Market Watch

Digital Technology Overtakes 35mm Film in Cinema


An end of an era as the venerable projection technology takes a back seat to advances in electronics
After serving more than 120 years as the dominant projection format in movie theaters, the reign of cel­luloid 35mm will come to an end in two short months when the majority of cinema screens go digital, ac­cording to the IHS Screen Digest Cinema Intelligence service at information and analysis provider IHS.

January 2012 will mark the crossover point when digital technology overtakes 35mm, which was used in 68 percent of global cinema screens in 2010. By the end of 2012, however, the share of 35mm will decline to 37 percent of global cinema screens, with digital accounting for the remaining 63 percent. And by 2015, 35mm will be used in just 17 percent of global movie screens, relegating it to a niche projec­tion format, effectively marking the end of mainstream usage of the venerable technology.

The principal film projection technology since 1889, 35mm has taken movie audiences through many stages of filmmaking history—from the slapstick of the silent age, through the great musicals of the sound era, to the epoch of the summer blockbuster. But after 10 years of market priming, movie theaters now are undergoing a rapid transition to digital technology, spurred initially by the rising popularity of 3-D films. The result is the rapid decline of 35mm, first losing its status as the dominant cinema technol­ogy in early 2012—and then dwindling to insignificance in four short years.

Avatar Changes Everything
The decline of 35mm is occurring at stunning velocity following the digital rollout that started in earnest just 18 months ago, in mid-2009. The trigger for this transition to digital technology was the popularity of a single movie: the seminal fi lm “Avatar.”

The release of “Avatar” in December 2009 represented the BC/AD moment for digital cinema, with digital technology forming the bedrock of the modern cinema environment. Before Avatar, digital rep­resented only a small portion of the market, accounting for 15 percent of global screens in 2009. After Avatar, digital’s share grew by leaps and bounds, jumping by 17 percentage points in both 2010 and 2011, compared to the single-digit increases during the previous years. This single film has driven up demand for digital 3-D technology at the expense of traditional 35mm celluloid.

Managing the Transition
With the decline of 35mm and the rise of digital, major impacts are being felt on celluloid supply, processing and demand. As such, the transitions involved as one technology gives way to another must be successfully managed among the various participants in the film business, including exhibitors, distribu­tors, film stock suppliers, and labs, among others.

For example, demand for 35mm cinema film is expected to drop from a peak level of 13 billion feet a year in 2008, to as little as 4 billion in 2012. Meanwhile, the cost of producing celluloid film is soaring due to rising prices for a key raw material, silver. The decline in demand and manufacturing and the rise in prices and raw material costs could cause consolidation among the film stock supplier base, with the three major players in this area possibly being whittled down to just one by the time 35mm demand ends completely.

Such an attrition of suppliers would serve to hasten the end of the 35mm era.

Film Prints Track 35mm Decline
A similar phenomenon is occurring in the demand for 35mm fi lm prints, which is falling sharply as more screens are digitized.

As the need for film disappears, the use of 35mm prints will be phased out territory by territory until it finally comes to an end. And as a country approaches full digitization—i.e., 80 to 90 percent—there is little clear reason to provide 35mm prints.

For example, the five largest countries in Western Europe account for 81 percent of prints in the region. Once each of those countries has converted more than 80 percent of its screens to digital, pres­sure will mount to end 35mm as a format across the entire region. This is forecast to occur at the end of 2013, although public funding and the presence of some 3,000 art-house cinemas may extend the life of celluloid a while longer.

The End of an Era
In the United States, there won’t be any more mainstream 35mm usage from the end of 2013. For Western Europe, this event may happen at the end of 2014, given the large number of countries and the possibility of public support.

The rest of the world will then be under some pressure to follow suit. Because of this, 35mm will see its last mainstream usage by the end of 2015.

While the era of 35mm will end at this time, there will still be some older films circulating in print for some cinemas. Ironically, these last prints may have a high value as they circulate among a relatively small number of theaters dedicated to keeping the legacy of traditional fi lm alive.

Learn More > IHS Screen Digest Cinema Intelligence