Showing at theaters: urgency of digital shift

The revolution in moviegoing will be digital, theater owner Bill Campbell knows.

But Campbell, who runs independent theaters in Sheridan, Wyo., and Miles City, Mont., isn’t ready to take up such an expensive cause just yet.

“I’m still using film projectors that were built in the 1950s and I can fix them myself,” Campbell said. “What if your digital server goes down? Dark screens are death to the theater industry.”

For moviegoers, Hollywood’s shift to digital cinema will mean clearer pictures, more 3-D offerings, movie houses that can easily add to the number of theaters showing popular films and event programs such as sports and concerts.

For theater owners, it means lower costs because prints will be eliminated. It also creates a new marketing hook to get people into the seats.

With incentives like that, the movie industry’s transformation from prints to digital projectors logically should take place sooner, not later. But for nearly a decade it has been hampered by the high cost to convert and disputes over how studios and exhibitors will foot the bill.

Finally, however, digital cinema is slowly gaining traction despite holdouts such as Campbell. About 4,000 of the world’s roughly 150,000 screens are digitally equipped compared with 1,700 a year ago, according to Texas Instruments Inc., which licenses the leading digital cinema technology.

By year-end the chip company expects the count to reach 7,000, with the majority of those conversions in the U.S., which has about 38,000 screens overall.

After moving at a snail’s pace, the transition has taken on a new urgency as theater owners compete with increasingly sophisticated home entertainment systems and other diversions such as video games and the Internet. Digital cinema was front and center at the recent ShoWest industry conference for exhibitors in Las Vegas, with much of the discussion about the $100,000 cost per screen.

If the switch takes an exceptionally long time, “I believe there will not be a cinema business here anymore,” said Drew Kaza, an executive vice president at British theater chain Odeon Cinemas Ltd., addressing attendees at the conference. “We’ve got to get real about this.”

But digital boosters say the industry is finally getting serious about the conversion.

“There is typically a love-hate relationship between studios and exhibitors, but this time they’re working together to make sure it happens,” said Shea Wallon, vice president of the sports and entertainment group at GE Commercial Finance, a backer of digital cinema.

GE Commercial last year provided a $217-million credit line for Christie Digital Systems Inc. and Access Integrated Technologies Inc., which are rapidly installing their projectors and servers in theaters.

Hollywood and theater owners see huge potential benefits.

Studios eventually could save a total of $1 billion a year in distribution costs. Producing and shipping 35-millimeter films costs roughly $1,200 per print, but sending digital files or satellite transmissions can slash that expense by 90%, according to industry estimates.

For now the savings are theoretical as studios make a long-term bet on the benefits of digital. They are subsidizing the installation of digital systems at U.S. theater chains by paying “virtual print fees” to the manufacturers, and they still must make thousands of film prints.

Cheaper distribution could enable smaller films to be screened more widely, said John Fithian, president of the National Assn. of Theatre Owners. The high cost of distribution is a major impediment to independent films, he said.

Helping give the conversion a boost is the resurgence of 3-D films, which today are shown predominantly in digitally equipped theaters. In its opening weekend, Walt Disney Co.’s animated “Meet the Robinsons” grossed an average of $12,200 per theater at the almost 600 digital theaters showing it in 3-D -- more than double the average gross at regular theaters. Some theaters were able to hike ticket prices 20%.

Directors Robert Zemeckis and James Cameron are making big-budget 3-D movies. DreamWorks Animation SKG Inc. said its whole slate would be shot in that format starting in 2009.

Beyond 3-D, programming flexibility is one of the biggest appeals of digitally equipped theaters. Alternative entertainment such as sporting events could be shown during the day or on nights when moviegoing is light.

Cineplex Entertainment, Canada’s largest theater chain, has been screening “WrestleMania” matches for several years. Recently it added hockey games, rock concerts and simulcasts of New York’s Metropolitan Opera.

The opera has been shown on as many as four multiplex screens at a time to accommodate matinee crowds, said spokeswoman Pat Marshall, adding that it brings in a new demographic.

Ultimately, theater owners see their multiplexes thriving as broadly defined entertainment destinations.

“The world is getting so competitive,” said Michael Whalen, president of Muvico Theaters, which is installing Sony Electronics’ “4K” digital system at its new Chicago multiplex. He said cinemas needed to improve the moviegoing experience amid competition from better home-entertainment systems and shorter time spans between a film’s theatrical release and its DVD debut.

Whalen dreams of packed houses for events such as NBA games or the Super Bowl in 3-D.

Technological issues remain formidable, however.

For now, loading or moving a digital movie can take hours because of the massive file size, said Michael Karagosian, a consultant to the theater industry. A 35-millimeter film print, by contrast, can be moved in 15 minutes. In addition, converting older, smaller systems to digital remains a problem.

Ultimately, the hope is that a multiplex will be able to move a surprise hit to its biggest auditorium, or demote a flop to the smallest, almost instantly with just a few keyboard strokes.

Studios gush about how crisp and pristine a digital movie remains even after hundreds of screenings, but not every filmmaker is sold on its superiority.

Paramount Pictures has released digital versions of almost every movie since last summer’s “Mission: Impossible III,” said Mark Christiansen, vice president of operations at the studio.

But when it screened Clint Eastwood’s World War II drama “Flags of Our Fathers” digitally before last fall’s release, the director and his team balked.

“They just didn’t think it gave the same visceral feeling,” Christiansen said. “We’re always going to listen to the filmmakers.”

Despite the uncertainties, manufacturers and theater owners expect the digital deployment to accelerate further in 2008 and 2009. The majority of the world’s screens will be digital within five years, Texas Instruments predicts.

“The good news is, the momentum is there,” theater industry consultant Karagosian said. “Five years ago, I couldn’t say that.”

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josh.friedman@latimes.com