|  IP: Logged

quote:

---

Imagine DLP systems which need a $75,000 upgrade every 3 or 4 years. Nobody will go for that when you could buy a cheapass Simplex XL that has run more than 100,000 shows and refurb it for about the price of a big screen tv and run another 100,000 shows without a hitch

---

Right, and the result is that it makes no sense for a theatre operator to pay for a DLP system, so long as the studios are willing to lease expensive, 35mm prints at the same rates as dirt-cheap digital prints.

The potential cost savings from not having to manufacture film prints is substantial.

A couple of assumptions here that may not be that accurate.

1) Assume that you receive all new prints, and they are all bandsawed after they are returned from your theatre, (even though you used filmguard and returned them in perfect condition.)

2) The cost of a DLP "print" is negligable -- a couple of DVD-RAM discs and UPS shipping. Also, DLP prints can easily be shipped from theatre to theatre, and one print can load any number of projectors, so the cost of digital distribution may even be less.

3) A print costs $3000, to manufacture, distribute, reclaim, and dispose of, from optical printer to bandsaw. That's the figure I've heard. Might be high, might be low.

$3000 x 9 prints = $27,000 x 3 years = $81,000.

So if you run more then about 9 prints per screen per year, then the distributor's savings on lab work, shipping, inventory, disposal, add up to about the amount of a new digital projector every three years.

If the distributors and studios really want to move to digital projection, one possible way would be to offer a "digital allowance" -- either money off the top, or better percentage terms -- for theatres that run digital prints instead of film prints.

Plus, remember that three years from now, when you're buying new digital projectors, your are going to trade in your old, fully functional digital projectors, which will probably be purchased dirt cheap by a second-run theatre, which will probably replace something like a Simplex XL.

This leads to the next factor -- economics of scale. The more digital projectors, the fewer film prints need to be produced. Producing motion picture film has a manufacturing per-foot cost, and a corporation overhead cost. The less release stock is produced, the more expensive that film becomes per foot. The more expensive film becomes, the more incentive distributors have to get theatres to go digital.

Say that as time goes by, the cost of a film print goes up to $4000. Then:

$4000 x 7 prints = $28,000 x 3 years = $84,000.

Now the break-even point is 7 prints, increasing the desire on the part of the distributors to stop manufacturing film prints.

Eventually you reach an inflection point -- where it becomes uneconomical to distribute motion pictures on film anymore, and nearly everyone stops doing it. As usual, this has absolutely nothing to do with quality of presentation, or quality of product, and everything to do with the cost of manufacturing.

If the studios and distributors really want to move the world to digital projection, they can probably do so -- if they are willing to in effect subsidize the projectors, either by paying for them outright, or, more likely, offering a financial incentive to run digital prints, at least for the first few years until all of the Simplexes are gone.

Perhaps someone with access to the actual costs of film prints and digital projectors can correct my numbers, but it seems to me that, all else being equal, it would be to the financial advantage of the studios and distributors to subsidize the replacement of film with digital, and do it as quickly as possible.

Problem with your economic model is that you assume that the cost of the DLP is fixed; the Simplex will run on very little, very low-cost maintenance for years, maybe decades. There is no guarantee that the DLP will not need tweaking, nano-mirror module replacement, computer service, etc. over any extended time-frame. This maintenance will not be some $25/hr technician like the fellows that can come and repair a thrown gear in an XL projector head within one or two show cycles or even replaced a "crashed" XL head with a spare one that is laying around the shop. 35mm projectors and part are ubiquitous. you don't have to find a one of the relatively few TI trained technicians to fly in and repair that crashed DLP.

And of course there is also the question of obsolescence that will tend to throw a mighty big wrench in any DLP economic model. 35mm projector technology has been around for a century. It is very questionable if the DLP technology will not become obsolete within a matter of years rather than decades -- we all know that everything about digital points to the incredible speed of its obsolescence. Hell, already Kodak has announce a system that has better specs than the TI module. Not a nice thing to hear if you actually went out and just bought a Christie DLP.

No matter what the break the distributor gives the theatre for using DVD instead of film, one round of getting stung by a leap in that technology, and the owner of the "last generation" DLPs will understand the catastrophic loss he has just taken. Any economic advantage he might have envisioned has just gone up in digital 1s and 0s. That would certainly be the end of any economic advantage he might have been offered on advances, guarantees and percentages by the distributor.

And I would suggest we look at history and see that exhibition traditionally has NEVER bought into technology without going kicking and screaming, and then ONLY if the technology could be shown to bring more bodies into his theatre seats and concession stand lines. Cinerama became a national sensation and had sold out shows for years because it captured the imagination of the ticket-buying public. They went by the millions to a Cinerama theatre because they could SEE and HEAR a startling difference in picture and sound than ever before. They loved it and showed it by their ticket purchases. This wasn't lost on Lowell Thomas and the rest of the Cinerama pioneers -- they opened each show with a standard sized, black and white image in the center of the screen and with mono sound. When Thomas spoke those famous words from that black & white small screen, "Ladies and gentlemen, this is Cinerama," and the curtains opened to reveal a huge enveloping screen, that audience was hooked. You can bet they saw and heard the difference.

Imagine the thrill the ticket-buying public will get when someone in the theatre shouts "Ladies and gentlemen, this is Digital Light Projection." They certainly won't be impressed with any new, exciting improvement in either image or sound -- in the best scenario, it will be no better than the picture and sound they have always seen. They aren't going to be impressed that the distributor saved money on print distribution. If the technology doesn't excite the public, exhibition traditionally will not invest in it.

Years ago, Dolby ran a great add that said it all: the page was split in half and on one side was the marquee of a theatre that said Now Showing. That theatre and a small number of people lined up at the box office. The other marquee read, Now Playing in Dolby Surround Stereo -- there was huge crowd in front of that box office. THAT is what drives the industry, not some cost saving that goes behind the scenes. Period. And even to this day, there are theatres that still have soundheads with mono cells.

The other side of the coin is that distribution traditionally has NEVER given exhibition breaks on terms. Period. The idea that they will give up that 90/10 deal which is where they make the bulk of that coveted umpteen million dollars in the first weekend, so they can save the cost of prints, is really to not understand the economic reality of the business. In larger scheme of the entire budget for a feature film, print costs are less than what they spend on catering or limos. No one ever said, "Oh gee, guess we can't make SPIDERMAN....the print costs are just to expensive." Look, if the only way DLP can happen is by distribution needing to subsidize projection equipment, why not just own the whole theatre? Why even bother with the middle man?

And then there is the reality of the rest of the world; the movie industry doesn't exist in a USA vacuum. What about the overseas markets which play a bigger and bigger part in the total income generated by a release. The overseas release can often generate as large a percentage of the total grosses than the US market. Does anyone think that the theatres in these and the third world markets are going to have the resources to purchase DLPs?

Example of new recent technology and how exhibition dealt with it. The introduction of the new cyan track saves lots of processing costs because the prints don't have to be reprocessed and the use of silver is eliminated. Reclamation costs are lowered also. The cyan track was supposed to replace redeveloped/silver soundtracks by 1999. Hasn't happened. Why? because lots of exhibitors STILL haven't purchase/installed the $600 it costs for reverse red scanners. The industry can't convert print inventories to the new technology if the penetration of the readers isn't nearly 95% (John P can give us the exact figure). No exhibitor was ever offered a better deal if he installed a piece of equipment that would save the distrib print costs by using cyan track prints. And exhibitors tend not to install technology that hasn't been PROVEN to bring in significantly more customers.

Sorry to say, none of this bodes well for a quick and pervasive replacement of Simplex projectors with DLPs.

------------------
Frank Angel,
Dir, Brooklyn Center Cinema and Chief Projectionist operating the magnificent 2500 seat art deco Whitman Theatre (still change-over, still carbon arc, still GORGEOUS light and 6 Channel Total Surround MegaSound.
www.BrooklynCenterCinema.com

In an interview with the Editors Guild late last year, Ioan Allen of Dolby Labs talked about the conversion to cyan dye analog soundtracks. He said:

"Hopefully, when you get to 85 percent of the theaters equipped with red lights, and then you do a full commercial cyan release without the silver application, that will trigger the last 15 percent to change over."
http://www.editorsguild.com/newsletter/NovDec01/ioan_allen_two.html

------------------
John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services, Entertainment Imaging
Research Labs, Building 69, Room 7525A
Rochester, New York, 14650-1922 USA
Tel: +1 585 477 5325 Cell: +1 585 781 4036 Fax: +1 585 722 7243
e-mail: john.pytlak@kodak.com
Web site: http://www.kodak.com/go/motion

It's the public demand or lack of it that will be the reason DLP lives or dies. And it is what the public sees on the screen and hears in the room that excites them, not what's up in the booth.

Agreed.

The ads for the Kodak Digital Cinema system say:

"This is what audiences have to say about metadata and digital light modulators and high-tech software and interface systems: Shhhh, we're watching the movie."
http://www.kodak.com/go/dcinema

------------------
John P. Pytlak, Senior Technical Specialist
Worldwide Technical Services, Entertainment Imaging
Research Labs, Building 69, Room 7525A
Rochester, New York, 14650-1922 USA
Tel: +1 585 477 5325 Cell: +1 585 781 4036 Fax: +1 585 722 7243
e-mail: john.pytlak@kodak.com
Web site: http://www.kodak.com/go/motion