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Cinema digitalisation is fast approaching

FNE Staff 2007-11-12

A new report by British-based analysts Dodona Research predicts about half of the world's cinema screens will be converted to digital technology by 2013. Luxembourg, Belgium and the U.K. are the European leaders in the changeover.

The conversion of the world's cinema screens to digital technology from traditional 35mm projectors will open up a potential $8 billion equipment market at today's prices, Dodona Research says in its Digital Cinema Report. Already about 5% of worldwide screens are digitalised, and 50% of the market will soon be converted in Belgium and Luxembourg. In Eastern Europe, Estonia recently launched a program to gradually renovate and digitalise its cinemas.

The report observes that, while most of the debate about digital cinema has revolved around film distributors and exhibitors, in practice these businesses will be relatively little affected compared to film processing laboratories and the film transport business. In particular, the $1.5 billion market for release printing will all but disappear, the report predicts, while in the long run the film transport business will be superseded by delivery by satellite or over other digital networks.

A number of high-profile films, made explicitly to exploit the 3D medium, are due to be released in 2009, including Avatar from James Cameron, Monsters vs Aliens and the first film in a series featuring TinTin. With at least 5,000 3D systems expected to be in place by 2009, this will clearly provide a considerable impetus to the digital conversion process, the report notes.

The report's author, Karsten-Peter Grummitt, notes the importance of game theory in understanding this market. The equipment manufacturers want to defray their R&D costs; the distributors want to make the minimum financial contribution possible to conversion; exhibitors wonder whether potential new revenue sources will justify the investment.

"Nevertheless," says Grummitt, "the next step in the market's evolution is probably going to need a fall in the price of equipment, or higher virtual print fees, or bigger exhibitor contributions, or all of these. Strategies in this market need to move on from the ‘who pays?' face-off of the last few years to focus on how to get this done."

Digital Cinema Reportis available from Dodona Research at www.dodona.co.uk