Katzenberg urges action as tensions mount over digital rollout (VAR, REU)

By Nancy Tartaglione-Vialatte

Jeffrey Katzenberg is not happy. On Tuesday, the DreamWorks Animation chief said he was disappointed with the pace at which movie theater chains are moving to deploy digital and 3-D technology.

"Things haven't progressed as well as I had hoped," Katzenberg told analysts on a quarterly conference call.

The big supporter of 3-D films said, "I feel as though things have dragged along, and it's been pretty disappointing." DreamWorks has pledged to make all of its future films in 3-D at an incremental cost of about $15 million per picture.

Tensions are simmering on both sides of the issue, says Variety. Currently, the majors and the top three circuits are trying to hammer out the size of the "virtual print fee" that studios will pay to distribute their films digitally, which would be used to defray the costs of digital projector installations.

A consortium formed by Regal, Cinemark and AMC to help with the digital transition is in the midst of trying to secure a $1.1 billion line of credit that theater owners can use to convert screens to digital. But, the virtual print fee agreement needs to be in place before the financing can be secured.

Katzenberg on the conference call said he still believed DreamWorks will see a good return on its investment based on projected ticket prices and the number of 3-D screens he is certain will be in the market by the time his studio's first 3-D film, "Monsters vs. Aliens," is released in spring 2009, notes Reuters.

"But whether or not it achieves the fullest potential and outside goals I've set for ourselves and challenged exhibition with, is the thing up for grabs right now," he said.

About 4,000 of the 37,000 cinema screens in the United States are digitally equipped, while a little more than 1,000 screens have 3-D capability.

"If these guys don't get their act together very quickly in the next 30 days, they're not going to be able to achieve that goal and it will start to deteriorate quickly. Every week that goes by will be several hundred less screens that will manage to be rolled out in the timeframe," he said.

Meanwhile, DWA reported largely positive earnings with revenue up 67% to $156.6 million and net income rising 69% to $26.1 million.