Moving to safeguard its historic franchise in Hollywood, Eastman Kodak Co. announced Wednesday that it is jumping into digital movie projection, the most contentious and uncertain technical field in the industry.
But Kodak said it had no answer to the biggest question stalling a large-scale roll-out of digital projection in neighborhood cinemas: Who will pay for the conversion, estimated to cost more than $150,000 a screen at current hardware prices?
Because the major film studios are expected to reap most of the potential savings of $800 million annually from a conversion to digital projection, theater owners have been loath to shoulder the cost of installing new equipment. The two sides have been at an impasse for years and Kodak said it is not in a position to mediate.
"We can't establish the business model for the theaters and the studios," said Glenn Kennel, program manager for digital cinema at Kodak's Hollywood-based Imaging Technology Center. But he said Kodak hopes to bring down the equipment cost to roughly $75,000 a screen.
Kodak expects to bring its own digital projection system to market within about 18 months. The system under design would use digital imaging chips from JVC Inc., which Kodak said offer about twice the resolution of competing chips being manufactured by Texas Instruments Inc.
Texas Instruments already has placed prototype systems in more than 30 theaters worldwide and is considered the leader in the field. Theaters in Irvine, Burbank, Universal City and Hollywood equipped with TI technology are showing digital prints of the films "Final Fantasy," "Jurassic Park III" and "Atlantis."
Kennel said Kodak should be able to catch up with its competitors by the time any of the systems are ready for commercial use.
"The systems deployed today aren't commercially viable," he said, noting that they are demonstration systems heavily subsidized by the manufacturers and studios. He said Kodak hopes to have its own prototype in a few theaters early next year.
Because a digital movie-projection system doesn't require physical contact between a projector and a strip of film, the image is steadier on the screen and remains pristine even after repeated showings.
Even more appealing to Hollywood studios is digital projection's ability to relieve them of the burden of manufacturing and distributing thousands of feature prints a year, at a cost of up to $2,500 each. The prints would be replaced with a few digital files that could be beamed to theaters.
Doubters say digital screenings are not enough of an improvement on film to draw new customers into theaters. Technical standards still are being developed by engineers, and digital projection may suffer through the same kind of "format war" that has led to three incompatible digital sound systems for theaters.
The JVC and TI chips employ slightly different technologies, but both convert a stream of digital bits into microscopic flashes of colored light that are combined through specialized lenses and projected onto a conventional theater screen.
Kennel said Kodak's theater system would include compression and encryption technology to protect a digital print from piracy, and a program allowing theater owners to easily package trailers, in-house advertisements and a feature on computer.
Although Kodak is by far the leading supplier of film products to Hollywood, its position rapidly is being eroded by the rise of digital technology, which eventually may render film obsolete.