Australian exhibitors weretold today that if they want to stay in business they have ten years to find away to make the transition to digital.

"I do not know exactly howlong you can keep running 35mm prints of major movies but suggest that within10, 12 or 15 years they will not be available," John Fithian,president of the National Association of Cinema Owners, told delegates at theAustralian International Movie Convention. But he also said that issuessurrounding testing, certification and cost meant there was no compellingreason to rush out now and buy new systems.

Two Twentieth Century Foxexecutives, Julian Levin and Sunder Kimatrai, did providea reason to consider making the move soon however: each studio has enteredlong-term contracts to supply movies in digital form to US cinemas who make thetransition, and to pay virtual print fees (VPFs) tohelp with the capital cost, but VPFs may not beavailable forever.

Fithian says that his US members will haveconverted 1,200 of their 38,000 screens by the end of this year and the vastmajority will be digital within 10 years. The studios are likely to save $1bn ayear as a result. Michael Forman, chair of Pacific Theatres in the US, suggested thatthere was no economic benefit to exhibitors and consumers could not tell thedifference in quality, but the shift was inevitable.

Australia has hardly ventureddown the digital path with no more than 10 digital cinemas in place throughoutthe whole country. Wayne Smith, managing director of Reading Cinemas, said heinvestigated the option of installing a digital cinema several months ago andcame away from the exercise confused and uncertain on many fronts, includingsupply.

Cost is one of the bigissues in Australia, especially giventhat the studios are unlikely to contribute to the same extent as they are inthe US because US filmsmake up 80% of box office revenues in Australia compared to nearly100% in the US. Yet subtitlingwill not add extra costs as it will in some territories.

Some delegates wereadvocating the installation of systems that did not meet the DCI specifications but Levin emphasized that the studios would not supportthese systems.

On the positive side forexhibitors, digital cinemas could open up new revenue streams from alternativecontent such as sport and education usage, independent feature films and moresophisticated cinema advertising. Some may also choose 3D capability. It mayalso mean more first-run films for very small operators.