• by Tom Ohanian , October 7, 2008

The process of making feature-length motion pictures essentially remained the same for almost 100 years until the year 1992. That year, digital nonlinear editing systems (DNLEs) that played back digitized images at a film-native 24 frames-per-second (fps) rate began to appear in the marketplace. Within six years, DNLEs became the dominant systems for feature film editorial. Today, for feature film theatrical -- across the world -- one finds very little film-based editorial where film is still manually cut and spliced.

The movement of cutting film to cutting nonlinearly was no less remarkable than the introduction of sound to motion pictures some 20 years after Edison invented recorded sound in 1877.

As important as the introduction of sound and the adoption of DNLEs to the filmmaking process, the introduction of disk- or solid-state based cameras is another development that is beginning to gain support, with an ever-growing number of films being shot digitally. Whether for documentary filmmaking or independent or studio-financed feature films, digital acquisition is growing in use. This is also happening on a worldwide basis.

In filmmaking -- regardless of whether the content is short- or long-form documentary or short- or long-form feature for theatrical distribution -- all forms of digital technology are converging to further the art and craft of making and delivering motion pictures. I often use the abbreviation D-D-D when referring to digital acquisition, digital manipulation (editing, compositing, Digital Intermediate, etc.), and digital distribution.

Over the last several years, the media and entertainment industry has implemented, in very small numbers and without any specific coordination, solutions for digital cinema delivery. Specifically, the term digital cinema delivery (DCD) can be used to describe the delivery of both short-form and long-form programming to theatres.

Today, digital cinema theatre and screen counts are highest in Asia, followed by the U.S., with Europe trailing. However, all developments, most importantly business and technical, indicate that 2009 portends to be the year of significant DCD implementations, resulting in what should be a relatively short period of retooling the majority of cinemas in the largest and most lucrative world film markets. Is this retooling inevitable -- or is it feasible that large-scale DCD implementations will be put off, yet again, year after year? For a number of reasons, digital cinema distribution will characterize content distribution to theatres and will, indeed, replace the physical distribution of film prints.

Why Digital Cinema Distribution? Physical Distribution Costs

The cost associated with creating film prints varies depending upon the number of prints ordered. The current record holder for films with the widest openings is "The Dark Knight," which opened on 4,366 screens.

For purposes of illustration and being conservative, let us take $1500 per film print multiplied by 3,000 screens multiplied by 100 films per year ($1500 x 3,000 x 100), which equals $450,000,000. Again, these are conservative numbers. If we increase the number of screens and films by only 25%, the total becomes over $700 million.

Piracy Concerns

According to the most recent figures available from the Motion Picture Association of America (MPAA), the worldwide motion picture industry, which the MPAA classifies as including "foreign and domestic producers, distributors, theaters, video stores and pay-per-view operators", lost $18.2 billion as a result of piracy. Content piracy can occur before the official release date where either portions of the film in-progress or the entire completed film become available in either physical form (tapes, DVD, etc.) or in digital form, typically on peer-to-peer file sharing networks. The continued use of physical distribution of film canisters or from a high-definition (HD) tape that has been used for previews/screenings can thus easily lead to that pre-release content becoming a $2 to $5 DVD on a street corner.

 One of the most promising aspects of delivery of digital files to theatres is that it will become possible to have a more dynamic programming schedule. This will benefit the content owner, the distributor, the exhibitor, and the audience. Today, of course, a film is "programmed" onto some number of screens for some number of weeks. Exhibitors will typically enjoy a greater percentage of the film's revenue the more weeks the film plays on its screens. However, under-performing films will also contractually be obligated to "play out" regardless of whether no one is in attendance. However, the ability to electronically reprogram screens, rotating old films out and new films in, will be of great importance in maximizing the revenue-generating capacity of screens.

While there are many reasons why digital delivery to cinemas appears to be stalled -- negotiations of virtual print fees (VPFs), underwriting of costs of hardware and software implementations in theatres, and so forth -- but, it is inevitable and we should see digital cinema distribution dominate over the next three-year period.