Do you see digital cinema growing faster from now on?
Several things that were roadblocking the growth have got sorted out. Prices have fallen and the technology has settled down. Film producers, distributors and exhibitors have realised that digital makes better economics. There has been an improvement in sound, though we do not see the same jump in picture quality.

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What will fuel the growth?
Digital cinema will grow on its own as it is an effective tool against piracy and saves on print costs. But what will further fuel this growth is the emergence of 3D. Across the world today, there are around 5000 digital screens of which at least 1000 are 3D – that is 20 per cent already. In India, we are already seeing a 15 per cent conversion of theatres (about 10,000) into digital. We haven’t seen a 3D wave as yet, but I am sure it will come. More and more people are finding that with plenty of 3D Hollywood ventures coming up in the next two years, 3D makes a lot of sense commercially. That realisation will come in India too.

What will drive digital cinema growth in India?
We are already seeing decent growth in India. We have installed 550 digital systems across the country. UFO Moviez has touched 1000 theatres. Reliance ADAG’s Adlabs is testing the technology.The real push will come when Reliance decides to ramp up.

What is the model that you follow?
We sell our equipment to various providers like E-City, Pyramid Saimira, and PVR. UFO Moviez, on the other hand, follows a rental model; they act like a technical service provider.

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So you are not looking at the rental model….?
The rental model is not lucrative for us right now.

But doesn’t this model provide UFO the volumes?
If you put out the money and you operate at the theatre saying pay me a rental, why would you not have takers? Theatre owners do not have any commitment. If the theatres want the digital systems for two weeks, UFO will give it for that period and then take back the services when they do not want it anymore. So it is an easy scheme. Therefore, it is quickly chosen. But these theatres do not always run on digital systems.

Isn’t your system more costly?
We charge Rs 3 million for installation of our system. But we have a cheaper option where theatre owners have to pay Rs 1-1.2 million; they can upgrade later on. Most of our customers are from this bracket. For the 3D system, theatre operators will have to further part with Rs 2 million. So it takes Rs 5 million to do digital plus 3D.

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Is the growth coming in from smaller cities?
No.These 550 equipments are mainly with mainstream A and B theatres including multiplexes. E-City alone is using 150 systems, mainly in Gujarat. Pyramid Saimira has taken 100 while Sri Venkatesh Films in West Bengal has installed our systems in 40-50 theatres. PVR is also using our systems.

Is an export market available?
We have sold 150 systems in overseas markets. Our main clients overseas are in US, Canada, Korea and European countries.

How effective has digital cinema been in tackling piracy?
We have put in invisible water markings into our system to fight piracy. If a film has been shot from the screen directly, we can tell exactly from which theatre the copy came from. And the best thing about these water markings is that it cannot be edited. We also lock the projector and the server in such a way that the projector is unable to work with any other server.

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Do you see digital theatres tapping new streams of revenue?
Advertising is a new revenue opportunity. We are going in for consolidated advertising. We have a technology wherein you can put in an ad at a particular time to get the best audience attention. You can also decide the number of times the ad could appear, thereby hitting at the target audience directly. Using this technique, You can also choose the theatres in which you would want your ad to get displayed. This leads to targeted advertising, next only to internet.

How big an attraction is 3D?
3D is definitely an attraction – like digital. Take for example the 3D Disney film Hannah Montana that is stated to have made $30 million during its opening weekend.

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3D is also lucrative for other programmes like live concerts and sports. Today, concerts are being covered in 3D and released; sports are being covered live on 3D and released.

Is the cost of covering a live concert on 3D the same?
Covering live concerts on 3D is much more cost effective when compared to films. When you are making a full movie, of course, the cost on the budget will go much higher; live event coverage is on the other end much cheaper.

How is the installation done?
The movie is placed on the server to a digital projector and we transmit the movie through satellite or by hard drive depending upon how many theatres are receiving it. Our system accecpts anything. There are two kinds of technology that can produce a 3D effect, the passive and the active.

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When it comes to the passive technology, we put them up along with the system in our servers. For example the external rotating polarizing filter that works with a single projector for the single screen. We have taken this technology from Master Image. The other technology is for the dual projector with fixed polarizing filters on each projector. It is for the silver screen. Here there is not active involvement of the eyewear.

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The active systems include the infrared emitter and shutter glasses technology from XpanD. It requires a single projector and has and active eyewear and is for the white screen.

How cost effective is it in converting old movies into 3D?
The cost varies between $5 million to $30 million, depending upon how lengthy and complex the movie is. There is only one company that is currently doing it. It’s called In3.

How many movies have been converted till now?
Nothing has been released yet. But yes, there are movies like Star Wars (1979) that have been converted.

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What are your 3D plans for India?
We are trying to act as a catalyst to make 3D happen in India, in both production and exhibition.

Satyam in Karnataka has already installed one screen with 3D and we assume that a few more will be coming up very quickly like Adlabs and PVR. Also, we will start helping Indian films shoot in 3D. And this we see will definitely bring in a huge boost to our technology.

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Since the digital market is growing, will you need to raise money to fund your expansion?
We are looking at a third round of funding within 6-12 months and expect to raise Rs 600-800 million. The funds will be mainly used for rolling out digital cinema and development work. We are also looking at expanding in the area of 3D. We already have Intel Capital supporting us in the second round. Street Edge and Novastar have participated as initial investors.