It is probably too early to really know what the real costs will be of investing in digital cinema for a cinema. When converting a screen from traditional cinema projection to digital cinema it is not just the cost of the projector which has to be taken into consideration, there is are a number of other items which need to be purchased. First of all, a server for storing the content on, such as the Dolby Show Storer, then you need a piece of equipment for playing the film back, such as the Dolby Show Player – this is already about $20,000 before any interface exists between the server and the sound system. The cost of installing a LAN for the digital cinema is also like to cost,
According to the Autumn 2007 edition of ScreenTrade Magazine who ran an article on converting a screen to digital it is likely to cost $119,000 plus another $20,000 excluding glasses if you would like to be able to show any 3D content. On top of that there is a $1,500-$3,000 annual service contract. This could mean that for a five screen cinema to convert to entirely digital equipment it is likely to cost in the region of $600,000 or about £300,000 in English money.
However, in the Winter 2007 edition of ScreenTrade Magazine there is a follow up article where the author Jim Lavorato looks at the costs involved at converting some of the circuits in America. His estimate was for a ‘conservative $90,000 per screen’ which mean that the 6409 screens belonging to Regal Entertainment Group would cost $576,8m to convert. His conclusion broadly being that the cost would be too high to convert all screens.
As digital cinema is effectively an equivalent of a giant IT investment with it’s servers, networks and very expensive monitors (the projectors) it is not unrealistic to expect to have to up grade every three to five years. Maybe the same business model will start to exist as currently happens in big business where a cinema will lease the digital projector etc over a period of time and then get a replacement at the end of this lease?
However, there is of course all the new potential revenue streams which a cinema may be able to get as a result of having a digital projector (subject to the cinema having paid a further $6,000 to get an Alternative Content Formatter such as a Folsom installed (although this is not likely to exist for each screen). This means that the cinema can potential earn extra money through showing alternative content such as the Rugby World Cup, local film makers films, the opera, conferences or even a gaming event. After all a screen maybe dark for a large part of the day, especially when it is term time. Hosting conferences can help to fill this space.
Alternative content of course will work better when cinemas have more than one digital projector installed as there just won’t be the same sort of flexibility available otherwise. However, there is still going to have to be some sort of discussion with distributors in terms of how flexible they are willing to be in order to allow cinemas to move their films around screens on different days (not very likely because of the issue with keys).
The next bit of this section is controversial, it is a guess and it is by no means what I would like to see, but it is a possible view that may happen as a result of the introduction of digital cinema and is included here because this section is about economics and the business economics of exhibition.
The other side of the economics of digital cinema are unfortunately the savings that are likely to be possible to made as a result to staffing costs. The need for one full time projectionist may no longer exist and instead they can be a combined role with a cinema manager (after all if it is mainly being operated via a computer and network you could run the show from a PDA on the other side of the world). A full time technician is then only likely to be needed when there is a special event or alternative content happening. Like the rest of the television/film industry freelance technicians can be brought in for those events. Sadly the savings made from three projectionists salaries over three years will almost cover the cost of converting to cinema.
