After years of predictionsand speculation, digital cinema is finally becoming a reality, Thomas Hoegh,CEO of Arts Alliance Media, told a Screen International conference inLondon on Tuesday.

During his keynote addressat the Embracing Digtial Cinema conference, Hoegh declared that digital cinema"has arrived" and that there is "a growing sense of momentum that has broughtgridlock to an end."

Hoegh said that the signalsthat the digital revolution is finally here are the announcement of the UK FilmCouncil's Digital Cinema Network, the publication of suggested industryspecifications from the US studio venture Digital Cinema Initiatives, and apartnership between Christie Digital and AccessIT to fund digital cinemarollout, starting before the end of 2005, working with the major US studios."With confidence we can now say we are at the tipping point," Hoegh said.

To say that the tippingpoint has arrived doesn't mean that the changes will come overnight (there arecurrently only 407 digital screens worldwide, according to Screen Digestestimates.) Heogh predicted that only 33% of the world's screens will beconverted to digital by 2010. He sees 80% conversion by 2015.

It won't come cheaply. If itcosts $100,000 for each screen's digital conversion, and there are about100,000 screens worldwide, that's a bill of $10 billion for the total globalswitch, Screen Digest's Senior Cinema Analyst David Hancock told the crowd ofindustry executives. (That represents roughly half of one year's globalbox-office revenues.) Hancock predicted the territories that will drive digitalexpansion are the US, the UK, Singapore, Belgium, Ireland, France, Italy,Korea, and Japan.

But all eyes are on theeventual payoff. The promises of digital cinema are widely touted by now: decreasedcosts of each film copy, more flexibility in terms of scheduling andprogramming, and a wider range of content from more sources. Both distributorsand exhibitors will have to be cautious about flooding the market with too muchprogramming, however. Steve Knibbs, the COO of Vue Cinemas, warned, "floodingthe market with lots of experimental work will just turn people off."

With the potential increasein selection, several conference speakers noted that audience development andmarketing could become more important than ever - just because a cinema has awider range of films available on a server, that doesn't mean that a widerrange of filmgoers are just going to stumble in the door suddenly. "The singlemost important marketing partner for studios in the next 10 years isexhibitors," Hoegh said.

Hoegh sees the challengebeing for what he termed the "mediocre studio products" that take up the middleof the market, and noted that the digital cinema revolution could actuallyboost the box-office for studio blockbusters - there can be even more screensshowing an event film such as a Harry Potter without much greater costs-- as well as boosting the takes of independent films at the lower end of thescale.

As the tipping point begins,there are tangible rollouts that can soon be tracked: David Gajda from AccessIT(partner with Christie Digital in Christie/AIX) noted that their venture hasraised $18 million in funding to start its digital rollout, which will kick offby the end of 2005. They aim to have 500 screens converted by spring 2006, and4000 screens by the end of 2007 (that's up from the company's initialestimates.) The UK Film Council's Digital Cinema Network will cover nearly 250screens during the next 18 months.

While some European digitalconversion schemes can get started with government funding, follow-up financingis also needed from the private sector.The "who pays'" question was still being hotly debated at Tuesday'sevent. Private funders could include distributors, exhibitors, venture capitalinvestors, or more surprisingly - only in the short-term -- audiences. Hancockpointed to Belgian cinema chain Kinepolis, which had successfully convincedaudiences to pay a 1 Euro surcharge for its digital screenings, above the usualprice for a 35mm screening.

Vue's Knibbs was confidentthat solutions will appear as the rollout starts: "I think the market will sortthis all out," he said.