Forbes asks, 'What's Wrong With Digital Cinema?'

Lisa DiCarlo of Forbes presents a laundry list of problems facing the digital cinema roll-out... some familiar and on target, others wrong and inadequately reported.

- It costs $100K to upgrade each screen, she writes. Yeah, that's a good ballpark. But she says that "nobody really knows" who's gonna pay. That's not true. There are several groups of financiers putting together deals that would bankroll large d cinema installations, and then charge the studios a "virtual print fee" of around $2000 each time a new movie plays on that equipment. Why not talk to them?

- "...[M]ost moviegoers couldn't distinguish a digital film from its 35- or 70-millimeter celluloid predecessor." Maybe this is true, in the same way most people can't tell Coke from Pepsi, or a pricey imported beer from Budweiser. But people still have preferences... and it's likely that digital cinema can be successfully marketed as a premium experience. Also, you can tell the difference when you're shown digital side-by-side with celluloid - which is a demo that no theater owner would ever do, unless they'd converted all their screens to digital. (Don't want to make the unconverted screens look bad.)

- "Independent theaters that can't afford digital equipment and won't be upgraded by the movie studios will be left out of the party," DiCarlo writes. How do you explain that some of the earliest experiments with digital have been at art house and non-chain theaters, like Landmark Theatres, Hallett Cinemas, the Ritz Theater in Big Spring Texas, and Emerging Cinemas. Independent theaters and independent film distributors, I think, have at least as much motivation to switch to digital as the big chains. Maybe more.

- "Technology being what it is, you can expect glitches in new digital cinema systems." Yeah, but probably fewer glitches than celluloid. A projector bulb can burn out with either system, sure - but with celluloid, the film can melt, or be spliced together wrong, or be brutally scratched - all problems that go away with digital. Admittedly, with digital you'll have the occasional hard drive failure - but only if equipment isn't properly maintained.

- DiCarlo writes, "New digital cinema standards do nothing to stop the guy in the back row from filming a new movie with his digital camcorder, a low-tech system that accounts for the bulk of movie piracy." Well, that's true today, but the digital cinema standards create a path for 'watermarking' technology that will at least make it easier to find out where those camcorder guys are plying their trade - in which theaters, at which time. And eventually, technology to prevent camcorders from capturing a usable image could evolve.

In the same issue of Forbes, DiCarlo also has another piece about theater owners who are looking to alternative entertainment content to bolster their business. She scores some good points here, noting that digital projections of Phish, Prince, and Kiss concerts have done well.

Sporting events are a different animal. Major sports like football and baseball are nearly impossible to show because broadcast rights are cost-prohibitive. So National CineMedia has focused on niche "sports" like drum corps competitions and specific legs of the Tour de France.

"We have to focus on events where there isn't a lot of distribution in other mechanisms," says [Kurt] Hall, [president of National CineMedia]. "We're competing on the experience, not the content."

The real question, says Hall, is how to get people into the theaters for non-movie events. The marketing cost to promote events and reach fans is borne primarily by CineMedia and content providers. Theater owners, who possibly stand to gain the most, invest the least, with lobby advertisements and preshow ads to attract fans.

But then, DiCarlo wanders into a hazy area, describing the studios as footing a "big chunk of the bill for digital cinema," which would give them total control over what plays on their projectors. "It's a valid question whether they should or would authorize the use of their equipment to generate revenue for other companies, especially theater owners," she writes. But if the equipment is financed by a third party (as I believe it will be) which charges these $2000 virtual print fees each time a new film runs on it, then why wouldn't alternative content be able to gain access to that same digital cinema gear for the same $2000 "usage" fee?

There is a question, of course, about whether the $2000 fee would favor deep-pocketed studios, and serve as a barrier to some niche alternative content (like drum corps competitions) that wouldn't attract big audiences.