Word on the street is that we should expect an announcement about DCDC, Digital Cinema Distribution Coalition, at CinemaCon. This journal asked “why DCDC” after last year’s CinemaCon. The best answer heard so far is “to finish what was started.” It would seem that DCDC has more to do with the politics of business than with return-on-investment.
DCDC is formulated to promote egalitarian ownership of the digital fulfillment path to cinemas. To do this, DCDC proposes to operate a not-for-profit satellite network to AMC, Cinemark, and Regal, the largest exhibitors in the US. Exhibitors are interested in this, as they don’t want a plethora of satellite dishes on their roofs. These same exhibitors also have the responsibility today of providing the download links for National CineMedia (NCM), their cinema advertising partner, which they would like to off-load to DCDC.
The devil in this deal is in the details. There are a lot of “ifs.” Exhibitors already have a satellite network in place to land NCM’s content. If that network is due for replacement, then it would make sense to redirect those funds into satellite dishes that would also bring movies to their sites. If the exhibitors are getting dinged for shipping costs when returning DCPs sent via hard drive, then it would make sense for a deal with DCDC that reduces or eliminate these fees. In fact, one can assume that exhibitors wouldn’t bother with the deal unless it made sense for them.
It’s more difficult to grasp why this deal makes sense for studios. They already have directed Deluxe and Technicolor to invest in the satellite distribution of movies. The costs of that infrastructure are built-in to their fulfillment fees. How would a DCDC-operated network reduce those costs further? This question has even deeper significance if the to-be-announced contracted entity working with DCDC is Deluxe or Technicolor. (It’s bound to be one of them.)
These are the obvious questions that have been raised about DCDC for some time. But a more thoughtful question requires an understanding of bit rates and payload. The DCI specification calls for a maximum compression bit rate of 250Mb/s. This places a limit on the size of DCP payloads, which tend to be in the 200GB to 300GB range. For satellite delivery, this payload, with the additional time required for error correction, requires in the neighborhood of 11 hours to complete. With physical media, the payload can be carried on a single hard drive. The cost of satellite delivery is based on transponder time, while the cost of hard drive delivery is largely based on physical shipment of the drive.
The trend in cinema, however, is to move beyond the DCI maximum bit rate, to accommodate higher frame rates. This trend will cause the payload to increase. Hobbit, for example, to be released later this year, will require a storage limit of at least 500GB to carry the 48fps per eye 3-D version, probably more. Such increases in file size were not anticipated when DCDC was first formulated. For satellite delivery, it could double the transponder time, and thus double the cost. But for hard drive delivery, where a single drive today can hold a 500GB DCP, the shipping cost doesn’t change at all. Further, in the real world, each release requires several versions of the movie to be shipped, requiring more time to deliver the payload by satellite. Hard drive delivery, on the other hand, can be more efficiently managed by directing which payload is sent to which site.
Another consideration is the build-out of terrestrial networks. Household demand for Internet services, and in particular, the demand by smart phone users for increased data services, has caused massive growth in terrestrial backbone capacity. Like satellite, this capacity can be put to work for other uses during off-peak times. The holdup today, as it has always been, is that the telcos, who own the terrestrial backbone, haven’t been keen on pricing themselves into the one-to-many data market. Last mile considerations are also an issue, but easier to solve today thanks to a massive cell tower build-out, and the introduction of low power unregulated microwave links capable of 1Gb/s and greater transmission. Add torrent servers to select hubs, and the speed of transmission in a one-to-many application will jump significantly. Telcos may not appear to be competition to satellite data delivery today, but one would be wiser to think of them as sleeping giants.
Which comes back to why Warner Bros would champion a satellite data operation deal that doesn’t own its satellites, and is facing a different world in terms of data demand than it did when it first set foot on this path? The best answer is to finish what they started.