Digital Cinema Shelves Plans to Sell Projectors

The sluggish pace of Hollywood’s transition from celluloid to digital projection systems has prompted Technicolor Digital Cinema to put on hold its plans to sell equipment to movie theaters, the company said Wednesday.

The Burbank-based company, a joint effort between Technicolor and cell phone giant Qualcomm Inc., said its decision to cut its business development and marketing groups is an effort to please a consortium of Hollywood studios that are trying to hammer out technical standards and business models for digital cinema.

“The [consortium] asked several vendors to wait because there’s no technology standards in place yet,” said Dana Banks, a spokeswoman for Technicolor, the leading film production and distribution company. “Until we have a standard, we have a staff that has nothing to do.”

Technicolor Digital Cinema has more than two dozen high-tech projection systems installed in theaters nationwide, and the company plans to maintain them.

The company cut two staff positions but declined to say how many employees remain in the unit. Technicolor is a Camarillo-based division of Thomson Multimedia.

Other digital cinema vendors, however, said Wednesday that they are pushing forward with their efforts to roll out new projection systems in the U.S. and overseas.

Technicolor rival Avica Technology Corp. of Santa Monica has installed numerous systems in Asia this year and expects to continue to expand in that market, said President and Chief Executive Andrew Maltz.

“We were never contacted by the consortium about this,” Maltz said.

Officials with the Hollywood-based consortium, known as the Digital Cinemas Initiatives, could not be reached for comment.

Instead of rolling film through a projector, the new breed of equipment projects digitally rendered images onto big screens. Instead of using celluloid reels, the machines allow digital files to be sent electronically to theaters through high-speed data lines, over satellite transmissions, or on computer discs or digital videotape.

Advocates of the technology say it will rid movies of visual problems, including wear that affects celluloid prints over time and scratches and other on-screen flaws caused by mechanical projectors.

The seven major studios created the Digital Cinemas Initiatives in May to establish technology standards for digital movie projectors. They also hoped to build a business model that will make it profitable to distribute digital films electronically to the more than 100,000 theaters worldwide. By eliminating film, studios expect to save hundreds of millions of dollars in film-print production and distribution costs.

But the conversion costs are considerable. One of the biggest roadblocks is determining who will pay the $150,000 fee for each digital projector, along with the more than $20,000 per screen for the computer that stores and feeds the movies. For Regal Entertainment Group, the nation’s largest movie theater chain with more than 5,800 screens, the tab could exceed half a billion dollars.

And though studios could save up to $1 billion in the U.S. alone by replacing film with digital files, the financial benefits to theaters are more subtle. Digital projectors can be operated and maintained with fewer employees, and theaters could use the equipment to show additional types of programming, such as sporting events and rock concerts.

All this leaves the consortium with much to figure out. Consortium officials have said they expect to pick an engineering standard for digital cinema by the end of 2003.

“There’s a prevailing view that, in film, we have an elegant technology that we know how to use well and people are comfortable with,” said Charles S. Swartz, executive director of the Entertainment Technology Center at USC. “It’s going to take time for people to replace that technology and agree on what is going to be better than film.”