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Studios discuss plans for movie screen conversion

A studio consortium on digital cinema, previously considered long on talk and short on results, is floating an idea to convert some movie screens to electronic projection and have exhibs repay the studios 25¢ per patron.

Exhibs previously have been resistant to even subsidized digital conversions, but a goal now appears to be boosting the industry’s fewer than three dozen digital screens to 200 or more by summer 2002, when George Lucas releases the next movie in his “Star Wars” series. The tech-savvy filmmaker is shooting much of the pic in digital, and observers see the release as a potential watershed for digital cinema.

Collaborating studios, proceeding cautiously due to antitrust concerns, are keying on the potential for millions of dollars in cost savings per movie release, thanks to lower costs for distribbing electronically rather than by film print.

Those participating in more than a half-dozen meetings on digital cinema since January include reps for Disney, Sony, Warner Bros. and Paramount, with Universal recently throwing in with the group as well, and Fox acknowledging a less formal interest. DreamWorks and MGM aren’t involved yet.

Fox up for conversion

As distrib for the famous sci-fi franchise, Fox theoretically would be most interested in facilitating Lucas’ digital ambitions for “Star Wars: Episode 2.” But a Fox rep nixed speculation of a commitment to release “Episode 2” on a set number of digital screens, and a Lucasfilm spokeswoman said the matter “isn’t something we can control.”

Lucasfilm’s Lynne Hale added that Lucas is eager to show “Episode 2.” on as many digital screens as possible.

“George believes it’s better to show something shot in digital by digital projection, that it makes for the very best presentation,” Hale said. “So, there would be an advantage to showing (‘Episode 2’) on a digital screen.”

The funding proposal being considered by the studio consortium — dubbed by participants only “Newco,” or new company in business-school parlance — reps the second such conversion scheme floated recently.

Technicolor Digital, a joint venture of fiber-optics networker Qualcomm and film lab Technicolor, said in March it would fund the conversion of up to 1,000 screens to electronic projection. The loss-leader proposition aims to goose the rollout of electronic distribution, with exhibs repaying Technicolor Digital about 12.5¢ per movie ticket sold.

Exhibs hold back

But that proposal has yet to be embraced by a single exhib, partly because it has been uncertain what, if anything, distribs would do to help defray costs. Exhibs are reeling from debt problems and have scant cash on hand for operating expenses, let alone new ideas like digital cinema.

Distribs, on the other hand, are seen reaping substantial savings from even a partial conversion of movie theaters to digital. But studios also have concerns, including the possibility that some filmmakers will object to digital projection on image-quality grounds.

Standards issues remain unresolved, as well. A task force of the Society of Motion Picture & Television Engineers soon will report on its digital-cinema standards efforts to date, but more work needs to be done to resolve the issue.

Another big problem involves the minimum of two extra weeks digital-release mastering would add to the post process.

“Why would anybody want to give up two to three weeks like that?” asked one studio tech exec. “Nobody will.”

Eventually, increased digitization of other parts of post could allow digital mastering to meld more naturally into the process.

At first blush, the studios’ 25¢ per patron charge to exhibs would seem to cost exhibs twice as much as the Technicolor Digital plan.

But exhibs — who haven’t seen a lot of particulars on either plan yet — say the studio proposal wouldn’t limit opportunities to recoup costs through on-screen advertising. Some believe Technicolor Digital aims to control such revenue streams itself.

There’s also a perception that studio participation would ensure digital content for theaters converted to electronic projection and advance efforts to secure a single set of uniform standards for digital cinema.

Consortium participants say the quarter-a-head proposal is best seen as one of many possible approaches to funding conversions. Alternate scenarios include a possible monthly charge to exhibs.

“The 25 cent proposal is one of a variety of proposals that are on the table and are being analyzed,” Warners distrib prexy Dan Fellman said. “We will support whatever program has the best economics.”

Among the various consortium members, Paramount is considered the least anxious to fast-track digital conversion, while Disney is considered the most bullish. In any event, it’s considered unlikely any major initiative on digital conversions will gel quickly. So, the studios’ funding proposal is seen primarily as a trial balloon intended to keep digital discussions active.

As a studio tech exec observed, “The likelihood of everyone at all of the studios agreeing on anything is unlikely.”