Digital Cinema: fight over, the roll out continues

Avatar (in case there is anyone who hasn’t seen it), tells the story of a powerful human force who have colonised a remote planet, and are intent extracting precious minerals, regardless of the more sensitive, less aggressive natives, whose cultural home lies over the richest deposits. The film has swept box-office records away in a tsunami worth US$2.6m of ticket sales, (still counting). It has resuscitated the roll-out not only of 3D but of D-Cinema in general. But has this roll-out upset the delicately-balanced ecology of independent cinema in regional Australia in just the way the mining colonists trampled on Pandora? And if so, how are the natives reacting?

Until late last year, the case for putting in a full Hollywood-Endorsed DCI (Digital Cinema Initiative) digital projection system was unconvincing. Spending up to $150,000 on a digital projector and server, to show the same films the cinemas had been getting all along as 35mm prints, wasn’t attractive. On the other hand, independent and regional cinemas could see a good case for installing a lower cost e-cinema system that gave them access to art house, independent and Australian titles at the same time as the first release houses in capital cities. Because only a few 35mm prints are normally made of these titles, regional cinemas have had to wait, often until after the DVD is released and their potential audience has evaporated. But this was new, extra box office business, filling the cinema for mid week and matinee performances. Business that would pay for the equipment in a year or two.

E-cinema works well in small to medium-sized cinemas, with less mainstream pictures. But it doesn’t conform to the DCI specifications. It has slightly lower resolution, and less secure (if any) encryption. And the encoding and compression format is different. Hollywood studios won’t permit their films to be shown in e-cinema format.

And so, as things stood last year, there was not a little disagreement in the cinema business: whether to encourage smaller cinemas to put in e-cinema, at least as a first step towards digitisation, or to support Hollywood and the major distributors in their demands for D-cinema or nothing. Independent distributors like Peter Castaldi (The PacK) pointed out the opportunities the e-cinema provided for distributing Australian films to independent cinemas, with fewer booking commitments for mainstream films: ICAA chair Mark Safarty wisely pointed out that D-cinema would ultimately become the universal standard, and argued that e-cinema was already a blind alley.

In the middle of last year, there were between 400 and 450 e-cinema installations around the country, and a hundred or so D-cinemas. But a storm was gathering: and its name was Avatar. Both Hoyts and Greater Union were installing DCI-approved 3D cinema systems as fast as they could go, and a number of independents were too. By the time Avatar opened just before Christmas, the number of D-cinemas had doubled – and they were all 3D-capable. According to Ben Wilson of equipment suppliers EdgeDigital Technology, there are now over 300 D-cinema systems up and running. Since Christmas, though, in the wake of a poorly-timed DCI specification change he reports that it has been hard to source enough projectors to keep up with D-cinema demand. EdgeDigital was formerly Atlab Image & Sound Technology, the leading supplier of e-cinema equipment. “Demand for that stopped dead late last year.” says Wilson. However, he reports that many cinemas are now also installing equipment to allow alternative inputs to their D-cinema system, including HD video and e-cinema.

At first, regional independent cinemas installed just one e-cinema system to play the lower-demand independent features on a single screen. Now, according to Wilson, a growing number are, like the major cinema chains, installing D-cinema throughout their complex, together with cinema programming and automation systems. This gives the flexibility to “play down” a digital film into smaller auditoriums as demand falls off. However, completely digitising a complex is a major investment, still beyond the reach of many independents.

Peter Castaldi bases his distribution business (The PacK) on Australian films. While it’s not always easy to get them programmed by the major chains, which have a constant supply of heavily-marketed product coming from the Hollywood studio system, he focuses more on independent distributors.

He reports that last year’s “D- or death” scenario has been toned down. Even Hollywood realised that could not afford to write off the indie sector (which represents half the screens in Australia), and so the business model has had to shift to accommodate them, he says. The proposed Virtual Print Fee (VPF), a financing model intended to ease the equipment cost for exhibitors, has so far not been adopted: but this has resulted in an easing of any restrictions on what can be shown on D-cinema systems, making a combined D- and e- system more feasible for independents.

He points to The PacK’s recent release of David Bradbury’s surfing documentary Going Vertical in about 30 cinemas, mainly in coastal centres, including major chain Greater Union as well as independents, in a mixture of D-cinema and e-cinema formats.

Another major player in the now slowed e-cinema rollout up is John Stokes, of Skytech systems, and previously Panalogic. Stokes confirms that existing installations of e-cinema are “alive and well”, but welcomes the shift towards the much more closely standardised D-cinema system “it’s more consistent in colour” he says.

With the drying up of conventional e-cinema equipment sales in Australia, Stokes finds his business has shifted. He is working closely with Castaldi in distributing independent features, but also expanding into what Castaldi calls “Microcinema”: very low cost installations in 30-seat rooms in bars and clubs, into other visual display systems (digital signage) for shopping centres. Stokes is also going into the Indian cinema business.

Despite its massive population, and production industry that rivals Hollywood for numbers of films produced, there aren’t many cinemas in India. There are just 12,000 screens: that is, one for every 80,000 people, about a tenth of the ratio for the USA or for Australia.

With its enormously popular local production industry, Indian exhibitors are not as beholden to DCI standards as the Australian industry is, but encryption is vital. So, according to Stokes, they are rolling out a hybrid system: e-cinema (HD) resolution, with DCI-level encryption, playing on low-cost projectors. Cinemas in India also see a big business opportunity in screening live cricket, potentially in 3D. In Australia, Hoyts is also reportedly considering 3D sports coverage.

It seems that Australia’s cinema industry – from the hardware providers to the independent distributors and exhibitors – might have skilfully hitched a ride with Avatar, healed over a potentially damaging split in technology, and found new business opportunities along the way.

– published in SCREENHUB April 12th 2010 –


One response to this post.

  1. Without distribution, these films would never be seen by anyone. Suppliers


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