Leading Depth Leading Innovators Leading Thinkers Leading Experience Software Council Panel Discussion 10/23/2003 1
The Promise 2001 - Technicolor (TDC) Planned to seed 1,000 installations (1) 2
The Promise 2001 - Technicolor (TDC) Planned to seed 1,000 installations (1) 2002 - Star Wars Episode II: Attack of the Clones 60 US digital screens out of 5,000 (1) 6 digital films at Cannes (1) 3
The Promise 2001 - Technicolor (TDC) Planned to seed 1,000 installations (1) 2002 - Star Wars Episode II: Attack of the Clones 60 US digital screens out of 5,000 (1) 6 digital films at Cannes (1) 2003 160 WW D-Cinema installations (1 & 2) 80+ digital films released to date (1) But maybe there s a market for films in different digital form: 500,000 digital movies exchanged on the web (3) 2-hr movie encoded at 750KB fits on a standard CD (3) 4 movies encoded in MPEG2 fit on a standard DVD (3) Also, digital infrastructure is finding it s way into theatres 4,000 WW low-end plasma displays for advertising in 400 theaters (1) 4
The Promise 2001 - Technicolor (TDC) Planned to seed 1,000 installations (1) 2002 - Star Wars Episode II: Attack of the Clones 60 US digital screens out of 5,000 (1) 6 digital films at Cannes (1) 2003 160 WW D-Cinema installations (1 & 2) 80+ digital films released to date (1) But maybe there s a market for films in different digital form: 500,000 digital movies exchanged on the web (3) 2-hr movie encoded at 750KB fits on a standard CD (3) 4 movies encoded in MPEG2 fit on a standard DVD (3) Also, digital infrastructure is finding it s way into theatres 4,000 WW low-end plasma displays for advertising in 400 theaters (1) 2004 Only 11 confirmed digital film releases scheduled (3 live action) (1) 5
The Business Issues Theater Owner Issues - No clamouring customers $5B-$7B to upgrade 36,000 US screens (2) $100K-$150K per screen; $2.4M- $3.6M per 24-plex (1) Upgrade is not a 1-time cost vs. life of projector: (1) - Ongoing maintenance and staff of computer-based servers - Server obsolescence and replacement Not enough titles means equipment sits idle 6
The Business Issues Theater Owner Issues - No clamouring customers $5B-$7B to upgrade 36,000 US screens (2) $100K-$150K per screen; $2.4M- $3.6M per 24-plex (1) Upgrade is not a 1-time cost vs. life of projector: (1) - Ongoing maintenance and staff of computer-based servers - Server obsolescence and replacement Not enough titles means equipment sits idle Distributor Issues - Potential $800M decrease in annual print business over time (1) Status of players (1): Technicolor TDC Qualcomm Boeing 7
The Business Issues Theatre Owner Issues - No clamouring customers $5B-$7B to upgrade 36,000 US screens (2) $100K-$150K per screen; $2.4M- $3.6M per 24-plex (1) Upgrade is not a 1-time cost vs. life of projector: (1) - Ongoing maintenance and staff of computer-based servers - Server obsolescence and replacement Not enough titles means equipment sits idle Distributor Issues - Potential $800M decrease in annual print business over time (1) Status of players (1): Technicolor TDC Qualcomm Boeing Studio Issues $26K per screen savings potential (1) Competing formats mean multiple masters Compression: Standard or Proprietary? (1) Resolution: 2K or 4K? ITU wants HDTV at 1.9K (1) Standards Bodies: SMPTE or DCI? (1) Vendors: TI, Barco, NEC, Sony, Kodak, (1) Indies can t afford $100K per title mastering cost Piracy of digital products -- $3B in piracy losses of physical media annually (MPAA) -- 500,000 digital movies exchanged on the web (3) -- 8-10 discs per site for 100 min. movie (1) -- 200 millionth download of Kazaa Media Desktop (KMD) on 3/11/2003 8
Potential Drivers Theatre Owner Opportunities - Maximize popular movies on more screens with flexibility (1&4) Distributors offer equipment and services, rather than theatres investment (1&4) Alternate uses and revenue streams: sports, concerts, educational and business events, niche film festivals, niche advertising (1 & 4) Distributor Opportunities - Potential digital media storage and distribution services (1&4)) Simultaneous releases (1&4) Can then handle 15,000-screen simultaneous release with film (1) Studio Opportunities - Reduce $800M on prints, rejuvenation and redistribution of film (1) Maximize popular movies on more screens with flexibility (1&4) With more digital intermediates, the cost of mastering can go down (1) With more advertising-driven infrastructure, more theatres will have networks in their facilities (1&4) Indies have alternatives: Lower res. outlets, online downloads, CDs/DVD mastering at lower costs (4) Piracy of digital products -- More mature role for DRM, watermarking, forensics (4) 9
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