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Research background: The CEO of Edwards Cinema is considering when (or even whether) to move into digital projector mode.

The cost of installation is extremely high. He needs to identify the trends in the motion picture industry and determine whether digital cinema is inevitable, or other options are in the pipeline.

Research budget: The client has authorized up to $300 in search costs, and up to eight hours to retrieve the information, read it, and prepare a report summarizing the results. He contracts with an independent researcher to conduct the search.

Research strategy employed: The research will search the RDS Business & Industry Database on Lexis (http://www.lexis.com) beginning with a broad search to identify technologies of interest and then examining each technology in more detail.

She will search the News Group File to seek more information on a little discussed subtopic, and then she will visit Web sites mentioned in the previous searches.

Research results: The researcher decides that it is most economical to make the first search somewhat broad, and then narrow within those search results using the Focus feature, unique to LexisNexis, which incurs no additional charge.

The search can’t be too broad, however, because the system will interrupt a search that finds more than three thousand hits.

Step 1. Run a general search on technology trends in the movie industry.
From the Lexis.com home page, the researcher clicks on the News and Business tab and then selects Market and Industry within that category.

Then she selects the RDS Business and Industry database and species a time range to search the previous five years.

She does not search the news database to start because a single news item can be duplicated among many newspapers, requiring a search to be very specific to avoid an interruption of one that is yielding too many hits.

She begins by restricting the search with indexing: Subject (Movie Industry). Because Subject is an index category, this search will retrieve articles in which the movie industry is a major focus, weeding out the many articles about home theater equipment and other nonpertinent items about the entertainment industry.

The full search string is Subject (Movie Industry) AND technology AND (trend OR innovation).

Lexis Nexis automatically searches for the plural form when you type in the singular form of a word, so there is no need t include both singular and plural in the search string. This search yields 206 hits.

Step 2. Use the Focus feature to narrow down the results to a manageable number of hits.

The researcher clicks Focus and enters projector, which yields seven hits. Viewing the full text of these articles, she learns the following:

1. “Up and Over: Box Office for 2002 Will Break Records, but Exhibitors Still Face Key Financial Security and Technology Issues (Showeast 2002).” Hollywood Reporter 375, no. 27 October 8, 2002): E-1 (13).

The movie studios have formed a consortium, originally called NewCo but now called Digital Cinema Initiatives.

Its mission is to determine standards for digital cinema and organize distribution of digital technology.

Some voices in the technology industry are concerned that too much time spent debating standards will cause the crucial manufacturers to turn their energies elsewhere.

The CEO of Loews Cinema predicts that exhibitors will begin focusing on alternative revenue streams, citing digital advertising and digital transmission of sports events as examples.

2. “Sound Surrounded: Future D-Cinema Systems Might Offer Infinite New Options to Audio Experts, But First They Must Set Standards (Cinema Sound).” Hollywood Reporter 375, no. 27 (October 8, 2002): S-1(3). Discuss setting standards for sound on digital films.

3. “Will H’w’d Freak at Endless Tweaks? Last-Minute Digital Pic Fixes; Helmers Happy, Studios Stew (Film).” Variety 387, no. 9 (July 22, 2002): 9(1).

Discusses the cost and contractual issues raised by George Lucas’s last minute modifications to Star Wars: Episode II – Attack of the Clones.

4. “Livin’ Large: Could the Participation of Hollywood Heavyweights Mark the turning, Point for the Large-Format Film Business? (Large Format).” Hollywood Reporter 373. no. 20 (May 10, 2002): 9(2).

Discusses the pros and cons of a recent move by Disney and Universal to remaster existing features or create new features to be shown on IMAX or similar large-format systems. Cites the gross receipts of several large-format film releases.

5. “The Next Wave: Digital Cinema on the Rise.” Entertainment Design 35, no. 9 (September 2001): S1(6).

This article makes passing mention of concerns about standards and security, but overall it is very optimistic about the imminence of widespread digital cinema production and distribution. Describes in detail the equipment and technologies available at the time of writing.

6. “Cinemas Lack Vision to Fill Seats.” Crain’s New York Business 17 (February 26, 2001): 3. Discuss innovative marketing strategies in Manhattan theaters. No significant discussion of technology.

7. “INSIDE TRACK: Film Industry Cries ‘Cut’ Over E-cinema: TECHNOLOGY MOVIE DISTRIBUTION: Digital Distribution Remains in the Can because of Cost Issues, Says Ashling O’Connor.”

Financial Times, London edition, June 7, 2000, p. 21. Discusses concerns about image quality and start-up cost for theater owner converting to digital technology.

In the first round of searching, the research has learned that standardization and cost are recurring concerns and that innovations by IMAX make it a possible contender for theaters looking into new technologies. Now she will run new searches to investigate these topics in more depth.

Step 3. Run new searches based on clues found in the first search.
The researcher runs new searches in the same database (RDS Business and Industry) and time range to find discussion of standards for digital cinema and to find discussions of IMAX.

She uses the search term (digital cinema) and standard! The exclamation point is the LexisNewxis truncation symbol, which allows the searcher to retrieve variants such as “standardize” and “standardization.”

This search yields twenty hits, among them the following:
1. “Warner Bros., QuVis Link for High-Res Digital Output: Software Raises Standard for Postprod’n (News).” Hollywood Reporter 377, no. 13 (February 7, 2003):6.

Reports that Warner Brothers has entered a licensing agreement that commits to a standard known as 4K.

2. “Digital Cinema Initiatives Designates the USC Entertainment Technology Center the Test Site for Digital Cinema Technologies.” Hollywood Reporter 376, no. 24 (December 11, 2002): 27.

3. “Video Encryption: Try, Try Again (Contributing Contrarian)” Washington Techway, September 16, 2002, p. 15(1).

Discusses technologies for encryption and copy protection of digital cinema. Cites a Credit Suisse First Boston analysis that is essimistic about the near-term future of digital cinema. The researcher notes this as an item to explore further (see Step 4 below).

4. “Ti Dialed into D-Cinema Future: Company Set to Work with Studios on Standard for Technology (Convergence).” Hollywood Reporter 372, no. 45 (April 5, 2002): 16(1).

Reports that Texas Instruments has installed digital cinema in fifty movie theaters worldwide.

Identifies the key issues in digital cinema development as agreement on technical standards for format and compression and financing the transition to digital projection.

5. “Studios Raising Curtain in Initiative for Digi Film.” Hollywood Reporter 372, no. 43 (April 3, 2002): 8(2); “Hollywood 7 Unite to Push Digital.”

Hollywood Reporter 372, no. 30 (March 14, 2002): 1(2). These two articles describe the formation of a seven-studio consortium to decide on technical standards and evaluate strategies for financing the deployment of digital projection equipment.

Cites the high cost of projection systems as a problem for exhibitors wishing to convert to digital.

6. “Leaner, Meaner Exhibs Celebrating in Las Vegas: Industry Enjoying an Economic Recovery.” Hollywood Reporter 372, no. 21 (March 4, 2002): 1(2). Reports “confusion surrounding progress on the digital cinema front.”

One executive is quoted: “The technology is getting better, but the price point is too high and there are too many questions to be answered.”

Points out that Technicolor Digital Cinema ad Qualcomm Technologies promised last year to install one thousand digital system within the year – in fact, only ten had been installed.

7. “Studio Report Card.” Hollywood Reporter 370, no. 34 (October 30, 2001): W-25. Reports that Hollywood studios have released a total of 26 films in Texas Instruments’ DLP digital format since 1999.

This compares with 478 films released in the United Stated in 2000. Three studios were most active; three had yet to release a digital feature.

Mentions the concerns that quality of theater experience outpace improvement in home theater technology.

8. “Until Studios and Exhibitors See Eye to Eye, the Future Digital Cinema Remains Grainy.” Hollywood Reporter 368, no. 39 (June 19, 2001): 12. Identifies the “4K standard” mentioned in an article above as equal to the resolution provided by conventional film. The first TI DLP projection systems offered much lower resolution.

The search IMAX and Hollywood yields 207 hits. The researcher clicks Focus and adds projector or projection system. This brings the number of hits down to a manageable 22. From these she learns the following:

1. “Omaha, Neb., Firm Makes Movie Projection Equipment Deal with Philadelphia Firm.” Knight-Ridder Tribune Business News, December 6, 2002. IMAX has a competitor named Mega-Systems Inc.

[The company] “has been in operation for about nineteen years and has motion picture equipment, sound systems, and other technology in more than two thousand theaters worldwide. Its projectors are in twenty theaters.”

2. “Large Format Film Operator Recovering (Finance & Business).” Screen Digest No. 371 (August 2002): 231.

IMAX intends to use digital remastering technology to offer Hollywood films in large format. Space Station grossed more than $21 million in sixteen weeks.

3. “Imax’s Hopes for DMR Loom Large: Technology Could Help Boost Selection of Giant-Screen Films (Money).” Hollywood Reporter 373, no. 7 (April 23, 2002): 13(1).

At the time of writing, there were 110 IMAX screens in the United States, 37 of which were in commercial theaters (as opposed to museums and other institutions).

The company hopes the digital remastering project will entice more theater owners to install large-format technology and screens.

Cinemark Theaters has five Imax theaters; they say they taking a wait-and-see approach. A sidebar reports that there are 225 IMAX theaters operating worldwide.

4. “IMAX Enters Mainstream Sector.” Inland Valley Daily Bulletin (Ontario, CA), April 8, 2002. Names some theaters that operate IMAX systems.

This and information in previous articles could be targets for primary research to determine potential profitability.

Reports that the Edwards chain has three non-IMAX large-format theaters in Southern California.

5. “An Overview of the Entertainment and Media Industry Trends and Statistics.” Chapter 2 of Plunkett’s Entertainment Media Industry Almanac, January 2002. Provides an Internet research tip: Log on to the Motion Picture Association of America’s site (http://www.mpaa.org) for information on many aspects of the industry, including industry news, statistics, legislation, and more.

6. “Imax, TI Agree on Digital Projection.” Hollywood Reporter 363, no. 18 (June 6, 2000): 8. IMAX licensed Texas Instruments digital projection technology for use in 35 mm and large-format exhibition.

7. “Crossing Over.” Hollywood Reporter 355, no. 27 (December 8, 1998): 16. Discuss the success of Everest and its significance for the growth of large-format exhibition, taking into account the costs of production and distribution.

Step 4. New avenues to explore: The Credit Suisse First Boston Report and the Motion Picture Association of America’s site (http://www.mpaa.org).

Now the researcher would like to find more detailed mention of the Credit Suisse First Boston (CSFB) report on the future of digital cinema that was cited in the Washington Techway article.

She uses the search string <subject (movie industry) AND credit suisse first boston>, obtaining twenty-four hits.

Then the omits “digital cinema” from the search string to see if CSFB is cited regarding film technologies other than digital.

This retrieves an October 2002 article from the Electronic Engineering Times that cites the Credit Suisse First Boston report in some detail:

1. “In their recent sector review, the aptly titled Digital Cinema: Episode II, they have pushed back their original projection of 5 percent penetration in the cinema market to a 2004 – 2006 timeframe.”

2. “CSFB analysts Gibboney Huske and Rick Vallieres note: ‘Two years ago, digital cinema proponents were predicting that there would be more than one thousand screens by now, with the cost of a digital projection system coming down to $50,000. In fact, there are fewer than one hundred screens with system costs still north of $100.000.’”

3. The article notes that the financial benefits of digital production go mainly to the studios and distributors, whereas the costs go mainly to the theater exhibitors. Schemes to balance this are confounded by anti-trust laws and conditions on subsidies.

4. The article mentions a competing technology called MaxiVision.

5. Maxivision uses a retrofit to existing projection equipment, at roughly 10 percent the cost of purchasing new digital equipment. MaxiVision provides better resolution than 35 mm, whereas digital does not yet equal 35 mm in resolution.

Other articles from this search discuss various financial ventures involving CSFB and the motion picture industry.

To find more information on MaxiVision, the researcher does a search on the company name.

This retrieves five hits: three area about eye surgery, and one is the article described above. The other article, in the Hollywood Reporter, simply mentions that Mitchell Goldman served as consultant to MaxiVision.

Turning to the News Group File, the researcher searches the file for articles published in the past two years.

The search term Subject (movie industry) AND maxivision yields only two versions of the Electronic Engineering Times article, and one additional item that she will see also in her next search: maxivision AND (movie OR motion picture).

This search yields twenty-five hits. Many of them are duplicates of two installments of a syndicated column by Roger Ebert, dated June and August 2002.

In them he mentions the advantages mentioned by CSFB, and points out that the MaxiVision projector can play either traditional 35 mm or films in the larger MaxiVision format.

He says the MaxiVision projector is designed to be much less damaging to film, so that wear and scratching is less of a problem, and that the vibration-free motor allows the projected image to be more clear, even when showing 35 mm film.

One column provides a link to a PDF file of the full CSFB report (http://www.sabucat.com/digital.pdf).

These items tell the researcher that MaxiVision remains a viable possibility, and that investment analysts’ reports might be a useful source if the client wants more information.

A visit to MaxiVision Web site (http://www.maxivisioncinema.com) yields a twenty-seven-page PDF document, dated July 2002 that describes the technology and include a pertinent except of the CSFB analyst’s report.

There is no mention of films in production, nor any indication that this would take place in the near future.

The Motion Picture Association of America’s site (http://www.mpaa.org) did not contain any pertinent information at the time the researcher examined it. It does have links to studios’ Web sites.

The total cost of the data from these searches ranges from $75 for a single day of access to news and business databases, to hundreds of dollars per month for ongoing unlimited access.

Total time for searching was about two and a half hours, plus several additional hours to read and organize the information retrieved.

Summary of solution: The research found the following:
1. Digital transmission and projection technology will make some alternative revenue streams possible by digital transmission of live events such as business conferences, music concerts, and sports events.

According to the articles found, this has been implemented only on a demonstration basis so far; a general distribution system was not described.

2. Technical and business issues need to be resolved before digital cinema becomes widely accepted by filmmakers and theater owners.

There are groups within the industry working to solve the problems, but it is not clear how long this will take.

3. Two alternative technologies, IMAX and MaxiVision, offer improvements in the projected images and are receiving some support in the industry. The cost of implementing IMAX is extremely high.

The cost of MaxiVision projection equipment would be much less than that of digital projectors, but there is no mention yet of the technology being accepted and implemented by the motion picture industry.

Overall, digital cinema appears to be the strongest contender and has been installed in a small number of theaters already.

MaxiVision and IMAX are interesting contenders, however. The owner of Edwards Cinema must decide whether to be prudent and wait till technical standards and financing structures are in place before installing the technology, or decide that the benefit of being the first in his market to offer digital cinema outweighs the risks of investing in technology that might become out of date relatively quickly.
Useful tips
• For economical searching of LexisNexis, run a fairly broad search and then use the Focus feature to pull out more specific subsets of articles.

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