It goes without saying that the shift to digital projection in cinemas thrust the cinema industry into the age of digital media, where no cinema has gone before. Just as consumers are continually bombarded by new “must have” technologies, exhibitors also face pitches from manufacturers to upgrade and improve their cinemas. More than ever, exhibitors need independent educational forums to best evaluate new investments in technology.
The shift to digital projection technology was a unique event in the history of cinema. It would have proven unmanageable had it not been for the Digital Cinema Initiative (DCI) specification. The specification provided the basis by which major motion picture distributors would release movies in digital format. Backed by the guarantee of content, compliance with the specification provided banks with the confidence to finance digital projection equipment. While larger exhibitors had the resources to investigate and learn details of the transition, small exhibitors looked to others for help. In Europe, for example, they turned to MEDIA Salles, which provides access to experts through annual education programs.
But the need for exhibitor education has not ended with the rollout. Instead, it has only begun. This is because digital motion picture technology makes it possible to introduce an unlimited array of new capabilities not considered when the DCI specification was first created. Just as owners of the first Apple iPad have come to learn, one needs to upgrade or replace their existing equipment to benefit from the latest features available in the marketplace. But unlike for owners of the first iPad, it’s not so easy to offset the investment in a new projector by selling the old projector into a secondary market. There is no secondary market, as the bulk of the transition took place with brand new equipment over a 5-year period, placing the entire marketplace on the same footing.
The absence of subsidies for new equipment purchases also shifts risk to the exhibitor. Major motion picture studios were willing to subsidize the transition to digital projection through a mechanism called the virtual print fee (VPF). In effect, the VPF subsidy shares with exhibitors the savings studios will realize over the first 10 years of the transition. But the VPF subsidy is a one-time event. Without a secondary market for older equipment, and without a future subsidy, exhibitors will be faced with substantial capital expenditures for the latest cinema systems. Those investments will need to be carefully placed, else their businesses will be at risk.
While DCI provided a specification for the initial transition to digital projection, DCI will have less control over the market without the financial power of the VPF subsidy to back it. Most certainly, there will continue to be standards that guide the makers of digital cinema equipment, and DCI will do its best to provide guidance. But manufacturers are keen to sell new innovations, such as new sound system technologies, as well as new projection capabilities that include high dynamic range, high frame rate, wide color gamut, and higher light levels for 3D. None of these innovations were addressed in the DCI specification. In addition, new capabilities designed to improve operations are beginning to emerge, again none of which are addressed by DCI.
Now that the transition is nearly complete, marketplace dynamics are beginning to revert to that of former days, where sellers drove innovation, and buyers would pick and choose. However, today is different from yesterday, in that technology is advancing at a much faster pace, and the cinema market is now highly leveraged, after investing massive sums in new digital projection equipment worldwide. The combination of rapidly changing technology in a highly leveraged market could lead to disaster for small exhibitors if ill informed when making new investments in their business.
Exhibitors can learn about new innovations at trade shows, but trade shows are driven by sellers, not buyers. A buyer-friendly event invites experts to speak independently of sellers. It also gives exhibitors unfettered access to those experts. This is particularly valuable for independent exhibitors, who otherwise are overshadowed by their bigger brethren at trade shows. But few such services exist around the world.
A good example of the capability of trade shows to over-promote technology is that of laser-illuminated projectors. Numerous trade shows and publications tout laser-illuminated projectors as the technology of choice for higher brightness 3D. Such projectors, however, cost in the neighborhood of 3-400,000 Euro today for a large auditorium, where light levels are most challenging. An independent exhibitor, hearing such news, might think its time to fold up shop. A better-informed exhibitor, on the other hand, will have the benefit of hearing alternative views, and can learn how to reach the level of quality they wish to achieve through more affordable methods. An unbiased and open education process provides small exhibitors with access to such information.
Technology advances, and business changes. The exhibition industry underwent enormous change with the introduction of digital projection. But the transition is only the first step of the exhibition industry’s thrust into the digital age. The rapid pace of new developments in technology, coupled with the over-leveraged state of exhibition caused by the transition to digital projection, creates new risk in the industry, particularly for small independent exhibitors. The mechanisms for mitigating the risk of new technology in the early days of the transition are limited and already losing effectiveness. The best way to offset risk for small exhibitors is to provide education in an unbiased and open manner. From my personal experience, MEDIA Salles in Europe has proven to be an effective platform for providing such education. I hope to see its efforts continue to thrive and multiply.
An earlier version of this article was produced in support of the MEDIA Salles exhibitor education program in Europe.