Going Digital

March 12, 2002 at 12:00 AM EDT

JEFFREY KAYE: Digital technology has sparked a revolution in filmmaking wizardry, from restaging the attack on Pearl Harbor to creating computer- generated dinosaurs.

Now Hollywood is seeking to expand its use of digital technology, from the making of movies to their distribution and screening, a step which could save studios hundreds of millions of dollars and alter the movie going experience. Film company executive such as Disney Vice President Phil Barlowe are leading the digital cinema charge.

PHIL BARLOWE, Vice President, Disney: This, on a grand scale, is like the movement from a vinyl record, a 78 record, to where we are today, where you can download something from the Internet.

JEFFREY KAYE: That progress means replacing the very heart of the motion picture experience: Film. The principles of showing a movie haven’t changed much since the days of D.W. Griffith and Mary Pickford. A projector unspools a reel of celluloid film past a light at 24 frames per second, casting the illuminated moving picture on the screen below. But film’s domination is being challenged as Hollywood replaces celluloid with digital technology. Digital cinema’s future can be glimpsed inside this once- abandoned movie palace on Hollywood Boulevard. Behind the boarded-up facade is the ETC, the Entertainment Technology Center. Here, movie studios and high- tech companies are testing the latest in digital cinema formats.

THOMAS MacCALLA, Entertainment Technology Center: This is a projector, this small piece here.

JEFFREY KAYE: Thomas MacCalla is the ETC’s chief operating officer. He says that for moviegoers, digital cinema’s major benefit is picture quality.

THOMAS MacCALLA: The images that we’ve been rolling all this time, we’ve been showing those images since we opened here, no scratches. They look exactly the same now as they did when we showed them the very first time, as opposed to what get in film.

JEFFREY KAYE: And how is that? How can that happen? How can that be?

THOMAS MacCALLA: Because you’re dealing in the digital domain of zeros and ones.

JEFFREY KAYE: Like a tire tread, a reel of film gets worn and frayed as it travels again and again through a projector. The wear and tear are familiar to any projectionist.

ORREN WEBBER, Projectionist: The problem that we have with .35-millimeter film, or film in essence, is that it gets dirty over time. You know, when we start that very first showing, by the time you get to that 1,000th showing, the film has been dirtied up. You get scratches. Pieces get bent and torn. And there are some pitfalls about it.

JEFFREY KAYE: But a digital movie is just as pristine on its 1,000th showing as its first, since it’s stored and projected electronically. The film industry hopes that improved picture quality will be key to pleasing technologically sophisticated audiences.

SPOKESMAN: 8:30 pulled out?

SPOKESMAN: We are in competition for the public leisure time. The money goes with the leisure time. So we’re not just competing against other studios. We’re competing against sporting events; we’re competing against DVD, the most successful new consumer product in history; we’re competing against the Internet. We’re competing against all sorts of things. And consequently, to not have digital available in the cinema, when it’s available in the home, is really just not smart business.

JEFFREY KAYE: Smart business, as the studios see it, is what’s really driving their push towards digital cinema. The technology has the potential to revolutionize the economics and logistics of film distribution.

JEFFREY KAYE: To release a big summertime blockbuster, for instance, the studios must strike thousands of individual copies, or prints, of the film, costing between $800 and $1,600 a print. The films are then shipped to theaters around the world. But one digital film could be transmitted electronically as a stream of data to countless theaters, saving Hollywood hundreds of millions of dollars in print and distribution costs. The race is now on to develop a digital cinema distribution system, a way to deliver films electronically from the studios of Hollywood to the world’s movie theaters. The race has attracted companies not typically associated with movies.

SPOKESMAN: Boeing, digital cinema.

JEFFREY KAYE: The Boeing Company, better known for jumbo jets, is working to develop such a system via satellite. Boeing’s digital cinema initiative is being directed by Ron Mael. He says his company’s expertise in satellite communication gives it an advantage in distributing digital films.

RON MAEL, Boeing: The technologies that we’re using are really very much based in the Boeing heritage and tradition, so a lot of the government programs, plus the commercial programs, develop the basic technologies.

JEFFREY KAYE: Qualcomm, the San Diego-based cellular phone company, is Boeing’s major competitor in developing digital film distribution. It has formed a partnership with Technicolor, the film processing lab, to deliver movies via fiber optic cable. Boeing and Qualcomm are betting that the digital cinema technology they develop will open up vast new markets far beyond the movie theater.

RON MAEL: One of the things, for example, just to give you one of the things we looked at in the real estate case, we found out that there’s really high value to transmit, for example, to real estate agents on a laptop in their car things like virtual house tours at high definition, when they have real clients sitting right next to them, because they’re focused on a given customer at that point in time. That’s a high-value application for them.

JEFFREY KAYE: More formidable than the technological obstacles facing digital cinema is the challenge of convincing America’s hard-pressed theater owners that they need it. In the 1990s, theater chains financed a multiplex building boom. They added stadium seating, sophisticated sound systems, and thousands of new screens.

But ticket sales remained flat, and in recent years, many national theater chains filed for bankruptcy and reorganization. So theater owners are particularly wary of the costs of retrofitting America’s 35,000 movie auditoriums for digital cinema, says John Fithian, President of the National Association of Theater Owners.

JOHN FITHIAN, National Association of Theater Owners: The digital cinema revolution will never happen if movie theaters are expected to pay for it. And let me explain that. A modern projector in a movie theater today that uses the traditional film, you can get a really good projector for $30,000, and it will last for 20, 25 years. The digital projectors that are on the market today– just the projectors– can cost $150,000. Throw in all the computer equipment necessary to take the digital data and arrange it in a format you can show it, you’re talking $200,000 per auditorium. And yet this equipment is so new, it probably won’t last beyond two or three or four years before the next generation comes along and you need to implement that. So why would movie theater owners pay $200,000 for equipment that will last for four years, when today we pay $30,000 for equipment that will last 20 or 25?

JEFFREY KAYE: Hollywood studios have made it clear that they’re ready to help theaters bear the costs of digital conversion, says Disney’s Phil Barlowe.

PHIL BARLOWE: We have said for two and a half years that we recognize that we must be a participant in the cost of conversion. The patron belongs to the exhibitor and the distributor. It’s up to both of us, jointly, to work together to see to it that we are competitive with all others forms of entertainment that are available.

JEFFREY KAYE: But theater owners remain skeptical about digital cinema’s potential.

JOHN FITHIAN: Three years ago, I listened to several leading representatives of the studios and the companies tell us we’d have 3,000 or 4,000 digitized screens by the year 2001. There are less than 50 in the world. So anybody that’s trying to crystal ball this and make predictions I think has an agenda.

JEFFREY KAYE: Digital technology might be creating whole new worlds on the silver screen, but at least for the time being, film, an invention of the 19th century, will still remain indispensable to 21st-century movie theaters.