Perhaps DCI’s greatest accomplishment is that, under its umbrella, all 6 major motion picture studios agreed to distribution and security standards for digital cinema. But the studios also wanted the means to enforce their joint requirements onto equipment manufacturers. Thus, DCI-compliance testing was conceived. To enforce compliance, the studios envisioned that all equipment would be purchased through digital cinema deployment entities, which would collect VPF payments to recoup the cost of equipment. If the equipment wasn’t compliant, the VPF wouldn’t be paid.
But DCI’s ideals have yet to materialize. 17,000 digital cinema systems are now installed around the world, none of them DCI compliant. Further, as many as 50% of those screens are not financed through a digital cinema deployment entity, leaving the studios with no means to enforce compliance short of withholding movies. Yet the studios continue to deliver content to all of these installations. An additional wrinkle is that the value of the theatrical release has been growing. For the first time since 2002, first release box office revenues exceeded sales of DVDs to consumers in 2009. Imagine the heads that would have rolled at Fox had someone suggested that Avatar can’t play on digital 3-D screens because they aren’t DCI compliant.
Digital cinema deployment agreements generally stipulate that once DCI compliant equipment is available, all installed equipment must comply. But if the equipment isn’t purchased under a deployment agreement, then the only means of enforcing compliance is to withhold a movie. Given the growing value of theatrical box office, and the large number of screens which are not governed by deployment agreements, it’s unlikely that any such action will take place. It’s particularly unlikely that all 6 major studios would collectively withhold movies. Setting aside the anti-trust implication of such collective action, one should not discount that these are fierce competitors. Should one studio move to create a void, another will certainly move to fill it. After all, the equipment that they play their movies on today around the world is obviously acceptable, so what would be the risk in continuing to play movies on this gear?
This might sound like anarchy, putting full control of equipment specifications in the hands of manufacturers and exhibitors. However, this is not actually so. Some studios, taking control of their destiny, have had an equipment approval process in place since the beginning. (Disney’s approved equipment list is online at http://digitalcinema.disney.com.) Studios also remain in control of the distribution format. As they move to standards-compliant distributions, and as these standards are adopted by ISO, their ability to control the distribution format around the world becomes inviolate. This is critical, as the distribution format is encrypted, requiring a security key to decrypt the content. When creating such keys (or KDMs) for the exhibitor, full knowledge of the equipment on which the movie is to be played will be learned. So while withholding a movie may be a radical step, the studio has the ability to learn if approved equipment is being used to play its movie. The problem will be upgrading this equipment to DCI compliance.
If a sudden upgrade to DCI compliant equipment is difficult or impossible to achieve, then the introduction of DCI compliant equipment will be gradual. One of the drawbacks of digital cinema equipment that exhibitors like to point out is that it has a relatively short lifetime when compared to film equipment. This is good news for studios. Digital cinema equipment, particularly the server, is not expected to last more than 10 years. If studios cannot enforce an upgrade to DCI compliance in the near term, they can enforce a transition to compliance over time as older equipment is retired and replaced with new designs. We should expect that, in the long term, there will be a balance in deciding what constitutes compliance, particularly as larger exhibitors weigh in with their choices of equipment, and studio payouts of VPFs dry up.
So the question as to the relevance of DCI compliance today is a worthy one. The good news for studios is that they got off on the right foot by only allowing approved equipment to be installed. One day, the equipment approval process and DCI compliance testing will be one and the same. But studios may never reach the holy grail of upgrading existing equipment to DCI compliance at one go. Which is good news for Doremi, which will naturally strive to delay the transition to DCI compliance until the inevitable warranty replacement is required of 4000 servers in the US installed under Cinedigm’s Phase 1 deployment.