Digitalization

Digitalization - Advances in digital technology are in the process of changing the face of the film business – the impact is expected to be as radical as internet and cell-phone technology changed the communications business (PWC & FICCI, 2007). Digitization impacts the entire value chain of the industry: (1) Digital technology can significantly improve film production by leading to efficiency improvements and higher control over the production process. (2) Distributors can benefit from more flexibility and substantial cost savings, which hinges on the idea of ‘digital cinemas’ (the projection of movies in a digital format without the need for actual film prints). (3) ‘Digital cinemas’ provide similar flexibility benefits (e.g. adjustments to timing of screening) and cost saving effects to exhibitors as to distributors, and it could also allow exhibitors to raise ticket prices given the better quality of the images shown. However, exhibitors also bear the highest investment costs in terms of purchasing digital projectors, facilitating the technology, and support services. Due to these high costs, only large (multiplex) chains have begun investing significantly. (4) Digitization helps to curb the problem of piracy. Digitization of both movies and cinemas would allow an almost instant distribution to rural cinemas and thus close the time window in which piracy is profitable. Moreover, digital films often include visual features that can deter the quality of an illegal recording of a movie (e.g. a large mark on the screen that is not visible in the cinema but on recorded copies). (5) Digitization allows charging higher prices thus increasing revenues, which translates into higher entertainment and income tax collections. Smaller cinemas can thus become more commercially viable (by facing less piracy and higher revenues), which translates to more employment opportunities and a strengthening of the rural exhibition industry. 6) General film quality improves also, especially because digital films (on contrast to prints) do not lose visual quality when shown many times. Thus, digitization is a promising trend in many ways, but certain challenges need to be overcome. Digitization has only happened to a small extent in Bollywood – regional Tamil cinemas are, for example, ahead in the game. Also, lacking technological standards impede the growth of one unifying and affordable technology (Naachgaana, 2008b).