look at one of the early movers - Bigger Picture (a division of digital cinema aggregator AccessIT) - in what may prove to be an important source of revenue for theater owners.

The technology also enables theaters to easily switch what's being shown in a theater, opening venues up to specialized shows so they can sell tickets and popcorn when they aren't showing Hollywood's latest blockbusters. Although major studio movies attract big crowds on weekends, Dern said that over the course of a typical week auditoriums are often filled to only 10% to 15% of capacity.

"If we can move the dial 1%, that's a big number," Dern said.

Bigger Picture started three years ago, when Dern and Rutkowski came up with the "Kidtoons" animation programs. A typical program might include a G-rated feature, such as this spring's "Strawberry Shortcake: Berry Blossom Festival," plus cartoon shorts, music videos and singalongs.

Concerts, opera and sports have all taken a turn at the alternative content turnstile, with live theater simulcasts from New York's Metropolitan Opera proving a surprising success. Still, we're early in the exploration of just what sort of content will drive audiences to movie theaters in off-peak hours. As digital cinema grows and approaches a critical mass, well see a lot more companies looking to turn alternative digital content into a sustainable business.

Michael Karagosian, a Calabasas-based consultant to the theater industry, sees several challenges. Niche offerings may end up playing best in rural areas where access to concerts and other events is limited, he said, but prove a tough sell in cities.

Competition is heating up, he notes. National CineMedia, for example, a digital theater advertising company, distributes concerts and other events under its Fathom brand.

Still, Karagosian said, what Access is doing boosts the appeal of digital technology to exhibitors.

"Content will drive the business more than equipment," Karagosian said. "It's recurring revenue, and a company like Access IT is looking to sell razor blades, not just razors."

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