I will admit that many people would not agree with this headline, but almost none of them work in the digital cinema industry, which did not experience a bad year or a even down year. It was, in fact a "good" year, but it could have been even better had more money been available to install digital cinema projectors and then upgrade them to 3D.

Matt Brennesholtz
Insight Media Analyst

This column was sparked by an e-mail press release I received from Barco with the headline "2009 best year ever for Barco’s digital cinema business." My first reaction was "Well, Duh!" According to the release, "2009 has been a record year for [Barco's] digital cinema business, with a very significant growth of more than 100% in sales, orders and production capacity. By the end of 2009, Barco had reached a total install base of 6500 projectors worldwide."

But was this as universal in the digital cinema business as I thought?

According to the National Association of Theater Owners (NATO), the number of screens in the US is up, from 38,834 at the end of 2008 to 39,233 on December 6th, 2009. While this is only a 1% increase, it is still not bad for a year that was down for most people. According to Box Office Mojo, the total box office revenue for 2009 was $10.6B, up 10% from the $9.6B in 2008. Ticket sales had also risen by 5.3% from 1.3B to 1.4B. The difference between the 5% ticket growth and the 10% revenue growth was driven by higher ticket prices, which in turn was partly fueled by 3D movies such as Avatar. (Note: One cannot write an article on 2009 cinema without mentioning Avatar at least once!)

At the end of 2008, there were an estimated 2540 DCI-compatible digital screens installed world-wide. In June, 2009, Screen Digest forecast that by the end of 2009 there would be 6882 digital screens. Currently, the estimate is a total of over 9700 WW screens, with 45% of them equipped for 3D. Given the claimed 6500 installed base by Barco, even this estimate may be low since Christie, in the US at least, is the number 1 supplier of DCI-compliant projectors. NEC is the third major provider.

At roughly $70K per installation, the 2009 investment in digital screens was over $510M and the investment taps are still open. JP Morgan, for example, is expected to supply $700M for an additional 12,000 digital screens.

The 3500 3D screens currently in the US are clearly not enough for the 3D hungry public and the revenue hungry theater owners, studios and distributors. Major features native 3D feature like Alice in Wonderland and How to Train Your Dragon are arriving soon. Studios are changing plans and converting 2D films to 3D, like Clash of the Titans, in response to the success of Avatar.

But Avatar is not going away, so it seems there will be a fight over available 3D screens. Reportedly, over 70% of Avatar’s box office in the US was in 3D and about 85% in the UK. The conflict over 3D screen availability isn’t going to end soon, since about 48 3D films are scheduled for release in 3D in 2010.

If your company is in the digital cinema business or the 3D cinema business and 2009 wasn’t your best year ever, you need to seriously re-evaluate your business plan. -Matthew Brennesholtz