Studios have been enamored with the idea of sending movies to cinemas digitally by satellite ever since digital cinema began to emerge. Equally so, satellite operators have been attracted to the idea of transmitting movies to theatres to fill out satellite dead time. Boeing and Raytheon were early contenders for this space, with Boeing the first to deliver movies by satellite.
But studios were less interested in rocket science, and more interested in a fulfillment process that could be handled by the lowest bidder. They certainly were not interested in spending on satellite dish and receiver infrastructure. As a result, several satellite business models have emerged to pay for that infrastructure.
Each model has its limitations. If a single satellite has many uplink services associated with it, the Arqiva model in the UK has merit, where Arqiva pays for the receivers and dishes, and the many uplink users each pay an access fee. The efficiency of the model is apparent in that only one dish is needed on the cinema’s roof.
In the US, where not all uplink services use the same satellite, a less efficient model has evolved, requiring the cinema to install several dishes on roof to support the various uplink services. Microspace and Technicolor foot the bill for dishes and receivers. Deluxe partnered with EchoStar in September, where EchoStar will presumably pick up the tab for infrastructure costs.
The only innovative satellite business model in the US is that of Digital Cinema Distribution Coalition (DCDC). Initiated by Warner following its success with “Station in a Box” and its Global Digital Media Exchange (GDMX) operation, DCDC was conceived as a studio-owned satellite distribution utility. On a back burner for the past few years, DCDC has been resurrected and reportedly has a new RFP out for satellite service. Warner’s only studio partner, however, remains Universal.
Satellite delivery is challenged by the speed at which a movie can be downloaded, often taking a 24 hour cycle, sometimes longer, to complete error-free. There is also the cost of infrastructure necessary to deliver several movies simultaneously. In addition, the same competition that satellite faces in consumer TV markets will one day apply to cinemas. Telecoms are beefing up terrestrial backbone services and last mile wireless delivery for smart phone and consumer VOD applications. This will leave substantial unused off-peak capacity to sell for applications such as digital cinema fulfillment. While today the word “bittorrent” is synonymous with piracy in the minds of studio execs, it may one day be the very technology that delivers their movies to cinemas.
