posted 03-01-2010 02:11 AM                    

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Three large movie-theater chains are set to unveil a new $660 million financing plan to convert nearly half of the country's silver screens to digital technology, paving the way for Hollywood to roll out more 3-D movies in the wake of the success of James Cameron's "Avatar."

Using a 2007 joint venture established by AMC Entertainment Inc., Cinemark Holdings Inc. and Regal Entertainment Group, the trio will fund the overhaul of about 1,100 theaters, or about 14,000 movie screens.

In a digital conversion, theaters rip out old celluloid film projectors, and stop receiving weekly shipments of large film canisters. They instead use fiber optic lines to transfer huge digital film files.
Upgrade in Progress
Bloomberg News

Traditional celluloid film, above, sits in bulky canisters in a projection room, in contrast to the small hard drive that contains a digital movie, below.

The move to digital projection has been a hot topic of discussion for a decade. Currently in the U.S. there are about 40,000 movies screens and only about 7,600 of them are digital. Converting screens can cost $70,000 apiece.

AMC, Cinemark and Regal will convert most of their theaters from celluloid film reels to digital screens and projectors by the end of 2013. They will likely start in bigger markets such as New York, Los Angeles and Chicago, which have shown a bigger appetite for 3-D films.

The theater owners' joint venture, known as Digital Cinema Implementation Partners, or DCIP, was formed in 2007, but its fund-raising efforts were stymied by the financial crisis that erupted in 2008.

The new funding should enable theaters to quickly install digital screens and projection systems, which are currently in high demand as a crush of new 3-D films are slated for release.

J.P. Morgan Chase & Co. is backing the deal, which includes $445 million in debt and $215 million in equity. J.P. Morgan and Blackstone Group served as financial advisers to DCIP.

Six movie studios are also part of the deal: Walt Disney Co.'s Disney Studios; Viacom Inc.'s Paramount Pictures; General Electric Co.'s Universal Pictures; Lions Gate Entertainment Corp.; Sony Corp.'s Sony Pictures and Twentieth Century Fox, a division of News Corp., which also owns The Wall Street Journal.

The one major studio that hasn't signed on to participate in the transaction is Time Warner Inc.'s Warner Bros. People familiar with the matter said that Warner Bros. plans to join the consortium and is finalizing its agreement.

Studios currently pay $1,000 to $1,500 per screen for a celluloid print—and then must pay to replace that print when it wears down after about six weeks.

Under this venture, studios will agree to pay Digital Cinema Implementation Partners, a fee for every booking of the film. That fee will be about $850 per booking, according to people familiar with the matter.

The plan could be a boon to Sony of Japan and Belgium's Barco NV, whose digital technology will be used by the theater chains.

The new joint venture can't start soon enough for the Hollywood studios and U.S. exhibitors. Sparked by the success of recent 3-D films such as "Up" and "Avatar," the studios are flooding the marketplace with more than 20 3-D films this year.

For a big-budget movie aimed at an international audience, releasing it in 3-D may increase its profits by about 25%.

One such traffic jam happens next month, when Walt Disney Co. releases "Alice in Wonderland" in early March. DreamWorks Animation, helmed by 3-D evangelist Jeffrey Katzenberg, comes out with its second 3-D release, "How To Train Your Dragon," just a few weeks later. A third film—Warner Bros.'s "Clash of the Titans"—debuts in early April.

Write to Jeffrey McCracken at jeff.mccracken@wsj.com and Lauren A. E. Schuker at lauren.schuker@wsj.com

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posted 03-01-2010 02:15 AM                    

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Studios currently pay $1,000 to $1,500 per screen for a celluloid print—and then must pay to replace that print when it wears down after about six weeks.

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posted 03-01-2010 03:34 PM                   

quote: Jonathan Althaus

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We were told to get some electric work done to make room for our centralized server, so this article doesn't surprise me at all.

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posted 03-02-2010 12:50 AM                   

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Year 11 and We’re Still Talking About Rollout

Eleven years have passed since the first public introduction of digital cinema at ShoWest. The industry has since come a long way…and it has still a long way to go. With nearly 100 percent worldwide digital screen growth in 2009, and with the three major circuits in the US set to rollout in 2010, one might get the sense that digital cinema is on a roll. While the US is on track to convert approximately 50 percent of its screens, there is still the remaining 50 percent to think about, as well as the rest of the world.

3D has proven itself to be the reason for adopting digital projection. Nearly all of the digital cinema installations in 2009 were 3D, resulting in a large number of installations where only one or two screens were converted to digital. Naturally, distributors need all screens converted to digital in order to completely transition to digital distribution. But the majority of these new screens weren’t installed under a deployment agreement. No monies are committed to fitting out the remaining screens with digital projectors, leaving a less-than-desirable footprint of projection technologies that requires dual film and digital distribution. While 2009 was witness to an incredible growth in digital screens the question we were left is how the industry will transition to 100 percent digital projection?

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Have We Turned That Corner?
Submitted by Nick Dager on Thu, 02/25/2010 - 13:19. Big PictureThe Big Picture
For years now people involved in exhibition have been gathering at various industry events expecting to hear that the Digital Cinema Implementation Partners finally have their funding and will finally begin to convert the three largest movie chains in the world to digital cinema. And for years, at every event, the word has been that the funding is just around the corner. Now comes ShoWest 2010, which is being held later this month in Las Vegas and the chances are good that the news from DCIP will again be some variation of just around the corner. Yet despite that, many people are ready to pronounce the digital rollout all but over. What am I missing?

Most people, and I include myself in this group, look at the digital cinema situation and see a tremendous amount of work yet to be done. But there are many people who have said that, basically, the heavy lifting in digital cinema is all but over, this despite the fact that some 70 percent of North America and as much as 90 percent of the rest of the world still hasn’t made the transition. That dynamic is likely to serve as a backdrop for this event.

Two things are certain to be discussed – 3D and 4K – but other issues will also get attention. For most exhibitors, especially those who haven’t made the transition yet, the issue will be how to pay for it. For those who have already made the transition, an issue building momentum is how to service and maintain the new technology.

As the general manager of one of the largest chains told me, “The digital industry and equipment are so new that everything is evolving almost on a daily basis. I get the feeling that the manufacturers are learning as we all are (on the fly) and that many issues are first-time issues. It's going to be a while into the conversion before many of the lingering problems are ironed out.”

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posted 03-03-2010 03:55 PM                   

quote: Todd McCracken

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Screen size, especially for 3d format content will always have an advantage at theaters. The larger the screen the greater the separation thus more depth

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Never say "always". Besides being able to scale depth to a smaller screen if you so wish at the time of making the film, you may be forgetting "virtual really goggles" and wall size TV's of the future (4K+, of course).

http://www.i-glassesstore.com/
http://gizmodo.com/5442057//gallery/2

Just wait a few more years.

Cinema has already pretty much lost the resolution advantage.

This $450 27" home monitor has MORE resolution (2048 x 1152) than any non-Sony DCI "professional", brand new just installed digital cinema or, for that matter, 35mm 2K digital-intermediate based cinema.

http://www.newegg.com/Product/Product.aspx?Item=N82E16824009165

We won't even talk about this 30" or other similar $1000 ones (2560 x 1600)

http://www.newegg.com/Product/Product.aspx?Item=N82E16824185012

Hell. I shoot (still) pictures with a camera that can do some 5K resolution today.

The sound quality advantage is also lost, with uncompressed multi channel sound easily obtainable at home at very low distortion levels and reasonable volumen and cost.

The 3D advantage (if it ever had one), will VERY soon be pretty much gone too, considering how the first 3D TV is a 55" $3100 model out this month and there are models at 65" announced real-soon-now and 3D models up to 152" have been demonstrated ...

Don't think for a second that movie theaters, EVEN if/when they have 4K and even when (if ever) they have 4:4:4 12bits 3D shows (instead of 4:2:2 10 bits, ie) and even when they have (if ever) 14fl 3D (instead of current 4fl) and even when they have 48fps (all current TV's can do 60fps+) and even when they can triple flash at 144hz (current TV's are advertised for as much as 600hz) .... don't even think for a second that the "home technology" of the future won't be able to touch that.

The battle is lost, specially when theaters start cutting corners with digital such as "non-triple flash", or "severe keystoning" or "lamp flicker" or "hot-spotted screens" etc, etc.

Even when you do digital (2K) 100% perfect in your theater, you are but a small step away from home technology. Don't think your 2000:1 contrast ratio is "untouchable" or anything like that, as home technology offers even orders of magnitude improvements.

Home theaters can CURRENTLY provide all that a normal person can want when it comes to A/V enjoyment, similar OR SUPERIOR to theaters ... TODAY!!!!

Imagine tomorrow. Then imagine 10 years from tomorrow.

I think theaters need to start investing in better tasting popcorn machines/genetic engineering rather than 2K digital projectors.