Being Digital

There was an interesting article in today's New York Times business section by Saul Hansell on Landmark Theater's decision to convert all of their projectors to this cool looking digital projector that costs $100,000 per theater.

Landmark is co-owned by Mark Cuban, so maybe this isn't such a big thing.  Cuban believes in being digital after all.

But it got me thinking about the pace at which most media businesses convert to digital. I've lived through this in the radio industry where the broadcasters waited almost five years to adopt HD Radio and it was only when satellite started really hurting them that they did it. They did not embrace digital as something they needed to get behind quickly. They were forced to do it by competitive pressures.  And interestingly enough, the cost to convert a radio station to digital is about the same $100k that it costs to convert a theater to digital projection.

So back to the theater business.  Cuban isn't converting his theaters to digital because the picture will look better (it will).  He's doing it because digital changes the game.  He can now do short run movies cost effectively.  He can broadcast live events.  He can show movies that come straight from the camera to the screen.

These are the benefits of being digital.  Low cost, instant delivery, intelligence in the bit stream, network effects, etc etc.

Landmark will use these benefits to its advantage and change the game in the theater business.  I wonder if the big chains will wait five years until its clear Landmark is winning to react.

Comments

[Tony Alva]

I'm not so sure the picture will be better Fred. Film is film, not dots and dashes and going digital will change the way "film" look. I'm not an earthy crunchy who shuns digital media conversion (I have an analog multitrack tape machine as well as a hard disc recorder in my studio), but as with digital photo cameras, they take an entirely different picture. I'm going to remain skeptical for sometime that shooting features in a digital format will be an inprovement over standard 35mm film. Certainly can't argue the improved logistics and distribution opportunities, but can't going to the movies stay something unique vs. same ol' digital delivery you can get on your wizz bang home theatre set up?

[Jeff Jarvis]

I knew a guy who was trying to get into the business of converting theaters to digital (he didn't end up doing it). The main impediment to the conversion was the capital in the old equipment, the depreciation, the ammortization, the past.

Isn't that so often the case: You're afraid of looking dumb for what you do in the past so you don't do what's smart for the future.

The cable industry is the same with its investment in analog equipment (and, yes, the fear of what pandora's boxes digital boxes are).

The news industry, similarly, worries about the old rather than the new (see yesterday's NYTimes story on papers charging for online only so they can try to keep people buying the print they don't want).

I imagine that Warren Buffet wouldn't think this way, right? When he looks at his stocks, he says he never worries about what he paid but about what they're going to be worth. Shouldn't this be the same?

It strikes me that once you have digital equipment, you open up all kinds of new possibilities: daypart and demographic advertising; rush releases; live events; distributed meetings....

But I don't care about any of this if they don't have fresh popcorn.

[Brian Dear]

Several multiplex theatres in San Diego have switched to digital.
Has it made the experience better? Well, the movie-viewing part is fine.

The problem with digital projection is what happens *before* the movie starts. Twenty minutes of commercials, promotions for television shows, yadda yadda. I always found the theatre-going experience to be a refuge from television. I worry that the "digital revolution" in theatres will wind up being nothing more than the digital living room experience without the TiVo remote control to let you skip through the commercials.

[Doug J. McKenzie / Advanced Media Group Corp]

Fred, my work in '98 - '99 with the DTV Task Force in Canada (the equivalent of the ATSC committee in the US), led me to conclude several things about the ongoing evolution to Digital TV and Digital Cinema in North America.

First and foremost, I've concluded that the word "Digital" itself is horribly abused in the market in order to serve the agendas of the broadcast / exhibition "gatekeepers", the "studios", distributors, and others who are focused on bottom lines as opposed to resolution lines.

Many in the broadcast world would have us believe that Digital is about "more" (carving up the DTV bandwidth into more STV channels) when in fact I believe it is about "better" (16:9 / HD). While the broadcasters have yet to admit it, Television is a very "tired medium" and one which, not unlike the music industry in 1980 with the introduction of the CD, can and will be REBIRTHED by the introduction of new programming in the new, high resolution, broadcast window as opposed to a digitized version of the same old languishing format.

In relation to Digital Cinema, the comparisons are varied and the economies of scale are quite different. Capitalizing the change-out of a standard film exhibition theatre to DIGITAL (projector, secure bandwidth, disc record / playback units and possible screen & sound improvements), is a daunting challenge given today's revenue models.

The revenue "chain" which is aggregated by including the release print, FEDEX, insurance, distributor margins, and exhibitor margins (not to mention Popcorn), must be reviewed from "studio to screen" and consideration will need to be given by all in the loop to either carving up the pie in a different manner, or to making investments in areas where one may historically not have done so.

For example, there may be over $1 Billion spent in North America each year in release prints to support the current film release / exhibition industry. During the next 10 years, provided such investments are made, it is safe to assume that at least 60% of these expenditures will disappear, giving way to secure digital distribution systems that are based on one or more emerging models at this juncture.

Granted, per your comments, the exhibitor is motivated to utilize theatre real estate in off hours via "Video Conferencing" or special screenings of programming that is accessible on digital video. However and generally speaking, the exhibitor does not own enough of the revenue in the current "chain" to justify the investment to digital.

On the question of exhibition quality (and noting one other commentary to your blog comments) the issue is not the original acquisition of the image, though there are now some very "filmic" approaches to capturing high-definition digital images as demonstrated by Panavision / Sony / George Lucas. If one were to argue the point about actual resolution comparisons between 35mm and HD on a frame by frame basis, 35 would still win.

The difference in "perceived" quality has more to do with the absence of "jitter" a characteristic of film projection to which global audiences have become accustomed. In digital projection there is virtually no jitter and hence the perception of a much higher resolution overall.

However as implied, the real advantage to Digital Cinema, will be in the secure distribution of media and the operational flexibility in the process. "Quality" in the end, will be a given.

Light levels, contrast and depth of field are all factors which are coming under control in new digital projector designs and which also trace back to the original acquistion of the image (35mm or HD).

"Film Look" is an irrelevant term given its reference to an illusive visual style that has already evolved into a myriad of "looks", used now as creative weapons in the director's arsenal.

Obviously this is a topic on which we could banter for hours. Thanks for bringing this issue forward.

Doug McKenzie
Advanced Media Group Corp
dmckenzie@cogeco.ca

[Lloyd Wood]

The analogy presented with radio is misleading; a digital projector is more analogous to a radio jockey choosing tracks from an MP3 player jukebox, rather than hunting around for CDs or similar, and this applies equally to AM and FM. It's a presentation efficiency; quality improvements to the listener/viewer are secondary, if they matter at all.