Digital Projection Business

20th November 2004

As the discussions went. . .

>...But what if the distributor decides they don't want to pay this fee? After >all, they don't pay for film projectors...

Well they don't want to pay for the printing and shipping of film prints either. If it's cheaper, then it's advantageous. Wasn't this the Boeing business model?

It takes someone with very deep pockets to set up the infrastructure in a scale that makes this worthwhile. What would it take to set up a couple thousand digital projectors and would the lease system be profitable within a reasonable timeframe as repairs/replacements/upgrades be needed on the equipment? We're talking hundreds of millions if not billions here.

Mitch Gross
NYC DP

You know I feel a sense of deja vu here.

The article that I wrote for Showreel magazine that closes the last issue is on digital projection.

I think that it looks great but as has been mentioned has many more ways to screw your picture.

My main problem, however, is that all the cost models are done from a very US-centric viewpoint, the rest of the world doesn't exist.

I hear time and time again how much money will be saved by not printing, how the savings will pay for the digital projection.

This ignores one vital point, those prints are then recycled and used in the parts of the world that are not the US.

So what happens there? they can't afford digital projection, so do they stop getting movies or do you still have to make prints? and if you still have to make prints where are the savings.

Or is the US intention to turn the rest of the world into a DVD projected on domestic video projectors ghetto?

Go for it!

It would be the best thing to ever happen to every film production centre outside the US.

Cheers

Geoff Boyle FBKS
Director of Photography
EU Based
www.cinematography.net

>This ignores one vital point, those prints are then recycled and used in >the parts of the world that are not the US. So what happens there?

Interesting point - never thought of that.

But, I'm confused - other parts of the world - generally don't speak English either. They're dubbed. Don't they have to strike a country-specific print?

Dale Launer
Writer/Filmmaker
Santa Monica

Mitch Gross wrote :

>Well they don't want to pay for the printing and shipping of film prints >either.

Actually, theatres pay for shipping, according to my friend who runs our local art house.

>If it's cheaper, then it's advantageous. Wasn't this the Boeing business >model? It takes someone with very deep pockets to set up the >infrastructure in a scale that makes this worthwhile.

I believe there are about 37,000 screens in the US. You'd probably need to have at least 20% of those to make this work well enough to save real money, but you only save real money when 35mm prints were eliminated completely. So a small number of screens doesn't do it.

Say you did 5000 screens, and, as a result, could install each screen with server for $100K. That's only (!) $500,000,000.

But what would those screens pay as a fee? Say you amortize the projectors over five years -- that's $20K per year, which is only $384 per week. Not counting interest. Not impossible. OK, say it's $500 week. Each theatre would have to sell 50 extra $10 tickets. Again, not so bad. But there still has to be an infrastructure to get the films to theatres, either by satellite or fibre or shipped HD's or shipped DVDâ€™s containing files. That won't be cheap.

It could happen...but we'd all be luckier if it didn't happen for a few years, so all this stuff can get a lot cheaper, and, more important, better.

Jeff "my crystal ball is only 720P today" Kreines

>But, I'm confused - other parts of the world - generally don't speak >English either.

Well actually we do, some may even argue that the language originated outside the US and a hell of a lot of people have it as a second language.

>They're dubbed.

No, they have captions burned in along the bottom.

Even if they were dubbed, that's altering a soundtrack not the pictures.

>Don't they have to strike a country-specific print?

Oh dear, I think you have to go to some of the more obscure countries and go to the movies, you're in for a treat!

I do think that this is appropriate here BTW because we're talking about digital projection.

Cheers

Geoff Boyle FBKS
Director of Photography
EU Based
www.cinematography.net

Actually, theatres pay for shipping, according to my friend who runs our local art house.

Really?!?! My profit/LOSS statements (every hit movie I've ever written is STILL in the red) - list shipping costs.

>So a small number of screens doesn't do it.

Well, if the numbers add up - they add up. But you're right - a total elimination would be ever better for the distributors - they could avoid all the interneg stuff too.

>Say you did 5000 screens, and, as a result, could install each screen >with server for $100K. That's only (!) $500,000,000.

I don't think that would make sense. Also - those $100k numbers come amortizing development costs over a handful of projectors. When the numbers kick in - the cost drops and economy of scale should reduce those costs dramatically.

Each theatre would have to sell 50 extra $10 tickets.

No extra tickets. That'd be the distributors' cost, remember? They'd take it out of the print budget.

But there still has to be an infrastructure to get the films to theatres, either by satellite or fibre or shipped HD's or shipped DVD's containing files. That won't be cheap.

Assuming they're playing off a computer - say an Apple laptop? They could pretty easily be sent over a DSL line. Probably in "reels". Compressed of course. (I have a 105 minute movie on a 80GB file in DVC PRO 100 HD - and that's 1920x1080). But eventually we might be seeing theatres advertising UNCOMPRESSED! Again, not impossible for a DSL line, you'd just have to break it up and sent in instalments. Might take a few nights.

But who cares?

Dale Launer
Writer/Filmmaker
Santa Monica

>Well actually we do, some may even argue that the language >originated outside the US and a hell of a lot of people have it as a >second language.

England can afford digital projection. I wasn't putting any of the Brits (or any of Europe) in that category.

>They're dubbed.

>No, they have captions burned in along the bottom.

?!! Subtitles? Huh. It's been my experience that foreign markets all demand dubs. I've seen a few of my own films in other countries, and though I know what they're saying (big advantage knowing the script by heart when you don't know the language!) - but always in different languages.

>Even if they were dubbed, that's altering a soundtrack not the pictures.

I'm assuming we're talking 3rd world - aren't all those projectors only equipped with optical sound readers? Or do they take the old prints and re-corded dubbed tracks over them...?

>Oh dear, I think you have to go to some of the more obscure countries >and go to the movies, you're in for a treat!

Well, I thought that was what you were talking about - 3rd world. I know Italy and France offer movies in original language (with titles), and dubbed too. But they can afford digital projection.

Some of the 3rd world offerings - aren't always in theatres - it used to be a guy with a white sheet, a car and a projector. And 16mm print. Sometimes a tent. They used to be anyway. Now it's a VHS tape and a TV.

There's an interesting book called EXTREME CANVAS - by Ernie Wolfe, III - about hand-painted movie posters from Ghana - great, crude, wildly paint (by hand) movie posters. The stars are barely recognizable.

Dale Launer
Writer/Filmmaker
Santa Monica

I need to check more into the sound question, but we're not just talking 3rd world here.

I've seen captioned films in Greece, Israel, Egypt, India, Denmark, I'm sure I can come up with more if I really try...

As to affording it, I'm not as sure as you are that we can!

I've seen a lot of talk here about digital projection helping local production, I can't see it, the cinemas that are likely to be able to afford digital systems are US owned and therefore...

Cheers

Geoff Boyle FBKS
Director of Photography
EU Based

Geoff Boyle wrote :

>This ignores one vital point, those prints are then recycled and used in >the parts of the world that are not the US.

I suppose you could recycle projectors as well. Send the really contrasty ones to...

Noel Sterrett
Baytech Cinema
www.baytechcinema.com

Jeff,

Actually some theatres, not all, pay for shipping a print to the next venue, and usually only the slowest/cheapest way which can make it difficult to avoid incurring shipping costs when you don't have an unlimited number of prints.

Studio releases entail shipping thousands of prints to thousands of theatres. When it all stops playing at nearly the same time, the only thing being covered is the return of the prints - most often for recycling.

Robert Goodman
Author/Photographer/Producer
Phil. PA
www.stonereader.net

>Again, not impossible for a DSL line, you'd just have to break it up and >sent in instalments. Might take a few nights. But who cares?

I cares if I'm going to the theatre on Friday night and expect to see the whole film, you know, in order.

At least the popcorn jockeys building the show on platters have the whole show at once to work with, you're gonna trust "a few nights of downloads"

Don't complain to us when reel 3 of your next family comedy turns out to be M.I.L.F. action

Sam Wells

P.S."My Cousin Vinny" is still in the red ?? Gotta love Hollywood accounting.

Geoff Boyle wrote :

>This ignores one vital point, those prints are then recycled and used in >the parts of the world that are not the US.

Yes, I've been saying the same thing for a couple of years now. The prints will still be needed, which means no savings at all...

Jeff Kreines

Dale Launer wrote :

>There's an interesting book called EXTREME CANVAS - by Ernie Wolfe, >III - about hand-painted movie posters from Ghana - great, crude, wildly >paint (by hand) movie posters.

Ernie Wolfe the art dealer from LA? My uncle bought a lot of neck rests from him... all now happily resting at the UCLA Fowler Museum.

We have a few pieces of African hair sign art -- also great.

How long exactly do you suppose it will be before the quality of Digital projection in the theatre begins to follow the same path as Digital Cable for Television.

An ever increasing amount or artifacting and glitches, dropped, and paused frames.

Print Quality control is handled in the lab. We already know how well theatres handle their end of projection quality. Who will handle the quality control of 2K Projection?

Just something to think about.

Steven Gladstone
New York Based D.P.
www.gladstonefilms.com
East Coast CML List administrator

The art houses may pay for individual prints to be shipped, but that is a different business model on an entirely different scale from the big studio films. Often these prints aren't ready until just a few weeks or even days before their release, and the studios are increasingly cautious about holding onto the prints until just before the release date to avoid piracy. This is also the reason that more and more of the big action films that play well internationally are being given simultaneous international releases. I believe there was a recent film that crossed the 10,000 print mark for its worldwide release, which is a pretty astounding number. And yet still the financial model NEEDS to be somewhat US-centric, as that is the single largest individual market and does drive the wide-release volume industry (not including Bollywood).

The average cost of printing and shipping a feature print is somewhere between $1500 - $2000. That print usually only lasts in the US market for perhaps four weeks and I believe only about 1/3 of these used reels are reused for international release, either because of their physical condition or the need for dubbed not subtitled prints. So the majors will still need to make additional prints anyway.

So the model still stands for making digital projection financially feasible as long as it can be done on a scale worthwhile to the studios. If an average Hollywood film made 3000 prints for US release and could only reuse 1000 of those prints at best, then if it could cut 1000 or so prints from the US release by going digital then there is considerable savings to the tune of more than $1,000,000 per release. Even assuming some considerable cost to distribute the digital information and a leasing fee for access to the digital projection screens, this still represents considerable bottom-line savings to a big Hollywood distribution company spitting out a dozen or so titles per year.

Convert 1/3 of all US screens to digital would mean an investment of some $1 Billion (although I'm sure there would be considerable discount to such a large order), which would need to pay itself off within five years tops to be a practical financial investment. That's some $200 Million per year (really $250 if you want to think about some sort of interest and profit). About 250 major studio films are released in the US every year. If they could cut their print orders by 1/3 while still maintaining their screen count, that's more than 200,000 film prints not struck at a savings of some $300 Million.

How high a fee would the studios be willing to pay a digital projection leasing company? If a physical film print cost $1500-$2000 each then I'd find it hard to imagine them willing to pay more than half this amount. If so, then the digital projection company would only be making $150 Million a year when it needs $250 Million to make the investment worthwhile.

If the numbers could be brought into line this could be a very lucrative business, and certainly the price tag on this technology will drop as it always does. But it's no wonder why no one has dived in yet to try to seriously tackle the market. But I think it's only a matter of time, perhaps a few years. With the simple swing of a few numbers some company with the deep enough pockets to start this venture could be looking at hundreds of millions of annual profit in what would be a fairly stable investment.

Okay, time for me to make my first billion so I can corner the market...

Mitch Gross
NYC DP

Mitch Gross wrote :

>If a physical film print cost $1500-$2000 each then

How much for a Digital tape? I really don't think anyone will be downloading over the internet, or satellite. Too expensive, and having movies on a server somewhere will expose them to being stolen by hackers.

How much money will be saved by shipping a Digital tape rather than 9 Reels of film?

Steven Gladstone
New York Based D.P.
www.gladstonefilms.com
East Coast CML List administrator

9 Reels cycled via Film transporters to theatres in one of the major cities costs an average of $200. Same day shipment is about $600 via air or $240 overnighted via Fedex. Fedex shipping 3 day is about $120 UPS Ground (5-10 days) is $60

The prices quoted for prints are too low if you are talking about anything except a wide release where the studio can negotiate great deals. Most of those 250 films released pay much more for their prints.

Robert Goodman
Producer
Stone Reader

BTW, isn't the new Sony 4K projector suppose to be cheaper than the TI offerings. I believe I read on digital media net that it's going to be around $80,000.

Okay, if that's $80,000 now for a 4K projector, in order to increase competition and undercut Sony, all the Ti DLP projectors are going to have to come below that mark, say at least to $70,000 or even $60,000. Because frankly, I don't see the reason why I'd spend $120,000 for a projector that's arguably inferior to an $80,000 projector.

So now, redo those projector numbers at say $65K for the Ti 2K (which is still a pretty good projector).

Your $1Billion for a third of the screens in the U.S. now becomes around $541 Million, almost cut in half (this is your $1Billion being based on a 2K projector for $120,000). I think then that somebody could come in, only make $150Million in lease fees, and still come out on top.

So IMHO by the time the Sony 4K projector is rolling off the lines, the prices on 2K projectors will be at the point where you can safely build a business model on them, and not loose money based on what you're describing. Because let's be honest, for the foreseeable future, the majority of films on that Sony Projector are going to be at 2K, not 4K (I said majority, not all). By the time that 4K is really hitting big in the post world, it'll be time to replace the 2K projectors anyways, but by then you've made your money back, so you're still good-to-go.

Just my $.02

Jason Rodriguez
Post Production Artist
Virginia Beach, VA

I think Mitch is right about it being a matter of time, the new Sony
projector is meant to be considerably cheaper than the current top end.

>Lyris made me split this in two

Well if you posted in plain text Lyris would accept a message around ten times the length.

Lyris doesn't look at content or style, just the number of bytes.

HTML takes ten times as many bytes as plain text.

The moral is, if you want to post long messages, use plain text.

Ah Hell! just use plain text anyway

Cheers

Geoff Boyle FBKS
Director of Photography
EU Based

Dale Launer wrote :

>But, I'm confused - other parts of the world - generally don't speak >English either. They're dubbed. Don't they have to strike a country - >specific print?

Subtitles are often laser-burned onto existing prints. Another trick would be to use a DTS CD for alternate language soundtracks, as it would sync with a print in a different language (though when it failed, you'd suddenly change languages!).

And, of course, many countries speak English, often better than we do in the US, or else they show (as in France) the V.O. (version original) in some theatres.

Jeff Kreines

>By the time that 4K is really hitting big in the post world, it'll be time to >replace the 2K projectors anyways,

A couple of things :

4K is starting to hit big. The competition is making that happen. Spiderman is 4K, and all of the prints will be made directly from those 4K negs. All of the vendors are now realizing that they are going to have to move to 4K; the marketplace, you know.

Also the figure generally accepted for the infrastructure change to digital is in the 7 to 12 billion, I don't know where they came up with that amount. But that's what I get from several organizations who should know. The time frame that is generally accepted for the changeover once all of the decisions are made is from 7 to 12 years.

That's what I know.

Steven Poster ASC

Steven Poster ASC wrote :

>Time frame that is generally accepted for the changeover once all of the >decisions are made is from 7 to 12 years.

Is that 7 to 12 years for a "critical mass" type of situation to occur, or for an entire switch-over? "Critical mass" insinuates that there's still coexistence, but the tide or pendulum is swinging the other way if you will.

Jason Rodriguez
Post Production Artist
Virginia Beach, VA

Steven Poster ASC relates :

>The time frame that is generally accepted for the changeover once all of >the decisions are made is from 7 to 12 years. That's what I know.

Of course, in the US, they're supposed to shut down standard def broadcasting in a couple of years. Will that ever happen?

I think the broadcasters will get to keep the analog and digital frequencies...

Jeff "loves these predictions" Kreines

I don't think anyone is arguing about the eventual inevitability of the change from film exhibition to digital exhibition. It doesn't matter what time frame you put on the conversion...whether it be 1 year, 10 years, or 100 years, it is undeniably coming. While there may always be a film projector requiring film prints in our lifetimes, the momentum is swinging toward the digital release.

The arguments that have been posted over the last day with regards to this could have been pulled from a chat list 2 years ago or 5 years ago...it is still the same discussion..."Who pays"? The studios have recently made announcements acknowledging a responsibility with regards to the economics of the digital change, so IMHO the economic conjecturing belongs in Chat.

I think Michael Bravin's comment was a vote for digital projection with regards to the issues that the cinematographers and image makers should be concerned with, and perhaps this aspect of the discussion belongs here. How do the image makers assure that the digitally projected images reflect their true intent with regards to the look of the picture? How can this be made to be consistent across a variety of projectors and servers?

The recent DCL tests with the ASC/DCI StEM material have done a great deal to shed light on the quality and standardization issues. My question is, who will carry the torch when the DCI closes in the fall?

Steve Schklair
Cobalt

>How do the image makers assure that the digitally projected images >reflect their true intent with regards to the look of the picture?

With a Celluloid Reference Master

Sam Wells

>How do the image makers assure that the digitally projected images >reflect their true intent ...

> With a Celluloid Reference Master

I guess that's a joke. But this is a good forum to float serious ideas on this issue. Once let into the "ether", these ideas have a way of finding a home.

I know there are calibration devices one can put on a monitor. Actually I only know of one - from Pantone.

Could a similar device be developed for projection?

Dale Launer
Writer/Filmmaker
Santa Monica

>With a Celluloid Reference Master

Actually a very flammable substance not used since approximately 1955 when polyester films became available. and soon to be replaced with virtual stocks if Moore's law for projection comes true.

Soon direct projection without the need for a conventional projection booth will happen and we will see for the first time images projected without the extra layer of glass that once was used for fire protection making cost of constructing a cinema a little less costly.

A theatre will have a single server room with multiple projectors running and focus will be controlled digitally as well. New construction of digital cinemas will take advantage of these things and make the costs lower than ever before making digital the norm and not the exception.

This sounds like heresy now but most of these components are already existing now.

When I built my small screening room three years ago I was anticipating those developments that are occurring now. 4K is almost here and I applaud it. If contrast ratios are up to film and the color space exceeds what is now being seen then it is only a matter of time before film projection will become economically unfeasible.

Film may stick around a very long time for origination but in projection it's life may be very short with current developments.

Comments ... >>>>>

Mark Forman
Forman HD Screening Room
Forman Camera Bikes
Mark Forman Productions, Corp.
http://screeningroom.com

Dale Launer writes :

>Could a similar device be developed for projection?

What is needed is an end to end, device independent color management system. Kodak has one. they just don't know how to market it.

Steven Poster ASC

This may be pure ignorance on my part, but why don't they simply take an approach like that used with ICC color profiles/Color Sync in print?

Every device from input with scanners and digital cameras, to displays, to output with printers, web, etc. has a profile, and by everything being profiled/calibrated correctly, you can work in a unified color space like sRGB, AdobeRGB, etc. and maintain color consistency, even when transferring between color spaces (unless one color space is way different than another, ala RGB-CMYK).

Jason Rodriguez
Post Production Artist
Virginia Beach, VA

>Film may stick around a very long time for origination but in projection >it's life may be very short with current developments.
>Comments ... >>>>>

"Celluloid" used colloquially - (altho cellulose triacetate isn't same as nitrate !) OK polyester....

I really think an approved Film AP for reference will not be a bad idea...

Here's my point, I think the film reference print simply gives a long term eye-viewable reference; something you can look back to when XYZ colorspace becomes "Old School" and now we're all using Delta Epsilon Gamma color space this year.

If a full print is too painful make slides a la Cinex strip, whatever

Sam Wells

Dale Launer writes :

>I know there are calibration devices one can put on a monitor...Could a >similar device be developed for projection?

There's absolutely no reason why this couldn't be done. If the film's cueing leader included a series of red, green and blue frames (maybe even standard SMPTE bars), every projector could color-balance itself automatically.

It would require only a sensor pointed at the screen, and some relatively simple electronics and software. It would not be a huge investment on the part of projector manufacturers or content producers.

Dan Drasin
Producer/DP
Marin County, CA