After several false starts, the widespread replacement of aging film-based movie projection systems with cutting edge digital cinema setups is moving forward.
A big stumbling block toward deployment was removed when specs by the Digital Cinema Initiative were completed this summer.
Now, Access Integrated Technologies Inc. and Christie Digital Systems USA Inc. tell TechWeb they're on target to install 150 digital cinema projection systems by Dec. 31. Over the long haul, the two plan to install 4,000 digital screens nationwide.
"We're targeting between 250 and 350 installations during the first calendar quarter of next year," said Bud Mayo, chairman and CEO at Access Integrated Technologies Inc. "Digital cinema isn't some kind of technology that you can wheel and plug in. It takes time to network the servers and projectors, and train personnel."
Plans call for a 36,000-screen deployment during the next five years. That's how many commercial movie screens there are in the United States and Canada. It takes about one week to create and install a network for nine screens, Mayo said.
Movie studios such as Disney, Twentieth Century Fox, and Universal Pictures have been pushing for digital cinema, a distribution method to deliver movies in a digital format, in part, to spark consumers back to theaters.
Digital film projection technology enables studios to create better quality movies that don't deteriorate after multiple viewings such as film does. With digital, the image and sound quality of final showing is as good as the first.
The cost associated with retrofitting theaters with the digital projection systems will be mostly covered by movie studios and film distributors.
Only a handful of consumers have seen a movie that has been digitally mastered and projected on a screen, so there's been little demand for digital cinema.
That's expected to change beginning next year as more studios transition from celluloid to bits and bytes, Mayo said. Universal Pictures is the latest major motion picture studio to sign with AccessIT to distribute approximately 4,000 movies in digital format within the next two years.
The movie industry could use a boost. Theater attendance has declined since 2002 from 1.63 billion to 1.53 billion in 2004, according to the most recent statistics from the National Association of Theater Owners. AMC reported that attendance for the quarter was down 13 percent, compared with eight percent throughout the United States and Canada.
AMC Entertainment Inc., the second largest movie exhibitor in North America behind Regal Entertainment Group, earlier this month reported a revenue decline 10.2 percent. It lost $10.7 million in its second quarter, ended Sept. 29. A year ago, AMC lost $12.4 million for the same quarter, which included $5.7 million in preferred dividend payments and undistributed earnings.
Prices for movie tickets in the United States rose on average to $6.21 in 2004, up from $4.08 in 1994, and the national-average price is expected to rise again this year, according to the National Association of Theater Owners.
Tickets prices are expected to climb at a 3.6% compounded annual growth rate from 2005 through 2014, according to Wade Holden, an analyst focused on motion picture and home video entertainment at Kagan Research.