Film is dead--and a few big-budget movies won't save it

Last July, after lobbying by directors including J.J. Abrams, Christopher Nolan and Quentin Tarantino, the major U.S. movie studios signed a deal with Kodak to continue to purchase motion picture film for several years, whether or not they actually use the film. Kodak, which emerged from bankruptcy in September 2013, had planned to shut down its (and the industry's) last remaining motion picture film manufacturing facility. Between the virtually total replacement of film cameras with digital and the almost complete transition of U.S. theatrical projectors to digital from film, Kodak's shipments of motion picture film fell 96% between 2006 and 2014.

Why do this relative handful of directors continue to insist on shooting film? There are two primary reasons:

1. Film can capture a bigger range of colors than digital camera--the equivalent of 16 bits of resolution. By comparison, Arri's Alexa, the most popular camera for high-end cinematography, captures color information with 15 bits of resolution, but then may lose bits of resolution when it converts the video to a color space for editing and viewing.
2. Under ideal conditions, 35mm film has an image resolution of around 5300 x 4000 pixels, while the Digital Cinema standard for 4K acquisition and projection is 4096 x 2160 pixels. However, many movie theaters are still using 2K projectors, which limits the resolution to 2048 x 1080. Compared to either digital standard, film (hypothetically, at least) provides far more image detail.

So, those directors who still want to use film have a solid rationale for doing so, even if most of the increased resolution and color space are lost once they're projected on digital projectors or watched on HD, or even Ultra HD TVs. However, the vast majority of directors and cinematographers have switched to digital for several reasons:

1. Digital cameras have dramatically more dynamic range (the ability to capture bright and dark subjects at the same time) than does film. Typically, the dynamic range of movie film is 1,000: 1 (approximately 10 bits or 10 f-stops.) Even video cameras costing a few thousand dollars can capture 10 f-stops or more, and the Arri Alexa has a range of more than 14 f-stops, or better than 16,384:1.
2. Digital media is much less expensive than film over time, because it can be reused. Movie productions typically offload recorded flash media to hard and flash drives during the day, then erase and reuse the flash media. Digital's much lower costs also enable directors to get coverage from a variety of angles and framings.
3. 35mm film magazines usually only allow a maximum of 1000 feet of film to be loaded, due to size and weight. That means that magazines have to be changed every 11 minutes of filming (at 24 frames per second.) Depending on the image resolution, dynamic range and color depth, a single piece of digital flash media can hold hours of video. That allows for long continuous shots and far fewer interruptions to change media. 
4. Digital cameras have an enormous range of sizes and weights, many of which are smaller and lighter than any practical motion picture film camera can be. This gives filmmakers enormous flexibility for shooting in tight quarters and in sports and action situations. It also makes lightweight drones feasible for shooting, where previously only helicopters and airplanes were viable platforms for aerial photography.
5. Specialized digital cameras can provide much higher frame rates than are either economically or technically feasible for film cameras. For example, Vision Research's Phantom Flex4K digital camera can shoot Digital Cinema 4K at 1,000 frames per second, or 2K at 1,950 frames per second. By comparison, film cameras usually shoot 24 frames per second.

There's a technology coming down the pike that's likely to make film obsolete, even for the directors who still insist on using it. I wrote about High Dynamic Range (HDR) video two weeks ago, and I won't repeat all the arguments I made in that post. Here's a summary of HDR's advantages:

• Much greater dynamic range; Dolby says that its Dolby Vision HDR system will have as much as a 200,000:1 dynamic range. Many current digital cinema cameras can be adapted to shoot HDR video when there are commercially-available ways to view it.
• Color spaces that are as big or bigger than motion picture film.

However, there are several problems with HDR, beyond what I stated in my post:

• There are no current theater projectors, film or digital, that can project HDR images. Film is only capable of 1,000:1 dynamic range, and film can't project a true black because even the blackest part of an image can't block all the light from the powerful xenon bulb in film projectors. Digital projectors use a similar xenon light and have the same problem. It's possible that laser-based digital projectors could project both the dynamic range and color space of HDR, but to my knowledge it hasn't been demonstrated yet.
• With the exception of the handful of expensive professional Organic LED (OLED) displays in use, today's current HDTVs can't provide either the dynanic range or color space of HDR. However, LCD HD and Ultra HD TVs can be engineered to have a separate LED backlight for every pixel, and most LCD displays are capable of displaying a bigger color space than is currently used. Dolby, Technicolor, Philips and the BBC are all either in talks with or have already licensed technology to consumer electronics manufacturers to implement their HDR formats in future HD and Ultra HD TVs.

I believe that when the aforementioned film-holdout directors see HDR, they're going to want to use it--and that's when film dies, once and for all, for movie production. (Film is already dead in movie theaters, despite some last-gasp attempts to keep it viable.) The problem, of course, is that there's no easy way to implement HDR in movie theaters. However, as I wrote in my previous post, if past experience is a guide, it make take as long as ten years for HDR to become standardized and available to consumers at an affordable price. That will give theater operators and digital projector companies time to figure out a way to make HDR work in theaters.

Theater owners' true concern about Premium VOD

Fox, Warner Bros., Universal and Sony found themselves at the center of a firestorm last week when word got out that they had agreed to make some motion pictures available to DirectTV, Comcast and VUDU (an over-the-top Internet video service owned by Walmart) for premium VOD play 60 days after they premiere in theaters. Subscribers to those services would pay $30 per movie and would have 48 hours to watch them from when they purchase.

The National Association of Theater Owners protested the studios' decisions, saying that making movies available at home so soon after they open in theaters will "...fundamentally alter the economic relationship between exhibitors, filmmakers and producers, and the studios." On Sunday, the Chairman of Fox Filmed Entertainment replied, saying that only a small number of titles, primarily those that "don't realize their full potential in theaters", will be made available for early VOD.

Here's the underlying issue that theater owners are really concerned about: Their share of ticket sales from films increases the longer that a movie stays in theaters. The first week that a movie opens in a theater, the studio gets 80% to 90% of the boxoffice. In six weeks or so, the theater and studio are splitting the boxoffice receipts 50/50. If a movie stays in a theater for several months, the theater can take 80% of the boxoffice for itself.

Neither movie studios nor theater owners are concerned about true "bombs" going to premium VOD. What theater owners are truly concerned about is that movie studios will make titles that could last for months in theaters available through premium VOD, thus decreasing theater owners' opportunity for profit. If premium VOD becomes very popular, theater owners are concerned that they'll lose their exclusives on all profitable films after 60 days.

My personal opinion is that the premium VOD option may be a mirage. The premium VOD offering appeals to people who really don't want to go to a theater but are willing to pay a fairly huge premium in order to see a movie at home, perhaps two months before they can buy it on DVD or Blu-Ray for the same or less money, and 90 days before they can get it for $1.00 at Redbox or from Netflix. So, the theater owners and studios may end up fighting over nothing, but don't be surprised to hear and see a lot about this over the next few months.

Lowest summer attendance in U.S. movie theaters since 2005

In addition to the problems caused by the decline in DVD sales, you can now add bad news in movie theaters. According to Hollywood.com, U.S. theatrical attendance hit its lowest point since 2005, even though theatrical revenues hit a new record ($4.35 billion.) Why did revenues increase even though attendance dropped? The reason is that average ticket prices have been rising for years, and the introduction of 3D has pushed prices even higher.

If revenues are up even though the number of customers declined, that can't be bad news, can it? Actually, it can. Ticket prices can't continue to escalate at the rate they have indefinitely, especially given the slow and tenuous financial recovery. To spike revenues, movie studios are converting movies originally shot in 2D to 3D, with generally poor results. Revenues for these converted titles have been dropping throughout the year, and if the studios aren't careful, they may kill off the willingness of moviegoers to pay more for 3D before the new format even has a chance to take hold.

If theaters can't raise prices and attendance continues to decline, the inevitable outcome will be decreased theatrical revenues. DVD sales and revenues are also declining, even though the "loss leader" discounting of new DVD titles by the big-box retailers (Wal-Mart, Target and Best Buy) is largely a thing of the past. Blu-Ray hasn't taken up the slack in DVD sales and is unlikely to do so in the future. The market is shifting to DVD rentals, video on demand and digital downloads, but these channels bring in much less revenue than DVD sales.

It's the combination of all these trends, not any one trend in particular, that is (or should be) grounds for extreme concern in the movie industry. Some say that the industry has always had down years and has always rebounded--first radio, then television threatened to kill off movies but failed--but studios have become addicted to the "crack" of DVD sales and increased ticket prices. Movies like "Avatar" and the "Transformers" series couldn't have been produced without these revenues. Studios will have no choice but to either maintain budgets and release fewer films (increasing their exposure to risk of failure) or decrease budgets and produce the same number of films. This will decrease the potential for breakout blockbuster hits, which could result in even lower revenues. Neither outcome is appealing, and there's no solution on the horizon.

One Reason Why the Movie Business Is In Bad Shape

Earlier this week, Peter Sciretta of Slashfilm and Jason Kottke of kottke.org reported that only two of the top 30 films of the decade were based on original material: Disney/Pixar's "Finding Nemo" and DreamWorks Animation's "Kung Fu Panda". In fact, only nine of the top 50 films were based on original material, and five of them were from Pixar! Everything else was based on an existing motion picture, novel, comic book, or in the case of the "Pirates of the Caribbean" series, a theme park ride!

The movie business has been on a tear, with ever-increasing budgets fueled by DVD revenues. To mitigate the risk of failure for those stratospherically-budgeted movies, studios produce films based on known properties. Original works get crowded out or pushed to the studios' "independent" arms, which operate on relatively small budgets and get very little promotional support unless a movie has Academy Award potential.

The result is like never eating a meal that you haven't already eaten. Yet Pixar, which has only created one sequel in the history of the studio, has the best track record of any studio in terms of average revenue per movie. Is the lesson here to create fewer but better, more original, movies? Something to think about.