Kodak Digital Cinema — An Overview

What's the status of digital cinema in the US and in the world marketplace?

In the US, about 12-percent of the 40,000 screens now have digital projection systems that meet industry standards; on a worldwide basis, about 6-percent of the 110,000 first-run screens have been digitally equipped. Financing plans are becoming available, first in the US and Europe. The newest ones involve a small upfront payment from the exhibitor, with the balance paid by the studios and other content distributors through Virtual Print Fees paid to the system financer whenever a digital print is played.

What's attracting exhibitors to make the investment?

In 2007, 120 movies (out of the 600 released in the US) were available in digital, as well as on film. All 27 movies that took in more than $100M at the US box office were released digitally. Major studios are committed to digital - and smaller distributors are beginning to follow their lead. And other cinema content -- including sports, music programming, and 3D entertainment -- is increasing in diversity and availability. When exhibitors consider these new revenue-producing content opportunities -- coupled with the efficiencies and automation that digital cinema offers -- they are becoming more serious about digital investments.

What is Kodak's role in digital cinema?

Kodak is a full systems integrator, selling and supporting networked digital cinema solutions with the capability to handle the full cinema presentation, including pre-shows, trailers, and features in 2D and/or 3D. While the company's system includes high quality components from leading hardware suppliers, Kodak has designed and configured the system, provides the unique software to control and mange its functions, and provides all service and support - including installation and training.

What's the status of Kodak systems in the marketplace?

Kodak Digital Cinema feature systems have been installed in 14 countries, with 32 exhibition chains on well over 200 screens. More than half of those installations are new within the past year and the rate of Kodak installations is accelerating dramatically with the introduction of the company's new Business Plan. Several complete circuits are working exclusively with Kodak and more will be coming on board in the very near future. The transition to digital cinema is not a sprint, it's a marathon and Kodak is gaining steady momentum in the marketplace.

What's Kodak's role in digital 3D?

Kodak systems have been used to show every digital 3D title over the past several years in the cinema - and Kodak's is often the system helping studios to premiere new 3D movies at major industry events. Also, Kodak has a strong alliance with Real D - the world's most popular digital 3D technology provider -- serving as their agent in parts of Asia and working closely with them in other countries to deliver digital 3D presentations to the cinema screen.

What's included in the Kodak system?

The Kodak system includes a Kodak Content Player JMN3000 (which handles MPEG and JPEG content, in 2D and 3D), a Kodak Theatre Management System with Kodak software, and a Barco, Christie, or NEC 2K projector. Also included are full project management, training, installation, service and support, everything the customer needs to completely digitize a site and become comfortable and confident with digital cinema.

What are the benefits of the Kodak Theatre Management System?

The Kodak Theatre Management System is a central server that becomes the 'control center' in a multiplex, receiving, loading, migrating, staging and playing content - all automatically -- as directed by the site's ticketing system. By connecting and automating functions, the TMS brings new efficiencies to the complex and also provides a powerful backbone for all of the service aspects. For maximum up-time, Kodak network systems are monitored by the Kodak service and support team from our central Network Operations Center. So, the Kodak TMS is the heart of a networked system with excellent reliability and potential saving in productivity.

Does Kodak help customers finance the system?

Yes. Although the Kodak Plan has taken some time to develop - because we wanted it to be fair, clear and straightforward, with no surprises, undefined charges or hidden fees - it's now ready for implementation. Several exhibition chains are now using the Kodak Business Plan to finance their Kodak systems. Currently, the Plan is only available in the US, but we expect to expand that to other countries in the very near future.

How does Kodak protect against piracy?

Kodak-prepared feature presentations are always encrypted with a pair of keys and both are needed for decryption and playback. Keys have expiration dates set by the content owner and are valid for only an agreed-upon amount of time. Also, Kodak systems are manufactured in countries where there are strict rules against piracy, rather than in lower-cost countries where piracy is rampant. And if a pirated copy has been made from a camcorder recording off a cinema screen, watermarking technology - included in the Kodak system - embeds an invisible code into both the audio and visual elements, so pirated copies can be traced back to their source.

Is Kodak still involved with digital pre-show?

Yes. Kodak Digital Cinema pre-show systems are installed on nearly 2000 screens and the Kodak network operations center is preparing and delivering content that is seen by millions of movie-goers each month in 38 countries. Within the past several months, we've been installing the Kodak system on 172 screens in 17 sites for Warner Bros. Cinemas in Italy and there is sales potential in other countries as well.