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Technology — Qualcomm Projects Digital Cinema Success

It may not have been an overnight sensation, but Qualcomm Inc.’s digital cinema technology is now poised to take the motion picture industry by storm.

The celebrated telecommunications firm has formed a joint venture with Camarillo-based Technicolor Digital Cinema, Inc., which aims to help the motion picture industry transition from the use of 35mm film into the digital/wireless communications age.

Qualcomm will own 20 percent of the joint venture, which will be based in Studio City, while Technicolor will own the remaining 80 percent. Specific financial terms of the deal were not disclosed. Qualcomm and Technicolor also plan to seek strategic partners for the joint venture.

The joint venture, Technicolor Digital Cinema, LLC, will provide open, end-to-end distribution technology and support services for delivering digital cinema to theaters worldwide.

Qualcomm’s digital cinema technology, which was born about seven years ago, digitizes, compresses, encrypts and broadcasts a motion picture. Authorized theaters then receive the data and store it. Qualcomm’s encryption technology is expected to help cut the $1 billion to $2 billion annual piracy problem Hollywood studios face.

“The significance of this joint venture is it will become an enabler for digital cinema to become a reality,” said Kimberly Haile, president of Qualcomm Digital Media. “It’s marrying the technology with the business and relationship knowledge that Technicolor has.”

It’s that relationship Technicolor has with Hollywood that will help make Qualcomm’s digital cinema technology a star, Haile said.

“They are the guardian of quality,” she said about the 80-year-old Technicolor, the world’s No. 1 processor of motion picture film and the world’s largest independent manufacturer of DVDs, CDs and videocassettes.

“It’s a vote of confidence for our technology and what it can achieve,” Haile said about the joint venture.

Rob Hummel, executive vice president of digital development for Technicolor and once a non-believer in digital cinema technology, now has confidence in the technology.

“I was always against digital cinema because I thought it didn’t match the film quality,” Hummel said. “But when I saw it I thought, ‘Oh my God, this is much better.’

“We could try to go out and do it ourselves or we can go to somebody who already does it. They are a proven player in this domain,” he said of Qualcomm.

Qualcomm Debut

Hummel said the joint venture will be Qualcomm’s entrance into Hollywood.

“Hollywood tends to look askance at new folks coming into the fold. We already have deals with studios such as Disney. When we tell them we’d like them to take a look at this Qualcomm technology, they will take a look at it.”

Both Hummel and Haile said the movie industry’s growing acceptance of digital cinema is partly due to the improvement and increased use of electronic projectors. About 23 movie theaters across the globe are using electronic projectors developed by Texas Instruments, Inc. Other electronic projector manufacturers include Hughes-JVC and CineComm. Up to 34 movie theaters are expected to have electronic projectors by this fall.

Last summer, George Lucas’ “Star Wars , Episode I: The Phantom Menace,” and the Miramax film, “Ideal Husband,” were the first films shown to the public via electronic projectors. Moviegoers have also experienced a handful of other films that employ digital cinema technology, such as Walt Disney Co.’s “Toy Story 2,” “Bicentennial Man,” “Mission to Mars,” and the animated feature, “Dinosaur.”

“I think the (movie) industry is leading the course on digital cinema,” Haile said. “We’ve seen it coming. It’s just been a matter of the industry deciding whether it believes the technology has matured.”

Hollywood types aren’t the only recent backers of Qualcomm’s digital cinema technology.

Branching Out

In March, Qualcomm developed a deal with Eastman Kodak Co. to create a high-quality digital cinema system. Qualcomm’s compression, encryption and watermarking technologies are being used in a prototype projection system being developed by Kodak.

Qualcomm’s Digital Media Division, which includes digital cinema, also does a substantial amount of encryption work over wireless networks for the U.S. government.

Haile said Qualcomm’s digital cinema technology is one way the company is diversifying from its world-renowned code division multiple access, or CDMA, mobile phone technology.

“We’re more than just CDMA,” she said. “While CDMA gets the attention, we’re working on other initiatives. There’s always been that innovative entrepreneurial spirit here. Digital cinema is a perfect example. Our engineers continue to innovate and leverage off of (our core competencies).”

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