Is Coming –
Are You Ready?
by John Fithian
Digital cinema will precipitate exhibition’s
most important technological transition since the invention
of the talkies. Maybe since the invention of the projector.
Your trade association and many of our volunteer
members have devoted more time to this issue than any other
over the past few years. Until very recently, we have noted
and discussed many substantial barriers. As reward for our
diligence, we have been accused of not moving fast enough,
of being obstructionists, and (my personal favorite) of behaving
I now believe it likely that the d-cinema
transition will begin in earnest in the next year or two.
I also believe
that the exhibition industry must undertake this transition
to stay competitive. Given that position, I implore all theatre
operators to study up and get prepared. We must all work
to ensure the best possible outcomes for the industry and
|Though substantial work remains to be done, it now
appears likely that a joint venture supported by all
major studios will bring a digital cinema financing plan
to exhibitors in the next few months.
NATO and our members have worked consistently
to promote three important goals related to digital cinema.
sought uniform technical standards to promote interoperability
and compatibility, and to foster competition. We have called
for the highest quality levels to offer our patrons something
better than film and better than home entertainment. And
we have insisted on a fair business model that will see
the studios fund the transition with the savings digital
brings them. On Nov. 18, 2004, the NATO board of directors
unanimously approved a resolution setting forth our fundamental
objectives in each of these three areas.
All three of these goals are now within reach.
As I write this column, the studio members of Digital Cinema
(DCI) are making final edits to their technical specifications,
which likely will have been released publicly by the time
you read this. NATO has worked to support the efforts of
DCI by meeting regularly with DCI staff and members and providing
input, suggestions and commentary on the draft specifications
as requested. DCI, in turn, has been very responsive to the
input of our industry. Though we have struggled over complicated
issues of system design and security, the dialogue has produced
mutual understanding. The final specifications, though not
perfect, provide a most useful blueprint for the technology
companies that are designing your future equipment infrastructure.
We extend our gratitude to Chuck Goldwater, Walt Ordway,
Howard Lukk, Steve Tsai, Jim Whittlesey and the host of studio
executives and technology experts who made this vitally important
NATO will continue to participate in the essential
work of the Society of Motion Picture and Television Engineers
as that body adopts formal standards based in substantial
part on the work of DCI. The work of SMPTE has already had
an impact on the design of equipment and systems, as it will
continue to do, even though the transition will likely begin
before SMPTE has formally completed its work.
We are also pleased with the progress of digital
cinema quality. With the projector and server technology
currently on the
market, and even higher-quality equipment coming in the very
near future, we believe that digital cinema technologies
have come a long way in a relatively short time. As we witnessed
at ShoWest in March, digital cinema will also enable additional
quality for our patrons in substantially enhanced 3D technologies.
The third goal – a fair business model – has
perhaps been the most difficult of all. Though substantial
work remains to be done, it now appears likely that a joint
venture supported by all major studios will bring a digital
cinema financing plan to exhibitors in the next few months.
As has been reported publicly, the joint venture will raise
capital from the studios and from other equity investors
to provide a fund to aid exhibitors in the purchase of digital
cinema equipment. As the studios supply movies to exhibition’s
new digital projectors, they will pay virtual print cost
payments to the venture. The specific terms of any agreement
between the joint venture and individual theatre companies
will be negotiated individually.
So, what should you do to prepare for this
(1) First, please participate in the NATO
activities that continue to shape this exciting future. Volunteer
Technology Committee, where much of the digital cinema work
is done. The committee has a private e-mail reflector where
discussions about the technology take place. Our digital
cinema consultant maintains a private website with many materials
(2) Read up on the subject in several other
ways. NATO distributes information and articles regularly
to members of our Technology
Committee, and provides detailed updates on the planning
process to the association’s membership.
(3) Ask potential vendors, particularly projector
and server companies, if they offer or will offer training
for your employees.
(4) Discuss the coming transition with your
equipment vendors, contractors and consultants to ensure
that they are focused,
and to learn from them.
(5) Involve your staff, particularly those
involved with construction and operations, in the dialogue.
skill sets in your hiring process.
(6) Contemplate the coming technological transition
as you design new complexes and retrofit existing theatres.
have enough electricity, space and exhaust in your projection
booths? Can you handle dual inventory for a number of years?
Do you have access to roof space for satellite dishes? Can
you design a complex that will accommodate an appropriate
(7) If you have made the decision to exhibit
advertisements in your theatres, consider how theatre advertising
and digital cinema systems will be integrated and/or sequenced
within your facilities. Contemplate a lengthy (probably five
to eight years) rollout sequence of digital cinema systems
as you assess the amortization schedules of lower-cost advertising
(8) Investigate the new technologies and business
models for 3D in the digital cinema age. (We will publish
detailed piece on 3D technologies in a subsequent edition
of this magazine.)
(9) Think creatively about alternative uses
of digital cinema systems, from sporting events to music
concerts to educational
programming to religious events. Study the alternative-product
test cases we’ve already seen staged; some have already
received substantial public attention.
(10) Assess your current film technology in
terms of maintenance and upgrade costs so that you will be
prepared to compare
projections of those costs in a