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Thursday, November 08, 2007


I have been dealing one way or another with Digital Cinema for over 10 years and I see no reason to be anymore enthusiastic about it now than I was a decade ago and, in fact – the way things have evolved – I’m coming to the conclusion that D-Cinema could lead to the ultimate demise of the cinema industry. Similar to what has occurred to the music business, once movies vacate their analog format chances are the studios will lose distribution control and the industry (as it now exists) will begin its decline.

At best, I can categorize D-Cinema as a mosh pit – semi-controlled chaos with the potential for inflicting lot of damage. At worst, we’re witnessing what could be a black hole – sucking in the entire cinema industry. What would remain? DVDs and variations of alternative content. My concern would be eminent but D-Cinema continues to fall short of its expectation and is not the transformational acquisition it has been dubbed.


What is the cost of Digital Cinema? I get this question a lot. “About $100,000 to $120,000”, I say, “and then there’s the ongoing operating and maintenance costs, and oh yeah, the 3D option if you want that”. It’s not a very good answer but then again it is in keeping with the nebulousness of the whole D-Cinema saga. However, least I be accused of perpetuating the notion of D-Cinema as the industry’s ‘black hole’ I’ll quantify this mosh pit.

Big-D requires a cadre of basic components; as well as, ancillary items and services. The detail below depicts average pricing from component manufacturers less 20%. All amounts are stated in incredible shrinking U.S. dollars.


- Show Player – for image decoding and data feed to D-projector, also provides digital audio output to sound system

- Show Storer – stores digital movie (received from studios in DCP packages) for playback through Show Player

- Show Manager (System Software) Player, Storer and Manager: $20,000

- Digital Media Adapter – interfaces Show Player to existing cinema sound system: $2,500

- Network Automation Interfacer – interfaces Digital System to existing cinema automation system: $2,500

- Digital Cinema Projector w/Power Supply (2K Version) Lenses, Lamp, Pedestal: $80,000

-Alternative Content Formatter – for playback of alternative content through digital cinema projector: $6,000

- PC/Laptop w/work station: $3,000

- Installation - Equipment setup, interfacing, alignment, testing, & training, including all cabling, wiring, interconnections, etc.: $5,000

TOTAL: $119,000


- 3D Filter Controller & Filter Wheel Assby.: $18,000
- 3D Glasses – Regular Type: $35 each
Calibration Type: $100 each
- Silver Theatre Screen - $3.75/sq. ft. – if required for 3D Option
Screen Installation: $1,000 – 2,500


- Annual Service/Maintenance Fees: $1,500 – 3,000
- Build-out costs for any enhanced electrical power and/or exhaust & cooling requirements in Projection Room: Unknown

So, at the present time, the cost to convert one auditorium is approximately $120,000 – 140,000 with an undetermined useful life. Additionally, although not published, there are indications that the failure rate of the digital cinema components is higher than that of film projection. It is also worth noting that the various digital components making up the ’system’ are manufactured by various companies. In some cases, being “sold through” other manufacturers/vendors under contractual arrangement.


Big D’s reason for being – with all of its inherent complexities and costs – is Hollywood’s attempt to retain control of movie distribution while increasing their share of pre-feature advertising revenues. Otherwise, films could be transmitted to theatres via the internet or sent on encrypted HD-DVDs.

Film is the glue that keeps the relationship between the studios and the exhibitors from falling apart and provides the studio’s distribution control. As is happening with other media that has experienced digital conversion once the bits are out it is impossible to get them back. Currently, piracy is a problem but the copies are inferior and it is not an industry killer. Digital piracy could be.

Late last year I forecast the U.S. box office would reach $10 billion in 2007. As it now stands it should come in between $9.8 – 10b, a 6 – 7% increase over ’06, but bolstered by a stellar summer box office (which was anticipated), and a good holiday finale (also in the cards). Internationally, there is higher growth but as compared to other (competing) forms of entertainment particularly internet and video gaming, the cinema’s growth is modest. Toying with the cinema’s fragile business model could prove disastrous – best to leave it alone.

Thursday, November 01, 2007

KEEPING UP WITH TECHNOLOGY Read Fast: This Article Expires in 5 Minutes

Technology is moving so fast it’s difficult, if not impossible, to keep up – change is the only constant. Communications technology is one such area and its advancement is having a profound impact (good and bad) on all businesses including cinemas. Several communication technologies, including IM and Texting, along w/portable storage devices (such as flash sticks) clearly represent this good vs. evil clash.


IM (instant messaging) has become ubiquitous in every day work and play environments. Used to communicate with other employees, vendors, and certainly friends & family IM should be viewed as a good and valuable technology but one that is also a potential security risk. As many cinema owners/operators have discovered, IM is very hard to control in the workplace as its convenience and speed make controlling it nearly impossible. Compounding the problem is the fact that telecommunications companies knowing that many businesses are trying to control and/or block IM, frequently (and randomly) change the requisite messaging protocol, as they constantly endeavor to keep user traffic high – effectively increasing monthly billings.

On the other hand, IM has its benefits. For one, it does improve employee productivity. People can work at a faster pace as IM takes less time than emailing while using up much less band width. Additionally, as compared to voice communication, IM saves vast amounts of time in eliminating both unnecessary conversation and phone tagging.

To alleviate control problems while maintaining IM’s benefits, businesses that allow IM should implement control software as, if unmanaged, IM can put any company at risk for potential internal security breaches and/or theft of intellectual property, not to mention, law suits. To illustrate, in the U.S., Britain, and most other developed countries, IM is governed by the same civil laws as emails so, for example, if an employee were to IM a sexually explicit or aggressive message to another employee the company could be held liable for harassment just as if those sentiments were expressed by email or verbally. So the potential for legal ramifications is a very real one. Affordable enterprise-class IM software products to address these control issues is available and inexpensive. For instance, both Lotus and Microsoft offer very refined products to meet this need and every cinema with more than two locations should be using it.


That’s all well and good for IM but there is currently no way to control Texting between cell phones. Cinemas face a dual problem with Texting: internally (employees) and externally (customers). Unlike IM, Texting has not been addressed by any type of regulation and there are no legal mandates surrounding it. For example, if a company provides a mobile phone to an employee and pays the bill there is the risk that if that phone is used in any illicit way the company may be held liable. Additionally, cell phone(s) and PDA(s) present other (perhaps more relevant) security issues. “Cell slurping” – the term used to describe the action of plugging a cell or PDA into a computer and downloading files (not unlike the use of flash stick or memory card) - presents very specific security risks regarding both viruses and corporate data theft.


There is no doubt that IM is fast becoming a critical and useful form of communication within companies – large and small. The key is in having employees use the technology (they probably will anyway) with its obvious advantages over voice or email by implementing good usage policy and practices. Here are several that every cinema should adopt:

* Take the existing email usage policy (if you don’t have one you should) and extend it to include IM and Texting.

* Make it clearly understood to all employees that company supplied technology tools, particularly communication devices, can only be used for business communications.

* Employees should be informed that their IM sessions may be archived on the company network.

* Take an informal survey within the company to see if a lot of IM is occurring, if so, determine the company’s needs for this practice to continue. If there is a corporate benefit then enhance company policy and standards and purchase the required enterprise software to control it.

Trying to keep up with technological advancements is virtually impossible. Additionally, technologies used by individuals and organizations are blending at a faster and faster pace, giving rise to unforeseen benefits, as well as, drawbacks. Take a look at your cinema operations and determine what technologies are being used (those formally sanctioned and those being used informally) weigh the benefits and drawbacks of each and decide what is best suited for the cinema and its employees, and which is not.