ETC, NATO, ITEA and SMPTE Announce Digital Cinema Lab.

Business/Entertainment Editors

LOS ANGELES--(BUSINESS WIRE)--March 6, 2000

Along With Participation by MPA, Effort Seeks to Research

Aspects of Non-Celluloid Medium for Future Distribution

& Exhibition of Theatrical Films

Recognizing digital cinema as the next dominant paradigm in the delivery and exhibition of theatrical motion pictures, an independent Digital Cinema Lab has been established by the University of Southern California's Entertainment Technology Center (ETC) in cooperation with the Motion Picture Association (MPA), National Association of Theater Owners (NATO) and International Theater Equipment Association (ITEA), utilizing wherever possible the standards and recommended practices currently being developed by the Society of Motion Picture and Television Engineers (SMPTE).

With a mission to serve as an independent test bed, the Digital Cinema Lab will be housed in Hollywood's Egyptian Theater.

The Lab is an outgrowth of the Digital Cinema Forum, a roundtable gathering of digital cinema stakeholders initiated by the ETC in May 1999. The consensus of the Forum was that a need existed to create a benchmark arena where objective testing could be performed on emerging technologies developed by myriad companies.

The Egyptian Theater, chosen for its central location and daytime availability, would serve as the first-stage Beta site. An overseeing body of advisers, composed of major studios, post-production houses, technology providers and others, would provide guidance throughout the process.

The Digital Cinema Lab will assess each company's various digital cinema components, as well as the interfaces between those components. Areas of examination will include mastering, compression, security/encryption, delivery, graphics, audio, projection and theater management systems.

Leaving any suggested modification of these components in the hands of the manufacturing companies, the Digital Cinema Lab will focus on the issues of quality, security, access, cost, compatibility and flexibility. Tests will be commissioned for private evaluations, non-commissioned for the public record and, in some cases, a hybrid of both.

Commenting on the Digital Cinema Lab, James H. Korris, ETC executive director and chief executive officer, stated, "This project is the most recent development in ETC's ongoing mission to facilitate the development of entertainment technologies, both for the creation and distribution of content. We imagine that it will serve, for the motion picture business, roughly as the equivalent of the cable industry's CableLabs operation.

"Developments in digital cinema will likely shape the future of filmed entertainment production and distribution; we are honored that such significant participants -- SMPTE, MPA, ITEA and NATO -- have come together to task us with the lab's creation and operation."

Thomas MacCalla, associate executive director and chief operating officer of the ETC, stated, "We are elated to have such a broad representation of industry points of view in this venture, assuring its reputation and success. They will be vital in safeguarding a true scientific approach, the feasibility of vendor systems and the ultimate viewing experience."

According to Brad Hunt, senior vice president and chief technology officer of the MPA, "The ETC's formation of a digital cinema test laboratory will provide real benefits to our member companies in the evaluation of technical specifications critical to the successful launch of a viable digital cinema system. Having already begun to develop a system and performance requirements document that clarifies the needs of our members, we look forward to working with the ETC as part of this process."

Curt Behlmer, senior vice president, technology of Soundelux Entertainment and chairman of SMPTE's Digital Cinema Technology committee, stated, "One of our main goals is to involve as many organizations as possible, to solicit strong participation from stakeholder groups as well as individual members. Having previously assisted in the advent of DVD and digital television, SMPTE is pleased that this effort is being spearheaded by the ETC, which as a neutral resource has wide support from within the entertainment community."

Dan Taylor, president of the ITEA, said, "The ITEA recognizes that digital cinema is a major part of the theatrical future, and we are very pleased to be a participant in this activity."

General Background on Digital Cinema

The benefits of digital cinema will likely be as numerous as its applications. For audiences, there will be consistent image quality. Films will be free of time-inflicted scratches and pops, megaplexes will be able to show popular films on more screens, and new special events might also be enjoyed in-theater.

For directors, producers and cinematographers, digital copies guarantee the same perfect quality in every theater, week after week, with no degradation. Finished works can be distributed immediately without time-consuming transfer to film and duplication. With the transmission of multi-language sound and picture tracks, digital cinema offers a greater ability to cater to global audiences, and with the elimination of audio compression limitations, cinema patrons may be able to enjoy multiple discrete audio channels.

While distributors will be protected from making too many or too few prints, encryption technology and the ability to simultaneously release films worldwide will further ensure against piracy. Exhibitors, in turn, could benefit from ease of use, scheduling flexibility, better audience monitoring, cost efficiency for smaller venues, increased revenue streams through event programming, and automatic diagnostics, among other elements. Digital cinema will also eliminate the environmental hazards of film disposal.