Immediatek, Inc. (fka IMKI)

[Art2Gecko]

The Cuban Revolution
The maverick billionaire blogger wants to take the film out of the film industry. And his all-digital vision is coming soon to a screen near you.
By Xeni Jardin

Getting to the Bunker, as Mark Cuban's assistants call his underground office, means tunneling deep into the American Airlines Center, the 20,000-seat stadium that's home to his Dallas Mavericks basketball team. A maze of curving corridors leads to a narrow hallway ending in two gray doors - no nameplates, no keyholes. Controlled by a keypad, the doors open to reveal a blinged-out hideaway. All that's missing is the theme song from Get Smart.


Inside the office, Crocodile Dundee II fills a mosaic of plasma screens tuned to Cuban's 24-hour high-definition television network, HDNet Movies. Another wall is decorated with Mavericks memorabilia, and a towering glass vitrine holds documents from the 1998 Broadcast.com IPO that made Cuban a billionaire.

Hunched over a PC in the corner of the room, wearing a Mavs jersey and white sweatpants, Cuban is doing what he likes best: swapping email with fans, posting provocative entries on his blog, BlogMaverick, and figuring out new ways to make a buck. In the past 24 hours, he has replied warmly to a Mavs devotee who offered ideas for upgrading the arena, slammed an NFL star who pretended to drop trou and moon fans in the end zone, and recorded a TV commercial to promote a Mark Cuban workshop for small-business owners.

It's game night, and the pace of Cuban's keystrokes increases as the stadium fills. But he's eager to talk about his next big idea, which has nothing to do with sports or TV. This time, the firebrand CEO is taking on Hollywood. As co-owner of Landmark Theatres, a chain of 60 cinemas he purchased two years ago, Cuban is building the first all-digital theater empire. His goal is nothing less than to take the film out of the film industry. In March, the conversion to digital begins with two Landmark theaters in San Francisco and Dallas.

Of course, change will come slowly. Even if Cuban converts all 270 Landmark screens - an effort that will cost him $10 million and probably most of his hair - that's less than 1 percent of the 36,485 screens in the US. The most he can hope for is to prod an entrenched industry to embrace an inevitable future. Cuban is optimistic; he's pushing to complete the Landmark rollout within two years and believes widespread adoption of digital cinema will happen by 2012.

He dismisses talk that the industry isn't ready. "People get frightened about all kinds of things in Hollywood," he says. "That's not my system. I don't have a business to protect. I have a business to build."

It's a business filled with promise - and no small amount of uncertainty and financial peril for the key players. First, the upside: Going digital would be a boon for studios, theater owners, and moviegoers. If studios no longer had to make thousands of copies of each film to deliver to theaters, they could save hundreds of millions of dollars a year. According to the Motion Picture Association of America, the studios spent more than $631 million in 2003 on film prints for the North American market alone. Taking these reels out of the equation could snip distribution costs by up to 90 percent, says Patrick von Sychowski, marketing director at Unique Digital, which places ads in European cinemas. When you factor in the cost for foreign releases and overseas distribution, cutting out the prints translates to an eventual savings of as much as $900 million a year.

Likewise, switching to digital exhibition systems would give theater owners unprecedented flexibility. If a blockbuster packed more seats than anticipated, an owner could quickly reallocate screens that weren't selling as well to handle the overflow. In a film-based world, such changes can be cumbersome, time-consuming, and costly - requiring an additional print from the studio and a reel swap. With digital, they would be nearly instantaneous and come at almost no cost, once the onetime hardware expenses were recovered.

Moviegoers, for their part, would be treated to a future that promises no more out-of-focus projection, out-of-order reels, or scratchy footage on heavily played film. Even more exciting to Cuban is the broader range of content that digital systems make possible: Beyond movies, theaters could offer live, hi-res broadcasts of sports events, Broadway plays, fashion shows, and multiplayer electronic games.

So if digital cinema is so great, why isn't it here already? Well, it is - in the editing stage, but not the distribution and exhibition end. While nearly all wide-release movies are shot on film, they are "cut" digitally. (The exception: productions by Steven Spielberg.) Footage is converted into data for postproduction, where scenes are put together, sound is laid down, and effects are added. When that's complete, the movie does a somersault back to analog, where it's printed onto reels, copied, and released to theaters. It's essentially a one-person operation.

But like a wide shot of bathing beauties in a Busby Berkeley number, going fully digital requires elaborate coordination and synchronized movement. Studios, filmmakers, theater owners, and manufacturers must each put one foot forward at precisely the same moment - but there are a number of financial, technical, and political obstacles that stand in the way. Who will pay to update the theater projection equipment (and just what that equipment will be and who will fix it so moviegoers never see the equivalent of the "blue screen of death") has been the biggest sticking point to conversion to date. Of course the logistics of exhibition don't matter if the filmmakers aren't on board. As it stands, many directors still believe analog is aesthetically superior to digital and they haven't seen anything to convince them otherwise. And then there's the studios' hysteria over piracy.

Back in Dallas, Cuban isn't waiting for industry consensus, and he's not wondering who will fund Landmark's conversion to digital. He will.

In a 230-seat theater at the Irvine Spectrum 21, a massive megaplex 40 miles southeast of Los Angeles, Jennifer Garner is flipping bad guys into the air like pancakes and twirling knives with impeccably manicured hands at hyperbolic speed. The picture is crystalline and crackle-free, so vivid that the bloodred slinksuit she's poured into practically drips off the screen.
Garner's Elektra bombed at the box office, but to see it projected digitally is to at least appreciate how cool it looks. "Digital is great because there are no flaws to pull you out of the viewing experience," says Spectrum booth manager Mark Longoria.


Regal Entertainment Group converted the screen to a digital projection system six years ago as an early test of digital cinema's commercial and aesthetic viability. On this particular night in January, it's one of just two theaters playing first-run titles in high-resolution digital in all of California - and one of maybe ten in the entire US.

That may not sound like many, but it's enough for now. After all, who needs digital projection if the studios aren't releasing films in digital format? From January 1999 through October 2004, only 86 studio titles were released in digital. With an average of nearly 500 movies released annually by the major studios, digital remains a meager slice of the Hollywood pie. Auditorium 17 at the Spectrum, specially equipped to play digital movies, ended up screening traditional films 70 percent of the time last year. "Our audience would love to see more digital," Longoria says, "and I know it's coming. I just don't know how soon."

The answer, like so much in Hollywood, comes down to money. The price tag for converting a single screen to digital - including the cost of a projector, server, and other upgrades - can easily climb to $150,000 or more. Theater owners, knowing that they are unlikely to sell many more tickets just because a film is screening in digital, aren't willing to pony up the cash for the new equipment on their own. They think the studios, which stand to reap the biggest bucks from a shift to all-digital distribution, should shoulder the costs.

"One model that seems very attractive is for studios to divert the money they would otherwise expect to spend on prints," says Charles Swartz, executive director of the Entertainment Technology Center at USC. They could then use this money to pay for equipment and installation in theaters that commit to showing digital fare. If the studios balk, another funding scenario gathering acceptance splits the financial burden among many parties. "Money from investment banks or Wall Street could find its way to entities that will purchase the equipment and install it in theaters," Swartz says. These new third-party entities could provide an array of services, from encoding and encrypting movies to packaging and delivery - essentially becoming a new middleman.

But before anyone opens their checkbook, there are some contentious issues to reckon with. Three years ago, Disney, Fox, MGM, Paramount, Sony Pictures, Universal, and Warner Bros. formed a joint venture known as Digital Cinema Initiatives to work out the specifics of a global shift from celluloid to bits. Their top priority was agreeing on a digital standard that would match or exceed the picture quality of film.

Just as the VHS versus Betamax split delayed the spread of home video for years, d-cinema has been dragged down by a debate between two competing technologies: 2K and 4K, shorthand for the horizontal pixel resolution of a movie image. With 2K, the imaging device displays 2,048 pixels across (that's higher than HDTV). The best-known projector in that league is Barco's D-Cine DP100. Alternatively, 4K, or 4,096 pixels, is double the width of 2K, but with an overall pixel count four times larger - and that means accommodating data files that Cuban describes as "a bandwidth hog-and-a-half." While Texas Instruments has staked out the 2K ground, JVC and Sony are focusing their research on 4K chip technology.

More pixels may sound better, but the 2K/4K flap is not that simple. At the heart of the conflict: Is pixel resolution really the most important factor in determining image quality? Beyond a certain threshold of bit depth, the human eye may not be able to tell the difference. Research shows that other factors like refresh rate - the digital equivalent of frames per second - also play important roles in creating the perception of image sharpness and quality.

While the geeks argue over pixel counts, the MPAA squawks about piracy. The studio trade group says moving to digital distribution invites a radical increase in theft of precious first-run films. In 2004, antipiracy chief John Malcolm described one group of file-sharing server operators as "parasites leeching off the creativity of others."

"You gotta have a bogeyman," Cuban scoffs. Pirates today "can go out and buy film prints. That's easier than knocking off digital projection booths like banks and stealing the hard drives," he says. "If a property walks away from one of my booths on a projectionist's watch, they're losing their job and they're going to jail. But even if someone does steal that server, they've got to de-encrypt and re-encode a massive file - and that's a fair amount of work." Cuban calls P2P hand-wringing "pira-phobia" and insists the movie industry as a whole stands to benefit from a wider embrace of digital distribution.

So what happens when theater owners finally agree on who pays how much to convert screens from analog to digital? What happens when the technical standard is resolved and the piracy threat is addressed? Even then, there'll be one big obstacle to an all-digital process: the filmmakers. While films are edited digitally and may, if Cuban and others get their way, be distributed and exhibited that way, many directors and cinematographers still swear by film. "I was one of the first people to use digital technology to enhance my films," Steven Spielberg told Wired in 2002. "But I'm going to be the last person to use digital technology to shoot my films."

Other filmmakers are making the switch. Robert Rodriguez shot the last two movies in his Spy Kids series digitally and followed with the digipic Sin City. James Cameron is developing his next feature using a stereoscopic 3-D technique designed specifically for digital exhibition. The CGI/live-action fusion, based on Yukito Kishiro's anime comic Battle Angel Alita, stars a virtual character and is slated for a mid-2007 release by 20th Century Fox. "If I could go back in time and shoot Titanic in 3-D for digital cinema, I'd do it," says Cameron. "I'll never shoot a movie on film again. I look back on all the stuff I've done, and it seems grainy, funky, and like I'm not living in it."

Cameron thinks audiences will appreciate how vivid digital movies look onscreen, especially 3-D. "This is why I'm proselytizing digital cinema," says Cameron, who made this winter's Aliens of the Deep in 3-D. "If you take the stereo part out, I'd still be all for it, but I wouldn't be so far out front waving this huge flag."

In Texas, Cuban isn't waving any flags for Hollywood. But he may be just the nudge the studios need. "When you're a public company, it's hard to implement change," Cuban says. "We don't have a big legacy business to protect, so why not take chances? I'm not doing this for some greater good - I want to make more money. I love to fuck with people, and I love finding ways to make more money."

Above Cuban's Bunker, the Mavericks are doing their pregame warm-ups. The genial mogul gets ready to take his seat courtside. "If we're wrong, we're wrong," he says. "But if we're right" - a grin flashes across his face - "just think!"

Correspondent Xeni Jardin ([e-mail]) is coeditor of BoingBoing.net.

http://www.wired.com/wired/archive/13.04/cuban.html