Pilot Program Tests Satellite Delivery of Digital Films to Theatres

washington — The shift to direct digital transmission of first-run movies from Hollywood to movie theaters across the country via satellite inched slightly forward March 7, when Microspace Communications Corp. of Raleigh, N.C., reached a deal to distribute movies to theaters owned by Carmike Cinemas of Columbus, Ga., the nation’s fourth-largest theater chain.

As part of a pilot program, Microspace will install satellite and server equipment in more than 200 Carmike theaters, making it possible for digital satellite transmissions to reach more than 2,000 screens, Microspace officials said. Neither Carmike nor Microspace would divulge the cost of the agreement.

The deal will enable Carmike, already the biggest user of digital technology in the movie theater business, to accept films from more Hollywood studios. Carmike entered the deal with Microspace because some studios have preferences as to which satellite delivery company they use, said Tony Reed, senior vice president at Carmike.

Carmike has had a deal in place with Access IT of Morristown, N.J., since March 2004, to receive digital transmissions of movies directly via satellite.

Of Carmike’s 2,447 total screens in 289 theaters, 1,711 screens in 85 theaters are set up for digital, Reed said .

“Access IT, to date, has delivered films to Carmike theaters from Buena Vista, Universal and a couple of others,” he said.

Microspace executives say their company has delivered 10 first-run films — “Glory Road,” “World Trade Center,” “Dream Girls,” “Over the Hedge,” “Mission Impossible III,” “Eight Below,” “The Shaggy Dog,” “She’s the Man,” “Flushed Away” and “Cars” — to eight theater chains across the country. The movies played on more than 2,000 screens at some 250 locations, said Curt Tilly, manager of digital cinema distribution for Microspace.

Using satellites to deliver films to movie houses enables all parties involved — studios, distributors and cinema chains — to handle complete, virtually pristine versions of films without having to rely on overland delivery services. Because the films are transmitted directly into servers at each cinema via rooftop satellite dishes, chains do not have to rely upon staff to be on hand to receive and upload films.

“Frankly, when theater owners and studios say we’re the next generation trucking company, we don’t think of ourselves in that way,” said Joe Amor, Microspace’s vice president and general manager. “But in the movie industry model, yes, we are.”

“With a satellite, you deliver directly into the theater’s server,” said Chuck Goldwater, media services group president for Access IT. The practicality manifested itself when a recent spate of bad weather hindered film delivery in much of the country’s northern tier, he said.

“We delivered some films that were supposed to be delivered via hard-drive but didn’t make it to theaters,” Goldwater said.

While satellite companies like Microspace and Access IT believe their service should ultimately become the industry standard, there is a long way to go.

Of the 38,500 movie screens in the United States, only 2,300 are digital, according to the National Association of Theater Owners, a Washington -based trade organization. More work needs to be done before satellite transmission becomes the industry standard, said John Fithian, the association’s president.

“The industry — cinema companies, studios and equipment manufacturers — are working to come up with technical standards and business models,” Fithian said.

One problem that had hindered the spread of satellite transmissions — the high cost of equipment — has been resolved, Fithian said, at least in North America. “Fees [for new equipment] are paid by the studios.”

The future largely will be determined when a group made up of the three largest cinema companies and two major Hollywood studios decide which platform for distribution they will use, Fithian said.

“The movie chains — Regal, AMC and Cinemark along with Warner Brothers and Universal — are still exploring what the [digital] distribution platform should be: satellite, broadband, disc or tape,” Fithian said. “Those three companies represent 14,000 screens.

“Most observers believe that satellite transmission will play an important role, but because it’s in the early stages of rollout, those distribution factors haven’t been decided yet,” Fithian said.

Carmike’s Reed concurs.

In the context of Carmike’s deal with Microspace, he is taking a wait-and-see approach.

“The Microspace deal is still only a pilot program for satellite delivery,” Reed said. “If everyone is satisfied [after Dec. 31 when the pilot agreement ends], then we’ll do a real contract.”