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Digital Cinema March 2000 Authors:   Ed Christie Paul Di Senso Michael Gold David Rader Karen Walsh About This Report Table of Contents Download the full report About This Report A major long-term change is about to hit the movie business, changing forever how movies are distributed to theaters. Major digital-media companies are creating the technical advances that are making digital cinema a viable alternative to 35-mm film. As is often the case, the premium technologies that these companies are creating for the digital-cinema market today will show up in mass-market consumer products in the not-too-distant future. For this reason alone, many companies that do not sell directly into the movie industry should be aware of what is happening as digital-cinema technology matures and deploys. In this report, Media Futures offers an overview of digital cinema's recent progress and of recent corporate moves that aim at riding the wave of digital cinema's development. The report describes benefits that digital cinema promises and the obstacles that it still must overcome. Looking toward the future, the report explores the merits of a phased-adoption path that can ease the impact that the digital-cinema transition will have on studio finances. Finally, we provide market-development projections for digital cinema worldwide. Readers who want a brief treatment of the key issues surrounding digital cinema's development and deployment can find it by reading the report's first four pages. We encourage readers who want a more detailed account of those issues to read the body of the report. We welcome feedback about this report and the program, and we encourage you to contact us with any questions or suggestions. For more information, please contact Michael Gold at telephone: +1 650 859 6354; fax: +1 650 859 4544; e-mail: mgold@sric-bi.com. Table of Contents About This Report ii Digital Cinema Is Coming 1   What Has Changed? 1   Important Obstacles Remain 2   Digital Cinema Will Become a Commercial Reality by 2005 3   Phased Deployment Will Ease the Transition 3 Digital Cinema Is Now the Buzz in the Movie Industry 5   What's Happening in Hollywood's World? 5   What's Happening in Europe and Japan? 6 Digital Cinema Promises Substantial Benefits 7 Technology Becomes a Driver, Not an Obstacle 10   New Technology Advances Enable Digital Cinema 10   Other Technologies Are Helping to Drive Digital Cinema 12 Important Business Obstacles Remain 15   Exhibitors' Concerns Focus on Deployment Issues 15   Various Concerns Temper Studios' Digital-Cinema Enthusiasm 18 Companies Are Addressing These Obstacles 20   Companies Develop and Install End-to-End Digital-Cinema Solutions 20   Lucasfilm Develops Digital-Cinema Certification 21   Leading Film-Industry Vendors Are Seeking Digital-Cinema Expertise 21   Digital-Cinema Standards Remain to Be Developed 22 The Next Five Years Will See Strong Digital-Cinema Growth 24   Past Digital-Cinema Efforts Offer Little Guidance 24   Different Companies Are Promoting Different Paths 24   Digital Cinema Will Most Likely Deploy in Phases 25   What Do the Next Five Years Promise? 26

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