The digital cinema market could be worth more than $100 million a year to projector manufacturers by 2005 according to a new report, Digital Cinema Factbook from industry analysts Dodona Research.

By 2008, the number of digital cinema screens is forecast to rise to more than 5,000 worldwide in response to the emergence of industry standards and innovations in business processes.

With just 194 high-end DLP Cinema screens installed in 25 countries by the end of March 2004, the digital cinema market is currently tiny. So far it has been hampered by lack of product, technology incompatibility and wrangling over who should pay for conversion.

However Dodona argues that there is clear evidence that some exhibitors are side-stepping these issues and making the move to introduce digital cinema on a more significant scale. One of the most notable of these is the Belgium-based exhibitor Kinepolis which has recently installed ten DLP Cinema projectors in eight of its multiplexes.

While 45% of digital screens are located in North America, this is the region where least progress is being made. The most proactive region is Asia where high-end digital cinema networks are being introduced by committed governments in China and Singapore, and by the vertically-integrated Japanese studios who stand to benefit across all areas of the film business. In Europe, in addition to Belgium's early adoption of digital, the United Kingdom is on the verge of seeing substantial expansion into the digital cinema arena via the UK Film Council's planned network.

Projector rollout forecasts anticipate that Asia will continue to expand most rapidly over the next five years. By 2008 more than 18% of the region's screens can expect to have a digital projector. The second-fastest growing market will be in Latin America where countries such as Brazil are still relatively undeveloped and there are real opportunities to bring cinema, in particular domestic films, to wider audiences.

Since 1999, just 112 films have had a high-end d-cinema release. 55% of these were released in the United States, followed by 19% in Brazil, and 10% in Japan. Therefore it comes as no surprise, says Dodona, that American distributors have released the majority of films in digital format. Warner Bros has been the most active with 25 films closely followed by Buena Vista with 21 releases. Apart from the Hollywood studios, the most important distributors at present are the Japanese studios, Toei and Toho, China Film Corporation and the Brazilian company TeleImage.

The speed of a digital rollout is still very uncertain. "There are technical problems to solve, production capacity would need to be increased and more film product needs to be available," said report author Katharine Wright. "What is certain is that digital cinema is beginning to influence the way business is done in a number of important markets.