Digital Cinema Major Concern for ShoWest Attendees

They have seen the future of cinema, and it is digital. The 12,000 attendees at last week's ShoWest 2000 convention in Las Vegas, the biggest annual event for theater owners, went home with both enthusiasm and concern about the effects digital technology will wreak on their industry. One major announcement was the agreement by six major theater chains that they would take their ticket sales onto the Internet.

"Digital cinema" is this year's buzzphrase, following the introduction of digital projection last year. Digital projection, now in development, will eliminate the need for shipping and storing bulky reels of film, and the damage—scratches and breaks—that occurs when film is run through a projector. It will enable a film distributor to simultaneously transmit a movie to thousands of theaters. The flip side of digital projection is digital cinema, or films shot primarily on digital videotape or hard disk. The first fully digital films will be out later this year.

Converting traditional movie houses to digital projection could cost as much as $100,000 per screen, conventioneers learned. The National Association of Theater Owners' (NATO) new president, John Fithian, said that film distributors should bear most of the costs of conversion because "they have the most to gain." Studio executives feel that the cost of the changeover should be borne equally by distributors and theater owners. Costs are particularly important to small operators like Camera Cinemas, a four-theater chain. "It would be great if the studios pay for the digital systems, because we don't know how we can possibly finance it," said Camera Cinemas general partner James Zuur. "Digital" will be on the lips of everyone in the industry for years to come, attendees agreed. NATO represents approximately 70% of all movie screens nationwide.

The theater industry has suffered from a recent overzealous building explosion that may take years to pay off. Cinema stocks have languished in an otherwise robust economy because Wall Street analysts have taken a generally dim view of the building craze. Fithian believes that slowing down the rate of construction will "raise the stock value." Jerry Forman, former chairman of NATO California, said he thinks the oversupply of theaters will be subject to "a lot of adjustment over the next two to three years."

In addition to rubbing elbows with some of Sony's film stars, ShoWest participants got the opportunity to preview some films slated for summer release, typically the most profitable season of the year for cinemas. Sony and 20th Century Fox rolled out their summer fare at ShoWest, which was diminished this year by the absence of several major studios: DreamWorks SKG, Warner Bros., Paramount Pictures, Universal Pictures, Walt Disney Studios, and MGM, all of whom thought the cost of exhibiting at ShoWest too high.