The National Association Of Theatre Owners (NATO) has hailed the agreement between five leading studios and North American's three largest exhibitors that paves the way for the long overdue conversion to digital cinema.

Disney, Paramount, Fox, Universal and Lionsgate are understood to have reached an agreement with AMC Entertainment, Cinemark and Regal Cinemas on the structuring of virtual print fees to pay for the conversion process in a deal that complies with the requirements of Digital Cinemas Implementation Partners (DCIP).

Now that the agreement is in place DCIP, a consortium that represents AMC Entertainment, Cinemark and Regal Cinemas, can access a $1bn credit line set up this year by JP Morgan Securities to instal approximately 20,000 digital screens. Sony is believed to be close to announcing a deal.

Digital conversion is an essential requirement as Hollywood studios prepare to unleash an unprecedented slate of 3D films next year.

'We congratulate the major studios and exhibitors on concluding this milestone agreement in the rollout of digital cinema,' a statement from NATO read. 'Digital cinema is the future of theatrical exhibition and vital for the success of exciting new theatrical experiences like digital 3D.

'With a deal in place for the largest US theatre chains, it is time to conclude a similar digital cinema agreement for the hundreds of independent cinemas and thousands of screens not covered by this agreement. It is imperative for the health of the industry and for the millions of moviegoers in small towns and cities that the benefits of digital cinema be spread as widely as possible.'