Digital Cinema – it's gonna cost – who?

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Digital Cinema Report has a nicely reported state-of-the-digital-deal story on it’s website. 

 Publisher Nick Dager starts it off with a bang:

The answer lies in the fact that the studios, either by happenstance or by design, are taking a very passive-aggressive approach in their negotiations with DCIP. Several studios are demanding higher virtual print fees, which exhibitors insist they can’t afford. Other studios are demanding that exhibitors convert to digital now in order to justify the costs of the 3D features due out next summer.

In some cases that passive-aggressive attitude exists in the same studio. In interview after interview Jeffrey Katzenberg, CEO of Dreamworks Animation has led the charge all but demanding that exhibitors waste no time in converting to digital, this of course so that his 3D movies can make more money. Yet his long-time partner Steven Spielberg tried to block the digital release of Indian Jones and the Kingdom of the Crystal Skull. In a recent story on the topic reported in the Chicago Tribune Spielberg is quoted as saying, “Making a film on celluloid, as I like to do with all of my pictures, but then transferring it and releasing it and projecting it digitally is a very inferior image.”

Where does that leave the transition to digital cinema, and by necessity, 3D? 


Scylla, meet Charybdis:

John Fithian, president of the National Association of Theatre Owners, says the situation has placed exhibitors squarely between a rock and a hard place. “Several studio leaders currently hope to reduce substantially the virtual print fee support they are willing to provide for the digital cinema transition, at the same time that several other studio leaders demand that exhibition install many systems rapidly for the 3D slate in 2009,” he says.  “And at the same time one of the industry’s filmmaking icons refuses to release a big summer picture on digital cinema screens except for locations where that is the only option. So, should we or should we not move faster with the digital roll out? How do they possibly believe that exhibitors will do anything less than push back? Maybe they should get their act together first before they try to tell us what to do.”

So when do we put the “budge” in budget? Insiders differ. Some suggest the deals are dependent on a successful resolution to SAG/AMPTP negotiations, others ascribe the hold-up to the credit crunch fueled by the home mortgage meltdown.

What seems crystal clear (and you don’t need special glasses to see it) is that the delay is all about the Benjamins. The 2009-2010 3D slate has only upped the urgency of resolving the basic calculation with a concrete and near-term demonstration of how much (and whose) money is at stake.