Being Digital

SonyspanThere was an interesting article in today’s New York Times business section by Saul Hansell on Landmark Theater’s decision to convert all of their projectors to this cool looking digital projector that costs $100,000 per theater.

Landmark is co-owned by Mark Cuban, so maybe this isn’t such a big thing.  Cuban believes in being digital after all.

But it got me thinking about the pace at which most media businesses convert to digital. I’ve lived through this in the radio industry where the broadcasters waited almost five years to adopt HD Radio and it was only when satellite started really hurting them that they did it. They did not embrace digital as something they needed to get behind quickly. They were forced to do it by competitive pressures.  And interestingly enough, the cost to convert a radio station to digital is about the same $100k that it costs to convert a theater to digital projection.

So back to the theater business.  Cuban isn’t converting his theaters to digital because the picture will look better (it will).  He’s doing it because digital changes the game.  He can now do short run movies cost effectively.  He can broadcast live events.  He can show movies that come straight from the camera to the screen.

These are the benefits of being digital.  Low cost, instant delivery, intelligence in the bit stream, network effects, etc etc.

Landmark will use these benefits to its advantage and change the game in the theater business.  I wonder if the big chains will wait five years until its clear Landmark is winning to react.