Interview with Bob Gibbons, Dir. of Marketing and Communications, Kodak Digital Cinema

Every Oscar for Best Picture since the first Academy Awards in 1928 has honored a motion picture recorded on film from the Eastman Kodak Company. Since the dawn of the motion picture industry, Kodak has served as a driving force in filmmaking science and technology, providing negative, print, and sound film, digital intermediate post-production work, and digital cinema products and services. In a November 2005 Lehman Brothers Equity Research Report, analysts Sabbagha and Talbott, estimated that Eastman Kodak earnings from entertainment film revenues were $1 billon annually, forty percent from their origination stock and sixty percent from their print stock. I wanted to learn more about how Kodak intended to protect is legacy brand in the midst of the emerging digital motion picture marketplace. Last month, I spoke with Bob Gibbons, Director of Marketing and Communications at Kodak Digital Cinema.

Alexa O'Brien

How has Kodak been preparing for the digital marketplace in regards to motion picture film?

Bob Gibbons

Let me just give you my view of digital cinema, because I have been involved with it since the beginning at Kodak. Around 1980, probably around the time of Disney's TRON, postproduction started going digital. The problem with computers in 1980 was that you needed a lot of power. You needed silicone graphics. Even if you had big computers, the quality of the postproduction, the special effects and so forth, was far less than film quality. So we said, why don't we come out with some sophisticated scanners and recorders to help maintain the quality of the product? So, we came out with a brand called Cineon. We also opened up a laboratory so we could improve those products and that was Cinesite, an effects company. As it turns out, other people started to come out with products. Pretty soon, there was a lot of good quality capability out there. Prices came down and there were more competitors in the marketplace.

Then we said, maybe we don't need to be in the product side of things. Maybe we ought to be in the service side of things, and continue to do effects. So we have two digital service companies: one in Hollywood called, LaserPacific, and one in London called, Cinesite that has done effects for Harry Potter and Narnia.

The next thing that happened was in the 1999; at ShoWest, there was a side-by-side comparison between film and digital. For the first time, exhibitors looked at digital on a big screen and said, "This looks pretty good. This looks a lot better than I thought it was going to look." So, we looked at it. I was at that meeting. A bunch of us came out of there and said, "One of two things is going to happen." Although digital looked pretty good, I mean it looked a lot better than people thought it would, there were still a lot of technical problems that needed to be solved. There was still a lot of edge-to-edge uniformity. There were still a lot of resolution issues. There was still a lot of stuff. We said, "Alright, before this is catches on, somebody needs to solve those technical problems. Maybe nobody will solve them. Maybe they are just too tough. in which case, film will last forever and won't that be great for us?" "On the other hand," we said, "Look, somebody is going to solve these problems, so why don't we solve them? We have over a hundred years of experience in color. We know a lot about image management. We also have a lot of patents on sensors and scanners. Why don't we start applying some of our sort of Kodak capability, or research capability, to solving the digital problems for digital cinema?"

So we started on a path that said, what we are going to do is when digital cinema is ready to move into the marketplace? We want to be ready with a solution, with a system to sell. If it never moves there, fine, but once it does, we want to be ready to go. People are either going to say, "Hey, I want to shoot film and print on film", in which case, they can choose Kodak; or "I want to use a digital system," in which case they can choose Kodak. That was the plan.

Now the problem was how are we going to pay for this. Well the way we started paying for it was by saying, "Look, if you look in the projection booth, you see there are really two projectors." This is 1999. One is a film projector that is putting the feature film on the screen; the other is a slide projector putting slides on the screen. We said, "What if we replaced that slide projector, with a low cost, business grade digital projector and put a network in? We will build a network, a cable network, which is to say a DSL line that goes from a Kodak headquarters' network operations center to the theater. Once it goes to the theater, it will end up at a big server in that theater." We called it a "content manager"-nothing to do with movies now, just pre-show. So, we did that. In fact, that was our starter.

We installed those systems in November 2003, and now we are up to a little above sixteen hundred screens, mostly in the U.S., a little bit in Canada; and a little bit in Japan. We have networks in place to those theaters. We have pre-show projectors tied into those networks. By the way, networks don't care what kind of data you are sending over the network. They don't care if you are sending image data, or numerical data or whatever. So the fact is that we can use those networks to manage bigger programs, manage bigger files, manage digital cinema. What we have done is partnered, which is to say we joined forces with Barco; which is one of the three manufacturers, projector manufacturers, who are licensed to use DLP technology, and we are working with them on installing full featured systems.

So right now, Kodak provides the network. Kodak provides the Cine Server, which is a big capable server, and Kodak works with Barco on the projectors. We do not build projectors, but we provide projectors. In fact, we provide all the service, all the support, all the content management. We've prepared the content for six or seven studios. We are working with Disney right now on Annapolis. Glory Road is out there. We did Narnia. We did Harry Potter for Warner Brothers. We did George Lucas, Fox, for his latest Star Wars. We did The Island, which is DreamWorks. We did Robots and Walk the Line which was Fox. We have done a bunch of movies.

Alexa O'Brien

Technicolor right now is in the process of beginning beta tests of their digital projection systems. It seems to me that Kodak has already done a quasi beta test with their networks and pre-show digital content. Would that be correct to assume?

Bob Gibbons

Yes. We have, but don't forget. The exhibitor lives in fear of one thing, a dark screen. You cannot test things enough for exhibitors. The fact that a small system works does not prove to the exhibitor that a big system works. The main difference, and I am oversimplifying, is that movies are encrypted. They are scrambled. Pre-show is not. If you want to pirate a pre-show advertisement, please do. The fact that a little projector works with small packets or files does not necessarily prove to an exhibitor that a big packet will work. They want to prove it for themselves. So, Technicolor is doing beta tests. We are doing beta tests. We have big digital projection systems in Chicago, Florida, and Rochester, where Kodak is based, close to our research people.

Alexa O'Brien

Are they 2K projectors?

Bob Gibbons

Yes. They are 2K and they are showing features. We already talked about some of the features, in addition to the pre-show systems that are out there. The idea is to create a system that starts with the smallest thing you can put on screen, which are pre-show advertisements; then the biggest thing you can put on screen, which are movies; and then go slightly beyond that. Starting on the first of January, we put five systems into Australia that show 3 D for example. We have been showing Disney's Chicken Little down in Australia, since the first of January.

To some extent, if you think about digital cinema. Digital cinema is both sort of a wonderful opportunity and a kind of an incredible challenge. The incredible challenge comes from the fact that somebody is going to have to pay for this thing and how are we going to do that? If you are an exhibitor, you probably have a fully functioning and fully paid for movie projector that runs film, that you probably bought twenty or twenty-five years ago, and that works great. It probably cost you $35,000. Now I'm going to go in and try to convince you to pull that out and replace it with an $85,000 projector that essentially does the same thing...

Alexa O'Brien

That might be obsolete in a few years...

Bob Gibbons

Yeah. Why would you want to do that? If you were only reinventing the wheel and calling it fire, the answer is, you wouldn't do that. You have to be able to do more with a digital system than you can do with an analogue system. In fact, you can do more. You can do a lot more. By having a network, you can, not only get content, you can also manage your business. You can take care of other expenses. If you just look at one technology replacing another, you are probably missing something. It has to bring something new. It has to be better, faster, cheaper. Once it gets to all three that's wonderful. If it is better and faster, that might be enough to convince you to spend more money on it.

Today, trailers are the most effective form of advertising for studios. You are already in a movie theater. You are already a movie fan. It's great targeted advertising. What happens is studios go to exhibitors, and say, "Please play my trailers," and the exhibitors say, "Alright. Absolutely. Of course." For whatever reason, the exhibitor has told every studio that he is going to play every trailer on every movie. By the way, audiences won't stand for that. So the studio knows the exhibitor is not going to play all of his trailers, but the studio sends the exhibitor all the trailers anyway. The studio sends them in flat and sends them in scope, which is to say wide-screen. Anyway, the studio says, "I wonder if the exhibitor is playing my stuff." So, the studio sends a checker into the theater to see if the trailer is playing, and that is an additional expense. Not only did they make the trailer, which cost them maybe $40 in processing and distribution costs; then they have to pay another $60 to the checker who goes into the theater. Now you have $100 to see if the trailer played. A digital system will tell you that automatically. Digital systems, such as ours, file audit reports every night. It tells you what played. You can to use digital to help defray or eliminate some of your other costs. A network helps you do that.

The other part is that digital can also enhance the entertainment experience, or change the entertainment experience, or add an incremental entertainment experience or do something that you can't do with film. Some of us are convinced that if you simply put a sign on your door that says, "I am going to show you this movie digitally, and by the way I want you to pay more for it." People in essence won't pay more for it. Now I say in essence, because for the first couple of weeks they might, but then after that it gets to be, "Hey do I want to pay twelve bucks to see a movie in digital or do I want to pay ten bucks to see it in film? You know, when film is done right, film looks great. I want to see the story. I don't care if I see a digital film." If you can do something like 3 D with Chicken Little. If you want to see Chicken Little in 3 D, you have to see it digitally. By the way, it doesn't cost $10 it costs $12 or $13 dollars or whatever. It's a different experience.

Alexa O'Brien

Theater attendance has certainly faced competition from alternative media before with the advent of television in the 1950s. Experiential marketing is so prevalent, today, as is the explosion of media rich content from video games for the gaming generation. Is a value added hyper-experience, for example with 3 D, what digital cinema can offer that a home theater cannot? In other words, will digital cinema change the nature of movie content?

Bob Gibbons

I think that people will go to the theater because of the social experience. There is something different about being with a hundred people then there is with being with two people. At the same time, I don't think technology itself is the answer for anything. It's the beginning of an answer. If you use one technology to replace another, it is probably a waste of your money. If you use technology as a starting point to say, what else can I do with this? How else could I use this? How can I in essence change the entire experience with this technology? Then, you have start on something.

The question is whether people will do the hard thinking and take the hard steps involved to get to that. If I decide that I want to show my slides with movies that attract teenage boys, it is a difficult thing to do. I have to change my slide tray. Every time I get a movie like Hostel or pick another movie that appeals to teenage boys, if that movie starts on screen one and by week two it's on screen four, then it's tough. With digital, you can do it with the click of a mouse. It's just easy. On our system its called targeting. On our system, you can target by screen. You can target by feature. You can target by studio. You can target by rating. You can target by genre. You can target by day-part, so that you can put different stuff on during the day than you do at night. You can target by location. You can target by circuit. You can essentially build your show with the click of a mouse.

Why would you want to do it? Some audiences are tough to reach on television. Teenage boys on television, you pay a fortune to reach those kids on TV. You might pay $100 a thousand to reach a teenage boy, where you pay $20 a thousand to reach a senior citizen. There is more money in it, if you use technology to do that, but nobody is. I mean the most they are doing is putting different stuff on R rated movies, than they are putting on G rated movies.

I will tell you where it is being done, though. It's being done in Europe on a per capita, per person basis. When you walk into the door the exhibitor makes money from you. The money they make from you is partially from a ticket price. It's partly from what you spend on concessions. It's a little bit if you play games, and stuff like that. If you are an exhibitor and you have a slide show, they are probably making seven cents from you. Over in Europe, when you walk through the door, they are making up to ninety four cents from you. Why? Because the have targeted stuff. They have sold it differently. They are showing you stuff you absolutely cannot see on television. It's different and they can sell it for a lot more money.

So think about that kind of model brought forward into the feature arena and think about what's going on in a typical theater during a typical week. Well a typical theater runs at twenty three percent occupancy in the United States. On weekends, it's crowded. Monday and Tuesday and Wednesday, few are there. What you could do, and I am just hypothesizing: Pink Panther, Firewall, and Failure to Launch are opening tomorrow. While they were shooting any of these movies, they were also gathering material for the DVD. You are going to have deleted screens. You are going to have director's commentary. You are going to have whatever you are going to have. That's done. Not only is that done, but that's digital and they got it. Why couldn't you create an enhanced experience? You can go on the weekend. A lot of people are going to want to go on the weekends, but every Wednesday night at my cinema, I am going to show you this DVD stuff that you are not going to be able to see before the DVD comes out. I am going to create an enhanced experience for you on Wednesday night. It's a hypothetical. Why can't you do it? The answer is you could. It's really easy.

Alexa O'Brien

How many digital projectors has Kodak installed in theaters?

Bob Gibbons

Since 1999, people have been placing projectors, and they have largely been beta tests. People haven't really paid for them. In other words, how many feature systems does Kodak have out there in the marketplace in test? The answer is three. If you said how many screens out there showing digital pre-show, the answer is a little over 1600. If you count all the screens around the world, there are about a 110,000 screens worldwide. There are about 38,000 in the United States. Of the 110,000, about 600 have digital capability. It's a tiny part and it will change. It will change but we have to get beyond these hurdles. It will take time.

Alexa O'Brien

Technicolor has a rollout plan. So does Access IT. Some of these plans are in the beta test phase. It is my understanding that Access IT is rolling out their own digital cinema systems without doing a beta test. Will the various networks be compatible? Are they analogous to cable television, where in a certain region Kodak has predominance, in another region Access IT has predominance?

Bob Gibbons

Well, there are two answers there. Will they be compatible? The answer is yes. The studios got together and formed the consortium for the Digital Cinema Initiatives. The purpose of DCI was to create a sort of the digital equivalent of 35mm film. The reason why film works worldwide and Warner Brothers can produce something here in Hollywood and show it over in India is that 35mm is 35mm. The studios said, "You know what, unless digital cinema works for all of us, it isn't going to work for any of us. We need to go to all theaters day-and-date around the world, so we better come up with standards." They have come up with is a concept called interoperability which means that everything fits together and everything operates with everything else. Now, that is a neat idea and obviously, what you want to do, but it's not there yet. In fact, it will probably be a while before it is there. So, if Kodak is going to show a movie on a Kodak system it is probably better that we prepare the content for that movie. If Technicolor is going to show a movie on their system it is probably better that they prepare the content. Interoperability will take a while to sort through the system. Then the systems will improve themselves and exhibitors will get more comfortable.

Alexa O'Brien

So, at some point Kodak would be able to prepare content for a Technicolor system...

Bob Gibbons

Sure. We will be preparing it. Everybody will be preparing it. The analogue world is very different from the digital world. The analogue world has really high barriers to entry. You want to make film, man oh man that requires investment. You want to participate in a digital business. You've seen what happens with special effects. When it started out you needed a Cray computer. Then you needed a silicone graphics computer. Now you need three guys with a Mac in their garage. That means really low barriers to entry. There are a lot of competitors. There will still be some shake out, but eventually, we'll all be able to prepare movies for everybody else.

Alexa O'Brien

In the digital marketplace, where there are lower barriers to entry, how will companies like Kodak or Technicolor protect their brands from the competition?

Bob Gibbons

That is the key question, isn't it? I mean what is the brand going to stand for. Clearly, we don't want to go the way of the studios. The studios basically gave away their brands, with the exception of Disney. I mean name the last six movies you saw and which studios produced them. Stars became their brands. What is the last Tom Cruise movie you've seen, or whoever, right? Guess why budgets are so high. The studios don't have any leverage. So, that is the challenge and that is the question.

Alexa O'Brien

Kodak is a fantastic brand identity. Kodak originating and print stocks for motion pictures are unparalleled. You certainly have the market share in those deliverables. I understand the landscape that you are describing but I am still not clear on what Kodak intends to do to protect its brand. Technicolor and Kodak both have long standing brand credibility compared to newer entrants like Access IT. A legacy brand can certainly help companies compete against newer entrants in a digital marketplace. In the flatter landscape of the digital marketplace, however, how will Kodak protect its brand from competitors like Technicolor, who also have a legacy brand?

Bob Gibbons

Let me just address a couple of things you said. First, how is Kodak going to protect their awesome legacy in origination film? One of the ways is by designing film to be part of a digital system. That means designing film that is more scanner-friendly. If you take the RGB curves, and make them exactly parallel to each other, then you make it easier to scan film. If you make a more scanner-friendly film, then that saves you time in the edit suite with your color timing. That is part of it. The other idea is to make film that breaks the speed-grain-sharpness triangle. If you wanted more sharpness, you had to trade off speed and you have a lower speed film. If you wanted less grain then you couldn't have speed. We have figured out ways to get around those trade offs.

The point is that film is the premier origination medium and will be for sometime. Now at some time, film is going to go away, but for now, we are continuing to develop film. We are not just saying, "Film is good enough let's just leave it alone." We are continuing to spend money on film and film development, color development and so forth. We just think there is more capability there. By the way, digital projectors and other projectors are going to get smarter. There is going to be more capability. We are ultimately going to be able to use lasers in which case colors are going to be more pure. We make sure that you get the best front-end with film and then you can digitize it all over. That is the front-end thing.

The back-end in terms of Technicolor, how does Kodak compare? It's interesting because in an analogue world, Technicolor for years has been one of our biggest customer. Certainly as a laboratory, they are huge, and they are really important. By the way, we have a great relationship with them. In the digital world, we could be one of their suppliers, because Technicolor is kind of an aggregator. They put systems together. Technicolor doesn't make projectors. They buy projectors. Whom do they buy them from? They could buy them from Christie. They could buy them from Barco. They could buy them from NEC. There are only three companies that they can buy them from. If they want to buy servers, whom are they going to buy servers from? Well they could buy them from us. They could buy them from Quvis. Then they can put that all together. So, what is Technicolor going to do in the whole thing? Well, they can prepare the images, because they are a lab. They know how to do that. They can do all the sort of digital front-end or middle-end. They can do all that. So, that's what their brand might be.

I think that you are going to see in this great brave digital world is that there is going to be kind of a settling down process, where everybody starts out saying I want to be everything to everybody. I want to be a leader in this industry. Well I think what we are going to see is a settling down process, in which companies look and say, "O.K. What am I really good at?" What they are really good at, they can then start to leverage, build, grow or extend. and offer it to other people. So if Barco says we are really good at cinema grade projectors; and that's what we want to do; and we don't want to do service; and we don't want to do support; and we want to just build projectors and so forth. That's fine, and then those who are really good at service, a gigantic service operation starts up. So there is going to be some settling down.

One of the things that Kodak is good at is that Kodak has a legacy of making complicated technology simple. Once upon a time, there was this great theme that somebody came up with, "You press the button, and we do the rest. That still applies today. Analogue technology is really well understood, but it's sort of limiting. I mean you have big reels that show up at the movie theater. They have to be spliced together, and then they have to be un-spliced. You have to cut the heads and tails off. Everybody knows how to do that and it is very reliable. It's a bit limiting.

Digital, on the other hand, is kind of liberating. There is a lot that you can do, but it is also complicated. How do you do it? Do I need a server? Do I need a router? Do I need a switch? Do I need a network? Now that I have a network today, will that be good enough for tomorrow? Tell me about JPEG compression and MPEG compression, what's the difference? It's just endless. We think we understand that and we think we can simplify it for people. Oh, and by the way, if we can deliver the solution, not by ourselves, but by working with Barco and others, such that if anything goes wrong, you call us. You don't have to worry about, "Should I call Barco because I have a Barco projector and a Dell computer." Don't worry. Call us. We'll take care of it. What our brand could stand for in the future is, it has to stand for color, and it has to stand for great images. We have to do that. That is our legacy. In addition to that, we are going to stand for simplicity. We are going to stand for putting the situation together in a way that makes it simple, that lets you do what you want to do. Think of what is in film. Film is a really complicated thing. You are coating all thirteen layers and making the total package less than the thickness of a human hair, and you are doing it in the dark. This is tough stuff. Well, we think we know how to do that stuff. Deliver digital services and systems. Put it all together for you. That is what we are trying to do.

Alexa O'Brien

If I understood you correctly, then Kodak will actually supply Technicolor with technology for their digital cinema systems.

Bob Gibbons

Lets put it this way; we hope so.

Alexa O'Brien

What other advantages does Kodak get from selling digital pre-show systems to theaters?

Bob Gibbons

First, it's good business in its own right. Second, you start to get experience in distributing content. In an analogue world, content is distributed by truck. In a digital world, there are other ways of distributing content. One is over terrestrial lines, if the files are small enough to go over a DSL line. You are not going to send a movie over a DSL line. You are going to send it some other way. You are going to send it by satellite, which is one way, or another way is by hard drive. You can send part of the content, meaning you can send the keys, which unscramble the content, or you can send the pre-show by disk, by DVD. One of the advantages that we've gotten by being involved with pre-show systems is that we have developed the capability to prepare and send content to theaters. We've created new connections with theaters.

The other advantage was installing networks in theaters. Networks are important to handling pre-show content today. Tomorrow, in the feature world they are going to be really important for managing movies and for telling you what played, on what screen, at what time, with what trailer. The network also ties into the ticketing systems, so we are getting experience with different ticketing systems. If I use my example from before, I want to reach teenage boys so my ad only plays on movies that teenage boys like to see. Turns out that this week Hostel is playing on screen one. So, the ad automatically goes to the right screen, because it has what we call "business association rules" attached to it. It automatically plays on that screen. Nobody needs to do anything. The only thing an exhibitor has to do is turn on the system. Our system on our network is talking to the ticketing system every couple of minutes, saying, "Hey what are you playing, on what screen?" The ticketing system says, "Well I am playing Hostel on screen one. So our system says, "O.K. Play there." Next week, for some reason, Firewall plays on screen one and Hostel moves to screen three. Our system talks to the ticketing system and says, "So, what are you playing?" "Well I am playing Firewall on screen one." "O.K. Fine." Our ad goes to screen three. It moves around the network. Moving content around the network is really kind of a learning experience, because that was never possible before. It wasn't the case of we didn't know how to do it. It wasn't possible. So it's been a big learning experience.

Alexa O'Brien

Is whoever controls the network, the industry gatekeeper?

Bob Gibbons

Gatekeeper is a pejorative term in the industry. Nobody wants a gatekeeper. A gatekeeper was originally described as someone who stands between the exhibitor and the distributor, someone who stands between the studio and the theater, and no body wanted that. Networks have to be like the highways. Anyone can use it, you just decide how and so. Think of them as sort of toll roads right. You can travel a toll road; we are just going to have to pay our way. Nobody says you cannot go on it.

Alexa O'Brien Alexa O'Brien researches and writes about national security and law enforcement. Her work has been published in The New York Times, VICE News, The Cairo Review of Global Affairs, Guardian (UK), The Daily Beast, NY Daily News, and featured on the BBC, PBS, NPR, Democracy Now!, and Public Radio International. She was shortlisted for the 2013 Martha Gellhorn Prize for Journalism in the United Kingdom and listed in The Verge 50. In 2016, she worked at The Constitution Project in Washington, D.C. as a staff researcher and writer on an independent commission studying Oklahoma's death penalty. She also provided research support to scholars of the first cost study conducted on that state's capital punishment system.