Gov’t backs digital screens

China moving faster than U.S., Japan and Europe

SHANGHAI — Industry insiders are cautiously optimistic about China’s rapid adoption of digital film production and screening. With RMB20 million ($2.4 million) of government money already spent by the China Film Group (CFG) on the first batch of 13 digital cinemas, and $4.8 million in reserve, some are predicting the Chinese digital film industry could overtake the U.S. within a year. Doubts remain, however.

“Some government officials are still worried about the technology,” comments one well-placed source. “They have bought so much already, and it could all be out of date very soon if the industry standards change. The other main concern is about the business model. It’s fine to experiment with digital technology, as many countries are starting to do. But it’s definitely a risk.”

CFG’s pot of cash is earmarked for a further planned 35 screens, to be completed by the end of the year. Depending on their success, a further $17 million will become available for stage two of construction, which will consist of 40-70 more screens by the end of 2003. The U.S. has roughly 70 digital screens nationwide.

“China is moving much faster than Europe, Japan or the U.S. on this issue,” the source says. “Those countries are all in the process of debating it. They are asking questions like, ‘We haven’t yet got industry standards … who will pay for it all?’ But in China, what the government says goes.”

The incentive of a government-created industry is already attracting the private sector and regional film bodies. In Shanghai, three of the current four digital screens have received no government money. As is often the case in China, control of content is a huge concern for the government. The standard encryption technology — AES Rijndael — is not available outside the U.S. due to export restrictions. China already has the decryption tools necessary to screen AES-protected films from abroad, but has yet to resolve its own security concerns.

“On this issue, China and the U.S. are united for once,” notes the source. “U.S. studios are determined to protect their down-the-line revenue from piracy. The Chinese are worried that if they don’t control the technology, anyone can sneak programming into China.”

Chief among concerns however remains the quantity of content available. Is there enough to fuel a new industry? “Star Wars: Episode II — Attack of the Clones” was the first foreign film to have a run on the digital screens. “Ice Age” is next up. With digital prints unofficially falling outside the yearly foreign quota of 20 films, there is incentive for more to come. The key issue, however, is local content.

The first domestic digital film, “Heavenly Grasslands,” was produced by Hua Long Digital Prods. this summer and released on the 13 digital screens (see review, page 32). Shanghai Film Group has also leapt to the challenge, with four or five digital films in production. One of them, set in the Himalayas and titled “Rescue in the Highlands,” is being helmed by Zhang Yimou’s classmate Zhang Jianya (“Crash Landing,” “Happy Angels.”)

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