Getting a Clear Picture on Letterbox Format : Technology: The average viewer may not care but many regard the process as an improvement.

The home-video release of director Steven Spielberg’s “Always” in the so-called letterboxed format has fueled the debate over how best to present big-screen movies on small-screen TVs.

Letterboxing is the less common of two ways to transfer films to videotape for showing on home video, cable and broadcast television. The viewer sees a narrow, rectangular picture, with empty black space above and below the picture. Letterboxing (the term derives from the British word for mailbox, since the narrow picture resembles the mail slot) preserves the purity of the original image, because the entire picture fits onto the TV screen.

The usual method of film-to-tape transfer involves squeezing the rectangular image onto the square TV screen, using a technique called panning and scanning. Parts of the picture are cut off on both sides, often making a shambles of the filmmakers’ images and sometimes slicing out vital content. Average viewers may not realize what’s happening but many sophisticated viewers--especially film directors--regard the process as a travesty.

The advantage to letterboxing is retaining everything in the frame. The disadvantage is that the picture is smaller than usual, since it doesn’t utilize the whole TV screen. On the average 19-inch screen, the smaller image can be difficult to see.

Some industry officials figured that “Always” would suffer on the home-video market for choosing the letterboxing route--that renters might not want the aggravation, or that retailers, anticipating such rejection, might order fewer copies. But “Always” is No. 6 on the Billboard magazine rental chart.

Allan Caplan, head of the Midwest Applause video chain, acknowledged that he has heard some grumbling from renters.

“They think they’re missing something,” he said. “They see the empty spaces at the top and bottom of the screen and figure something has been cut out. They want to know what they’ve missed. For the average guy, with the $300 Emerson TV and the $200 Goldstar VCR, he doesn’t care about letterboxing. He wants a full TV screen.”

Tower Video product manager John Thrasher said that letterboxing is best appreciated on a large-screen TV. “You need at least a 32-inch or at least a 27-incher to see that reduced picture,” he said. “But you really need a big-screen TV to really take full advantage of letterboxing.”

Most people first heard about letterboxing in 1981, when Woody Allen insisted that his “Manhattan” appear in this format on pay-TV and home video. Only a few movies, such as RCA/Columbia’s restored version of “Lawrence of Arabia,” have followed suit.

“It’s great for movies with scope and sweep, movies with big battle scenes,” Thrasher said. “A film like ‘Glory’ (about a black regiment in the Civil War) should be letterboxed so we can appreciate the battle scenes.”

The biggest audience for letterboxing is the laser disc crowd. Many films are released to the laser market both with and without letterboxing. “These are the upscale, sophisticated viewers,” Thrasher said. “They’re the ones who know something about film composition and want to see the movie the way it was shot. Also, these are generally people with money, who can afford the best equipment. They’re likely to have the big-screen sets that make watching a letterboxed movie much easier.”

The biggest enemy of letterboxing is probably the home-video companies--including MCA/Universal, which is marketing “Always” but which used the letterbox format only because Spielberg insisted on it.

Though no one at the company wanted to comment, Caplan had his own explanation. “Letterboxing costs the company a lot extra,” he said. “It comes out of their profits. The average customer doesn’t care. From the standpoint of MCA, why should they pay extra for a format that pleases only a few customers? They’d rather have the profits.”