In part one of this series (last issue), we described some of the changes that digital motion picture distribution and exhibition will bring about.

Now we'll see how changing from film to digital is being done, and explore some of the opportunities and benefits that going digital offers.

Making A Pathway

Current motion picture distribution is tied exclusively to film acetate. Digital distribution is considerably more flexible. Digital motion pictures can be encoded on many different types of media and transmitted in various ways. However they eventually find their way to theatres, digital programs will first be stored as computer-readable files. From there, they'll be compressed, and these smaller files can then be divided onto media like DVD-R discs, portable hard drives, or digital tapes for physical distribution to theatres.

The stored issues/39/images can also remain housed on a central server and distributed via satellite or fiber optic cable. At the moment, satellite and cable bandwidth limits make it impractical to serve high-resolution issues/39/images to modern multiplexes, at least in the broadcast fashion anticipated by the studios for future distribution systems. But physical distribution of programming is practical right now and rapid advances in storage, compression and transmission technologies mean that the broadcast model of distribution won't be held back much longer.

Pixar Studios, Miramax, and Buena Vista have demonstrated an early model of the physical transport system by shipping features recorded on DVD-R discs to about 15 theatres equipped with large local hard-disks onto which the pictures are loaded and from which they're projected. The screens equipped for this purpose have been set up for demo purposes, but the machinery involved is still regarded by most as too expensive for broader commercial installation.

It's unlikely that a commercially viable physical transport system will come out of the studio workshops for the simple reason that the studios are understandably looking at a more centralized way to (continue to) control distribution. The digital system they would like to see has more to do with creating economical digitized extensions to the existing system, and less with any kind of liberalization of the distribution medium and the practices that govern its use.

Predictably, the focused efforts of the studios and large circuits are upon gradual change over time, not any sudden or dramatic shift. They hope to experience the changeover to digital formats as a relatively uneventful walk down the pathways of established Industry norms, not a paradigm shifting of rules and order. But where they hope for a slow evolution, others see the makings of a quiet revolution. They see that as with the introductions of video in the early '80s and then the audio CD, change need not be detrimental to the overall interests being served by the Industry, but can in fact amplify and expand the markets for content. With a bit of forethought, inevitable change can positively embrace much of the established infrastructure and engage it in more profitable and expansive uses.

It is axiomatic that change is not only inevitable, but also inevitably disruptive. This creates fear as people anticipate a shake-up in their lives and careers, and those fears result in initial reactions of nearly universal resistance. But change is not only inevitable, it's a necessary part of the creative process, so our focus should be upon the degree of disruption at issue, not on preventing it altogether. The motion picture industry has sidestepped substantive change for nearly the whole century of its existence. In many respects, the digitization of its content offers the Industry a spectrum of creative opportunities all its own.

Historically, when a paradigm shift has occurred, in whatever field, it has never arisen from within the established order. This is always true for the simple fact that the establishment benefits from the status quo. Consequently, true paradigm shifts always come from the "outside." Various pioneers now working on developing the digital theatre of the future see an entirely new and more inclusive opportunity forming in which digital formats create an entirely new spectrum of motion picture programming. For them, programming ranges beyond movies into theatrical presentation of sports, live concerts and stage performances, distance learning, gaming, and business training, to mention but a few. In their design, the "movie" theatre becomes a cultural hub for the benefit of its host community. Its auditorium and caf  are nexus points of information and fun, consciously utilized to help people connect with one another in real time.

While the auditorium, like the Internet, presents opportunities for an interactive virtual connection to the wider world, both it and the adjoining café offer spaces designed to encourage real-time inter-personal contact. It's that contact that matters most. This is theatre with meaning, not just a motive. Designed to engage, nourish and encourage its audiences more fully in the experiences of life, it transcends completely the model of merely stimulating or distracting them over a two-hour period of passive entertainment, and establishes a new venue for a renaissance of community and interpersonal communication.

Technology has often been the agent of separation. Whether by isolating people within work-related duties, enclosing them in glass and metal transportation bubbles, or engaging them in hours of passive program watching, the technologies of the 20th century have more often served to separate than to bond the people using them. Now, in the 21st century, some of those same tools will be used to reverse the process by creating systems that bridge distances and differences and create communities both virtual and real. Digital exhibition is precisely such a tool: an extension of the Internet's capacity to connect people one to one, and also group to group.

Digital theatre re-maps the Internet's inter-personal connective capacities onto groups, which become as interactively engaged as two people in a chat room. Those involved with building digital theatres envision a place where people not only gather to see movies, but where they stay to talk about them and leave feeling nourished by the experience. For them, the medium is a wonderfully flexible tool capable of serving a range of purposes. It's the very flexibility of digital programming that is the main attraction, not the technology's ability to generate or control revenue streams. In this new paradigm, it's not about control. It is about community.

The Liberation of the Motion Picture

The costs of film distribution are mainly arithmetical the costs of production and the movement of film prints is derived from the number of prints you make multiplied by the costs of duplication and transportation. The labs might offer a per unit break on a large production run, but there's a rather high and hard limit to the price of a print no matter how many you make. While the price of a single print makes it hardly worth striking, it still costs about $1,400 each to make 2,000 of them, or 3,000 of themÉ

So the high cost of filmed program distribution is directly linked to the high cost of the medium used to distribute it. This high cost makes film distribution a big-money game for big-money players, which is self-limiting. Dramatic reductions in production and distribution costs for digital programming make it affordable to change the rules of the game or to create another game altogether.

Marketing is essential to the success of a picture regardless of how many prints are made and it's important to keep this in mind. The same people are currently in control of BOTH of these critical elements which impact so dramatically upon your success as a moviemaker. That control is based on 35mm film and its costs. But what happens when the medium changes from film acetate to a big computer file?

As with books and music today, the change to computer-readable formats has resulted in the creation of a new market for new players. Exhibitors are beginning to install the first pieces of digital equipment, and two games will soon be offered for your consideration. Figure out which one serves you at this point in your career; you may find there is so much in common between them that success in one opens a door to the other. Eventually they'll become the same game. Ironically, the master players of both games are interested in creating such fluidity for you. No master player is interested in seeing either game fold its tent just yet.

Building a Better Mousetrap

The first game is the older of the two by more than a century. Power and money are both the means and the end in this game. For the many players engaged in it, the "new" idea is to create a digital distribution system that will benefit those who are currently winning in the film game. It will continue to feature a highly centralized distribution system, probably utilizing satellite and fiber optic transmissions to get motion pictures from a distribution source to many theatres simultaneously. The majors will eventually agree to a Ôstandard' broadcast format. Through this Ôstandard' they will extend their authority over the global marketplace and exert constraints over the terms of play at your local complex. Theatres will continue to play mostly movies. Little will change in the advertisement of those movies, but much will change for the exhibitors who show them. In the end, the distributors will enjoy a kind of virtual ownership of theatres. This game stems from the perfectly natural tendency of a successful business system to use emerging technologies to maximize its traditional advantages. The film industry has a great and glorious tradition; it shouldn't be trashed without a thorough examination of the alternatives. It would in fact be irresponsible to play this game any other way.

The Have-A-Heart Alternative

The second game is all new and all digital. To some degree, it's still a virtual game being played on the fields of pro forma concepts, business alliance developments, and finance negotiations, though very soon it will be moving into actual buildings and real-time play will begin. The rules are not yet codified and, in fact, may never be. This game uses informative, not seductive, advertising to attract its customers. It teaches exhibitors how to grow strong local markets. It designs theatres for use as community gathering places, and offers programs that serve the widest range of constructive interests.

Theatre owners work with distributors to use the efficiencies of digital communication to create a devoted patronage eager to attend on a weekly basis. They assure their audiences quality programming and feel personally involved in and responsible for its selection. Ad campaigns link featured program materials to related services, travel and learning opportunities, and personal development. The game-two theatre is a cultural epicenter and vector for massive amounts of new and exciting information. It will serve to build and sustain the community that supports it.

The players in this game will do for the motion picture what Apple and Microsoft have done for information: liberate it for the benefit, use and enjoyment of the individual. Players use any digital medium that works for the theatrical patron to make this happen now. They delightfully report that all the pieces are now available, the board is laid out and money is on the table.

All the Marbles

While several companies, such as Darkstar Technology, Pixar, Disney, Reel Image, Qualcomm, Quvis, Apple Computer, and Digital Projection, Inc. (to name but a few) are deeply committed to creating the technologies necessary for the equipping of digital theatres, at least two companies are intensely involved in creating the theatres themselves. Their plans are to diversify theatre programming and to broaden moviemakers' access to theatre audiences by encouraging the rapid adoption of flexible, affordable digital solutions for producers and exhibitors. These companies are designing an affordable, open architecture system capable of being used by anyone, large or small, established or new, to the digital world of theatrical exhibition.

Lightyear Digital Theatre, LTD is working on the development and construction of new, all-digital theatres. First conceived in early 1994 by its CEO, David Hosler, Lightyear has developed strategic relationships with world-class technology and equipment providers to allow it to rapidly deploy its state-of-the-art digital theatre system. Their business model is based upon a franchise-like arrangement with local theatre owner/operators. Lightyear will act as a provider of digital systems, theatre design and construction assistance, program materials, and marketing support.

Often working in concert with Lightyear and many of the same technology vendors, Cinema Links is devoting resources gained by two decades of exhibition experience to its international client base of theater owners interested in a digital future. While helping these owners succeed in 35mm exhibition, it is preparing them to flourish in digital exhibition once they make the changeover. This company is focused on the development of digital exhibition through the adaptation of established theatre spaces. It is now preparing the comprehensive advertising that will be required to promote the diverse digital offerings already being booked for a few of its clients.

Game One players are promoting the notion that e-cinema is at least five years away. If you are willing to wait for it to appear under the film establishment's terms you may have a long wait. It will take that long for them to figure out "who has their hand on the button," as one of their top executives recently put it. Game Two is already underway. And you are invited to play. MM

Part I of this article ran in the April May issue (#38) of MovieMaker.

Greg Melick is a former teacher, computer programmer, and a 20-year veteran of the motion picture exhibition industry. He and his partner, Brad Smith, are the principals of Cinema Links. Greg joined Lightyear Digital Theatre, Ltd in early 1998 as Executive V. P. for Program Development, Acquisition & Distribution. Please contact him via email at gmelick@gwi.net or visit Cinema Links' Web site for more information at http://www.cinema-links.com.