The Digital Force

Tinseltown's love affair with celluloid is waning, and more movies are being digitally created. Now the industry has to build a supply chain of servers, high-speed networks and software that

May 16, 2005

11 Min Read
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Star Wars: Episode III, Revenge Of The Sith, which hits theaters this week, is the second movie in George Lucas' 28-year anthology to be shot and edited entirely as digital video. But like its predecessor, Star Wars: Episode II, Attack Of The Clones, only a small percentage of filmgoers will be able to watch it in digital format.

It's not that Hollywood hasn't embraced digital. The majority of feature-length movies are edited in the medium. And some, including the two latest Star Wars flicks and the recent blockbuster Sin City, were filmed, sent, and, on a limited scale, shown in the format, too. The problem is few distributors and theaters are equipped to handle digital movies.

Digital has many pluses. The latest technology provides the same high-quality viewing as celluloid. Sony Electronics' 4K digital projectors, expected in July, have 4096-by-2160 pixel resolution that can display images at more than four times the resolution of current high-definition projectors. Digital also retains its quality viewing after viewing, unlike film, which wears down a bit every time it's shown. By the third week of a film's release, moviegoers often see annoying scratches and speckles dancing across the screen.

What's missing is an industrywide, standards-based electronic supply chain of high-speed networks, servers, assembly and scheduling software, and projectors that can move digital films from studios' editing rooms to the nearly 37,000 silver screens in North America and thousands more around the world. "The theater of the future will have a main server and local area networks with 300-Mbps bandwidth screaming from subservers that can hold 1 to 2 terabytes of data linked to digital projectors," says Jerry Pierce, senior VP of technology at Universal Pictures.

For the most part, that vision already is technically feasible, and movie studios and theater operators have been moving in that direction for the past five years. But costs, standards development, and huge investments in legacy 35mm film systems have slowed progress. Work has picked up recently as companies such as Landmark Theatres and Regal Entertainment Group outfit their theaters with high-speed network links, servers, and digital projectors. Studios also are putting in the IT systems needed to create, edit, transmit, and store media in digital format. Just last month, Sony Pictures Entertainment inked a deal with Ascent Media Group, a distribution and services company for the entertainment industry, to convert the studio's extensive film, television, and other media assets into digital format.A digital infrastructure has the potential to dramatically cut costs. Distribution costs alone could plummet by as much as 85% using digital file transmission instead of printing and shipping tape reels, says Walter Ordway, chief technology officer at Digital Cinema Initiatives LLC, which was set up more than two years ago by major movie studios to develop standards and a business model for digital cinema. Studios spend $3.74 million on average to print and distribute a feature film on reels, according to the Motion Picture Association of America.

It's also likely high-tech movie making will alter the business contracts between studios, distribution houses, and theater companies. Lease agreements, for example, will have to accommodate the fact that a digital theater can simply flip a switch to change out a dud movie for one that packs in crowds.

"If there's one issue that keeps me up at night, it's the impact of emerging technology on the supply chain," says Bill Patrizio, senior VP of strategic sourcing and procurement at the Walt Disney Co. "As media content moves from analog to digital, the supply chain is dramatically impacted. It takes a different form."

Digital dissemination could pave the way for new revenue models. Studios someday might sell new releases to outlets other than theaters, such as cable or Internet companies, and even individuals willing to pay a premium to view them at home. That could be critical for the industry given the declining attendance at movie houses, which some attribute to more elaborate home-entertainment systems and the short time span between a film's theatrical release and DVD premiere. Theaters stand to gain, too. Some already show digital broadcasts of live concerts and could do the same with sporting events, corporate training, and even multiplayer electronic games. Digital advertising may benefit as well: Ads could be centrally managed yet tailored to match audience demographics.But the changeover to digital won't be cheap. Industry experts estimate that a digital supply chain will cost $4 billion or more in North America alone. Converting a single theater to digital can cost as much as $120,000, arguably the biggest obstacle in digital cinema's march to ubiquity. Many theater owners balk at the price, saying they've already got projection rooms full of expensive, high-quality equipment.

Disney, Sony, and Warner Bros. have teamed to raise money to fund up to $80,000 per screening room for the equipment that theater owners will have to install. "The studios are pooling $3 billion and will distribute the money to theaters, so they can upgrade to digital cinema," says Anthony DiClemente, entertainment analyst at Lehman Brothers. Other studios may have to pay a fee to use the digital supply chain that Disney, Sony, and Warner Bros. are financing.Piracy is an ongoing concern. Film ripoffs cost Hollywood $3.5 billion a year, according to the Motion Picture Association of America, and that's with existing technology that requires bootleggers to steal film reels or clandestinely videotape movies. Theft could get easier when full-length films exist as bits and bytes that can be snagged off a network. Digital Cinema Initiatives has identified an encryption specification that would let studios scramble digital films and theaters decode them. It's also reviewing digital-rights technology that would let a studio embed an authentication mark in a movie file. But encryption and digital-rights management both can greatly increase a digital movie file's already hefty size. A full-length digital movie is about 600 Gbytes compressed, says Gavin Schutz, CTO at Ascent Media Group.

Charles Swartz heads the Entertainment Technology Center, which studies technology's impact on the entertainment industry.

Encoding devices that include industry-standard compression and encryption mechanisms are under development. They're expected to hit the market in 12 to 18 months, says Charles Swartz, executive director and CEO of the Entertainment Technology Center at the University of Southern California, a research center focused on the impact of technology on the entertainment industry.

Sony is one of the leaders in the move to next-generation technology. At the heart of its transformation is the Digital Media Platform, developed by Hewlett-Packard's research lab. It stores digital files and serves as the media and metadata repository for filmmaking applications, including editing, color correction, watermarking, and formatting for electronic distribution.

In the past few weeks, Sony started using Microsoft's Connected Services Framework to simplify movie production. The Web-services software lets Sony build an infrastructure for shared services such as digital-asset management and content-distribution processes, so directors, editors, and technicians can collaborate on media content over the Web.

Sony also contracted Thomson Technicolor Digital Cinema to build a digital facility on Sound Stage 6 in the studio's Culver City, Calif., lot, where movies will be edited and color-corrected. The facility will have color-timing theaters, film scanners, and Sony's 4K digital projectors, and Thomson Technicolor will use it to create, among other things, digital "dailies" that contain all the film footage from a day's shoot.Sony's IT group is laying fiber from the Sound Stage 6 facility to screening rooms on Sony's lot to move the large files that will make up the studio's digital library. "We've been working on digital cinema for about seven years, talking about it, trying to figure out how to get there and how to structure it," says Al Barton, VP of digital-cinema technologies at Sony. The studio expects to have everything in place by the end of the year, he says.

Universal Pictures is going digital, too, though senior VP Pierce declined to provide details. Its first digital release was Jurassic Park III in 2002, which was shown in digital format on 10 screens. At the time, most of those theaters received the movie on hard drives rather than over networks. Last year, the studio electronically transmitted Van Helsing, a movie shot on film and edited in digital format. Warner Bros. has transmitted 27 films digitally, including The Phantom Of The Opera, to an average of 30 to 35 screens. Warner Bros. first tested digital transmission early last year. Files were sent via satellite to an undisclosed theater for a couple of months. The approach was different from sending files to broadcast stations or cable operators for video on demand because different compression methods and metadata were used. "We learned to deal with technical issues surrounding path throughput, file size, and confirmation of delivery," says Darcy Antonellis, executive VP of distribution and technical operations and senior VP of worldwide anti-piracy operations at Warner Bros.

Even though digital-cinema standards are still being developed, a handful of distributors are transmitting digital files via satellite and fiber networks to a small number of theaters that have invested in digital cinema. Access Integrated Technologies Inc. digitally delivered 12 major movies, such as Robots, to about 22 theaters around the country since last summer, along with about 80 movie trailers and a concert. It has contracted to digitally deliver the new Star Wars movie.

Only 89 commercial screening rooms are equipped to show digital cinema, says Bill Mead, a consultant and publisher of DCinema Today, an industry publication. But Universal Pictures' Pierce expects that to change quickly. "It's possible that within a year and a half you could see as many as 1,000 screens in the digital format," he says. "In seven years we may see between 15,000 and 20,000 digital-cinema screens."

Landmark Theatres, known for showing independent and foreign films, will begin its digital cinema rollout this summer. Co-owner Mark Cuban, who also owns the Dallas Mavericks basketball team, is converting the chain of 59 cinemas with more than 210 screens to Sony Electronics' new 4K digital SXRD projectors. Landmark will be able to show live concerts and sporting events, as well as ultra-high-resolution movies. The strategy is to produce and distribute high-definition movies through HDNet Films, another of Cuban's holdings under his 2929 Entertainment Co.

A Landmark theater in San Francisco and one in Dallas will be the first to receive and show digital movies, which will be shipped on hard drives to the theaters, Cuban says in an E-mail. Ultimately, he wants the films to be delivered electronically. "Once we get everything debugged at the system level and rolled out to more theaters, we will look at our distribution network," he says.

Regal Entertainment Group, a network of 6,264 screens and 553 theaters, has invested about $75 million to set up a digital supply chain. Tom Galley, chief operating and technology officer at Regal's newly formed National CineMedia subsidiary, which is focused on digital advertising and content distribution, spent more than two years designing and installing a high-speed network, satellite multicasting services, and a command center in Centennial, Colo., a spokeswoman says. The digital theaters have Christi L6 digital projectors that are controlled from the command center, each with an individual IP address and sitting next to a 35mm film projector, she says. Command-center operators transmit what the company calls the "2wenty," a 20-minute pre-feature program comprised of original, short-form entertainment segments and on-screen advertising. Regal also is experimenting with other digital transmissions. Last year it broadcast via satellite Prince's Musicology tour from the Staples Center in Los Angeles to its theaters across the country. Concert-goers paid $12.50 to $17.50 for the theater show.

Regal should be able to handle the eventual rollout of digital feature films once it adds more fiber, satellite dishes, and digital projectors that support Digital Cinema Initiatives specs, the spokeswoman says. Regal has five auditoriums that use 2K digital projectors, predecessors to the 4Ks, and support resolutions of 2048-by-1080 pixels.

With all this activity, it looks like Hollywood's blockbuster event of the season, Star Wars: Episode III, Revenge Of The Sith, could be a sign that the digital cinema is finally arriving. May the digitally produced, electronically transmitted, high-resolution flick be with you.

Illustration by Alicia Buelow, photo of Anakin Skywalker/Darth Vader courtesy of 20th Century Fox

Continue to the sidebars:
In Focus: One Filmmaker Who Knows How To Go Digital,
Protection From Pirates
and Long-Term Digital Movie Archiving Poses Challenges

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