AccessIT was among the first to develop and successfully test the required software for the 2K digital transition as well as devise a workable funding plan, which was highlighted by a $217 million line of credit it received from GE Capital. The proprietary software of AccessIT provides the digital link via satellite between studios and movie theaters around the country and also manages the entire digital process in the projection booth.
AccessIT recently announced it has completed more than 1,000 digital cinema system installations at some 121 multiplexes in 24 states around the country. The company now has contracts and arrangements with all the major studios and one of the largest exhibition chains (Carmike Cinemas), plus many small and mid-sized circuits. It expects to convert 4,000 screens over the next year and has set a goal of 10,000 by 2009.
The transition of the global motion picture industry (37,000 screens in the U.S. and Canada; more than 107,000 worldwide) to digital will save the major studios at least $1 billion annually in the U.S. alone while providing them with a powerful new tool to fight piracy, now estimated to cost the industry $6 billion annually. At the same time, it will provide exhibitors with ultra-high-definition, eye-popping, big-screen image quality (including easy 3-D capability) to meet the increasing competition from “home theater” (DVD, movies-on-demand, Internet downloads, etc.).
Equally important, it will open up a major new revenue stream for exhibitors from alternative content that can be beamed digitally onto their screens. Exhibitors envision attractions like the just-announced Metropolitan Opera performances, live concerts, major sporting events (SuperBowl, World Cup, Olympics, World Series, NASCAR, and the like), religious gatherings, children’s shows, corporate events -- in short, spectacles of all kinds. As it stands now, an estimated 85% of movie theater seats remain empty in any given week except for weekends and holidays.
Meanwhile, potential major competitors are either announcing big plans or marking time. Technicolor, the leading provider of analog celluloid film duplication and distribution, is still beta-testing its technology. It recently announced a deal with National Amusements, another large chain, for a pilot 150-screen deployment.
National CineMedia (the digital cinema consortium of Regal, AMC, and Cinemark) has not yet announced a specific funding or 2K technology strategy or made any installations of DCI-compliant 2K projectors. The industry is also awaiting some kind of detailed word from Kodak and Deluxe. Both are major players in the analog world who could be big losers in the transition to digital, as will be Ballantyne, a leading producer of analog projectors.
Overseas, there has been considerable activity. AccessIT is talking to exhibition chains in Latin America, Europe, and Asia. It’s also noteworthy that with such a pronounced lead in technology, installations, and funding, AccessIT might be a logical buyout route through which some of the lagging big boys mentioned above can quickly get into the game.
As noted, the company already has arrangements with all the major studios for them to pay about $1,000 per film delivery per screen to amortize the cost of the equipment, for which the exhibitors will not pay. The exhibitors will, however, pick up installation and maintenance charges. The studios have also agreed to release all major features going forward in digital format for 2K exhibition.
Richard Shonfeld does not hold a position in AIXD.
