Sony Electronics, studios in digital cinema deals

LOS ANGELES Thu Oct 2, 2008 6:00pm EDT

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LOS ANGELES Oct 2 (Reuters) - Sony Corp (6758.T) on Thursday said it reached a deal for three studios to back its cinema technology in the latest example of Hollywood's ramped up efforts to switch to digital projection.

News Corp's NWSa.N Twentieth Century Fox, Viacom Inc's VIAb.N Paramount Pictures, and Sony's Sony Pictures agreed to promote Sony's digital systems in theaters one day after five big studios reached a separate deal with a theater chain group called the Digital Cinema Implementation Partners (DCIP) to upgrade 20,000 screens in the U.S. and Canada.

Sony was not one of the studios involved in the deal by the DCIP, comprised of Regal Entertainment Group (RGC.N), Cinemark Holdings Inc (CNK.N) and AMC Entertainment Inc, as the Japanese electronics maker attempts to get theaters to adopts its own digital technology and integration services.

About 5,000 of the 37,000 cinema screens in the United States are now digitally equipped and the ultimate aim is to transform all 125,000 screens worldwide.

Mike Fidler, senior vice president of Sony's Digital Cinema Solutions and Services group, said Sony expects to deploy its equipment on 9,000 screens in North America, Europe and Asia.

Fidler said Sony was in discussions with exhibitors and offering them everything from installation to maintenance, alternative programming, security and advertising.

Under its deal with the studios, Sony Pictures, Paramount and Fox would pay virtual print fees when their films play on Sony digital systems. It would not disclose the fees, but sources familiar with the matter said they typically range from about $800 to $1,000 per movie.

Sony is among a field of companies now seeking to become digital cinema middlemen or integrators who secure financing via "virtual print fees" from studios to advance the deployment of digital equipment in theaters.

Eastman Kodak EK.N reached a deal on Wednesday for Paramount to finance deployment of its digital cinema technology, while Access Integrated Technologies AIXD.O has been a leading digital cinema integrator with commitments from studios to provide movies to up to 10,000 digital cinema systems in the U.S. and Canada over the next three years.

Because of the large theater chains involved in the DCIP deal, DCIP bypassed the use of a middleman or integrator to cut its own deals with studios.

Hollywood and exhibitors hope the digital conversion will boost attendance, cut down on printing and delivery costs and pave the way for more theaters to upgrade to 3-D, which commands premium pricing.

Hollywood has a lot riding on the conversion since many of them plan to roll out 3-D films starting in 2009 and need enough 3-D screens to support their slates.

There are around 1,300 3-D screens in the United States, but another 1,000 are expected by March 2009, analysts said.

(Reporting by Sue Zeidler)

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