quote:

---

Dec. 15, 2005

Top exhibitors roll out blueprint for d-cinema

By Nicole Sperling

In a move that constitutes the largest exhibitor commitment yet to digital cinema, Regal Entertainment Group, AMC Entertainment Inc. and Cinemark USA have partnered to work on the development of a digital cinema business plan. National CineMedia, the joint venture owned by the three companies that was founded to create a national digital preshow advertising network, will manage the process under the guidance of NCM chairman and CEO Kurt Hall.

The plan will be open to all industry exhibitors as well as NCM's founding partners with the goal of driving down digital cinema costs from the sheer size of NCM's network of theaters.

"NCM's primary objective is to work with manufacturers to reduce the cost of digital cinema equipment through volume purchasing for NCM partners' 13,000 screens and other participating exhibitor screens," Hall said. "NCM will also seek to develop an efficient financing structure for the purchase of the digital cinema equipment that will be open to all capital sources and that will provide a transparent, cost-effective arrangement for exhibitors, distribution partners, capital providers and all other key constituents."

Hall added, "Once the financing model and equipment volume pricing has been established, our founding partners and other exhibitors who participate will have ultimate responsibility for deployment of digital cinema systems."


The business plan, while not fully developed, is expected to be based on a virtual print fee model, under which the studios bear the brunt of the costs for each digital print in theaters. The plan is similar to those being proposed by other financing vehicles hoping to roll out digital cinema, such as AccessIT's subsidiary Christie/AIX and Technicolor Digital Cinema. Hall said NCM's plan is an "open-book financing plan," whereby all parties can see how the contributed funds are being allocated.

AccessIT and Technicolor have signed content deals with the majority of the studios. When asked whether the NCM effort would bypass those being put forth by AccessIT and Technicolor, Hall said that he would be happy to talk to either of the parties regarding financing but has not. In-depth talks with the studios also have not taken place.

"The studios have done a great job with digital cinema through (the Digital Cinema Initiative). Now with this approach, the exhibitors are coming to the table. It's a natural point for this to happen given all the work distribution has done," AMC chairman and CEO Peter Brown said.

"This could be a win-win plan for the exhibitor members of NCM and the studios," Regal Cinemas CEO Mike Campbell said. "It could potentially give us some additional efficiencies in regards to the purchase of digital equipment and could give the studios additional cost savings. The studios have already committed to paying virtual print fees to the digital cinema initiatives already announced. We believe we can present something to the studios that's even more efficient if we can aggregate the NCM screens."

It is not clear how the studios will respond to such a plan, but theater owners are optimistic that a common goal should allow them to work with the studios.

Said Cinemark vp marketing and communications Terrell Falk: "We all want the same thing -- high-quality presentation on our screens at a reasonable cost with few technical issues. If we work together, we can come up with a positive end result."

Hall's company has spent the past three years operating a national Digital Content Network that deploys digital preshows and other live and prerecorded digital content. The company, first owned by Regal, partnered with AMC in March to form National CineMedia; Cinemark joined in July. Once deployment of the DCN is complete, its network will comprise 11,000 digitally equipped screens nationwide.

The network is not DCI-compliant at this time, but Hall said that it has the capability to become so by plugging into higher-end equipment.

---

quote:

---

with few technical issues

---

Don't count on that. They want to trade a rather simple system, for a very complicated one. New equipment will work fairly trouble free for a while, but a few years down the road, there will be problems. Problems that will require expensive labor to fix. Problems that will take time to fix, causing lost shows.
 

---

Posted by John Vincent, Jr. (Member # 1791) on 12-16-2005, 07:47 AM:
 
As a theatre owner, I consider this the biggest development yet on the business side of Digital Cinema. And I like it. The big boys are thumbing their collective noses, at least so far, to the two other models currently out there (AccessIT/Christie and Technicolor), and further inviting other smaller exibitors with them. This is good for exhibition. I particularly didn't like the $300 virtual print fee that EXIBITORS would have to pay under one of the other plans.
 

---

Posted by Mark Gulbrandsen (Member # 72) on 12-16-2005, 08:49 AM:
 
Bruce,

You will find less trouble in the long haul with D-Cinema once there is a large base of them installed. The projectorss are actually quite reliable... not that there won't be troouble... youo still have the same xenon systems, very similar souond systems and a server system that dpennnds ono mechanical drives... so that probably won't prove to be any more reliable than any of the DTS products have been, DTS has a track record that no one can brag about. But what will be missing from the scene is the projector and platter which is where I spend most of my repair time in generral.

What will be interesting is to see is how long it takes to build the factory in China to build all these digital projectors, since with the presennt manufacturing base here we can only produce a couple thousannd a year at best between all the manufacturers.

Mark
 

---

Posted by Lyle Romer (Member # 1266) on 12-16-2005, 11:00 AM:
 
I don't understand why the major exhibitors aren't pushing 4k as a requirement to upgrade. Not only should it look better, but it provides an easy differentiator. "4 times the resolution of HDTV" is a lot easier to market than "We're better than home DLP with HD-DVD because our projectors use 3 DLP chips instead of 1 with a color wheel. Also, our movies are compressed with JPEG2000 at a much lower compression ratio that the MPEG-4 employed on your HD-DVD."

I'm sure that TI would develop a 4K DLP Cinema chip if they were guaranteed 30,000 screens (90,000 chips). They could charge $1000 per chip. There is no way the R&D cost to increase the number of pixels on an existing technology is going to be $90 million or even close to that. They can probably develop it for $20 million at the most.
 

---

Posted by William Hooper (Member # 71) on 12-19-2005, 03:42 AM:
 
Maybe it will be as good after it's established & settled in as the video movies & content in airplanes!
 

---

Posted by Scott Norwood (Member # 30) on 12-19-2005, 04:55 AM:
 
Hey, don't make fun of airline programming. There's a quick shot of the back of my head in the current edition of "World Business Review," which I am told is now airing on certain United Airlines international flights. (There is a short segment about my daytime employer.)
 

---

Posted by Steve Guttag (Member # 268) on 12-19-2005, 04:37 PM:
 
If you do your research properly...it has cost TI upwards of $100 million for EACH revision of the DLP. The home market is where all the real dough is for them.
 

---

Posted by Paul Konen (Member # 41) on 12-19-2005, 04:48 PM:
 
What I don't understand here is, who is going to supply the content. Now, you have Technicolor still doing some screens, Dolby sends out content to its people. You read about how AccessIT sent content over the satelite.

Are all these deals going to have to be able to send content to all theatres regardless. So Universal is hooked in with AccessIT, will be distribute through other groups too, or is AccessIT gonna have to send to all theatres, aka NCM installed theatre.
 

---

Posted by Lyle Romer (Member # 1266) on 12-19-2005, 05:56 PM:
 

quote: Steve Guttag

---

If you do your research properly...it has cost TI upwards of $100 million for EACH revision of the DLP. The home market is where all the real dough is for them.

---