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5/13/2005
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Digital Force

Tinseltown's love affair with celluloid is waning, and more movies are being digitally created. Now the industry has to build a supply chain that can move these bits and bytes from the camera to the silver screen.

Star Wars: Episode III, Revenge Of The Sith, which hits theaters this week, is the second movie in George Lucas' 28-year anthology to be shot and edited entirely as digital video. But like its predecessor, Star Wars: Episode II, Attack Of The Clones, only a small percentage of filmgoers will be able to watch it in digital format.

It's not that Hollywood hasn't embraced digital. The majority of feature-length movies are edited in the medium. And some, including the two latest Star Wars flicks and the recent blockbuster Sin City, were filmed, sent, and, on a limited scale, shown in the format, too. The problem is few distributors and theaters are equipped to handle digital movies.

Digital has many pluses. The latest technology provides the same high-quality viewing as celluloid. Sony Electronics' 4K digital projectors, expected in July, have 4096-by-2160 pixel resolution that can display images at more than four times the resolution of current high-definition projectors. Digital also retains its quality viewing after viewing, unlike film, which wears down a bit every time it's shown. By the third week of a film's release, moviegoers often see annoying scratches and speckles dancing across the screen.

What's missing is an industrywide, standards-based electronic supply chain of high-speed networks, servers, assembly and scheduling software, and projectors that can move digital films from studios' editing rooms to the nearly 37,000 silver screens in North America and thousands more around the world. "The theater of the future will have a main server and local area networks with 300-Mbps bandwidth screaming from subservers that can hold 1 to 2 terabytes of data linked to digital projectors," says Jerry Pierce, senior VP of technology at Universal Pictures.

For the most part, that vision already is technically feasible, and movie studios and theater operators have been moving in that direction for the past five years. But costs, standards development, and huge investments in legacy 35mm film systems have slowed progress. Work has picked up recently as companies such as Landmark Theatres and Regal Entertainment Group outfit their theaters with high-speed network links, servers, and digital projectors. Studios also are putting in the IT systems needed to create, edit, transmit, and store media in digital format. Just last month, Sony Pictures Entertainment inked a deal with Ascent Media Group, a distribution and services company for the entertainment industry, to convert the studio's extensive film, television, and other media assets into digital format.

A digital infrastructure has the potential to dramatically cut costs. Distribution costs alone could plummet by as much as 85% using digital file transmission instead of printing and shipping tape reels, says Walter Ordway, chief technology officer at Digital Cinema Initiatives LLC, which was set up more than two years ago by major movie studios to develop standards and a business model for digital cinema. Studios spend $3.74 million on average to print and distribute a feature film on reels, according to the Motion Picture Association of America.

It's also likely high-tech movie making will alter the business contracts between studios, distribution houses, and theater companies. Lease agreements, for example, will have to accommodate the fact that a digital theater can simply flip a switch to change out a dud movie for one that packs in crowds.

"If there's one issue that keeps me up at night, it's the impact of emerging technology on the supply chain," says Bill Patrizio, senior VP of strategic sourcing and procurement at the Walt Disney Co. "As media content moves from analog to digital, the supply chain is dramatically impacted. It takes a different form."

Digital dissemination could pave the way for new revenue models. Studios someday might sell new releases to outlets other than theaters, such as cable or Internet companies, and even individuals willing to pay a premium to view them at home. That could be critical for the industry given the declining attendance at movie houses, which some attribute to more elaborate home-entertainment systems and the short time span between a film's theatrical release and DVD premiere. Theaters stand to gain, too. Some already show digital broadcasts of live concerts and could do the same with sporting events, corporate training, and even multiplayer electronic games. Digital advertising may benefit as well: Ads could be centrally managed yet tailored to match audience demographics.

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