DigiTraining Plus (Day Two)

At the Finnish Film Foundation, Helsinki, 18 Feb 2009.

Presentations by Kerstin Degerman (MEDIA Desk Finland), Leena Laaksonen (Senior Advisor, Ministry of Education and Culture, Finland), Elisabetta Brunella (Secretary General of MEDIA Salles), Michael Karagosian (MKPE), Oleg Berezin (Managing Director of Nevafilm, Saint Petersburg), Harri Ahokas (Head of Domestic Distribution, Finnish Film Foundation), Ramon Reissmüller (Digitalt Projekt, Svenska Filminstitutet), Rolf Gjestland (Adviser in cinema technology and design, Film & Kino, Norway), Jan Petersen (IT manager of Nordisk Film Biografer, Denmark), Daniel Hromadko (BrickBox Digital Media, Czech Republic), Marieke Jonker (Amstelfilm, The Netherlands), Ami Dror (Xpand).

Leena Laaksonen stated that there has been a 51% increase in 3 years in Government film funding. 90% of the cinemas would vanish without public funding. Municipalities cannot afford to support cinemas. Virtual Print Fee is not a solution in a small market like Finland. Public funding is necessary. Problems include the lack of competition and the high cost of other digital stuff. Public funding has to be carefully prepared, with national, cultural criteria, and cinemas need to be treated equally.

Elisabetta Brunella reported that 2009 has been a year of exceptional growth in European cinemas, 6,3% more spectators. The trend has been especially strong in Germany, France, and Great Britain, as well as in Austria, The Netherlands, and Sweden, but also in Russia, Romania, Poland, and Slovakia. The average ticket price rose due to 3D. There was a 70% growth in digital screens during the first half of the year. France grew to be the European leader in digital screens, beating Great Britain. Penetration of 3D in digital screens will reach 55%.

Michael Karagosian gave the keynote speeches. Studio revenue is declining due to the costly transition to D-cinema. The bulk of the growth is due to 3D. 3D is the driver. In 2009, 15% of the global screens were digital. There is a decline of digital screens per site due to 3D. Karagosian presented the complex structures of the Virtual Print Fee, the Deployment Deal Structure, the 10 year warranty procedure, the free rider arrangement, and the film cutoff calculation.

Instead of standards, Mr. Karagosian spoke of compliances.
1. The DCI compliance with six major studios. There is no standard, but the procedure is evolving. D-Cinema has started developing before there were standards.
2. SMPTE DCP compliance: moving towards standards.
3. Accessibility compliance. For the first time ever films can be supplied with audio and subtitling alternatives royalty free. The previous techniques were proprietary.

Mr. Karagosian underlined the issue of managing trust and developing a standards-based security key management. It is a huge issue.
KDM = Key Delivery Message
FLM = Facility List Message
DCP = Digital Cinema Print
CCM = Cinema Communication Message
COMBI = Common Media Block INterface

Further, Mr. Karagosian talked about visual acuity limits. I disagree with him about 2K resolution being a sufficient replacement for 35 mm film.

Piracy is a major issue. Equal in profit to that of cocaine. 300-400% higher profit than on heroine, but penalties are lower. Piracy costs the industry more than digital cinema. In the USA 6,1 Billion estimated consumer losses. The ability to trace is developing, all content is marked in some way. Camcorder detectors.

Q & A: - The windows are shorter, even 12 weeks only, due to piracy.
- There was discussion whether digital cinema is a speculative bubble about to burst in a few years.
- The durability of the D-cinema hardware: one can expect the server to last 5 years, and the D-projector 10 years. We are on a learning curve, and updates take place every 3-5 years. We are still taking baby steps. It will take years to reach a robust stage. Digital cinema equipment is a part of the information technology development.

Rolf Gjestland (Norway): film distribution in Norway is to be all digital, with no 35 mm distribution.

Jan Petersen (Denmark) was more cautious, critical of the endless upgrades. D-Cinema is not as stable as desired. There is no business in 2D D-Cinema. 3-D is very good business: Avatar, and also Metropolitan Opera, Oscar Gala, Super Bowl, Champions League. The prerequisites for a digital shift include: - a substantial price reduction - smaller size of 2K projectors - full DCI compliance - in two years a full roll-out in Denmark is expected

Conclusion: every country has a different situation. It is a difficult area.