posted 08-22-2003 12:24 PM                    

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Qualcomm Quits Cinema Project
The move leaves Technicolor on its own in developing a digital projection system.

By P.J. Huffstutter, Times Staff Writer

Qualcomm Inc. said Thursday that it was stepping out of the digital cinema market, leaving the Technicolor film lab to continue on alone in a revolution that remains a distant dream.

Qualcomm, a telecommunications firm that specializes in mobile phone technology, said it sold its equity interest in Technicolor Digital Cinema, effective Thursday. Financial details were not disclosed.

The sale essentially dismantles the grand dreams the companies established two years ago, when Technicolor, the Camarillo-based unit of Thomson Multimedia, tried to usher in an era of digital distribution of movies by partnering with the San Diego-based Qualcomm.

Sources at Qualcomm said the company was reluctant to continue funding a project that had clearly stalled.

But executives at Technicolor insisted that the dissolution of the partnership would allow the film lab to expand its offerings and take more control over development of the digital cinema hardware.

"This will allow us to work on the requests of our clients," to provide services that support several different versions of digital cinema technologies, said Michael Sterling, a principal at Technicolor Digital Cinema. Those clients include both the studios that produce films and the theaters that show them.

Back in 2000, Technicolor Digital Cinema was planning to pave the way for digital projection systems, which promise to make movies crisper by eliminating the need for film, which can be damaged by mechanical projectors and otherwise degrade over time. By eliminating film, studios expect to save hundreds of millions of dollars in costs associated with printing and distributing movies on reels of celluloid.

Technicolor and Qualcomm promised they would install digital projectors in 1,000 movie theaters around the world at their own expense, though they never announced any target date.

Industry debates over digital standards and business models have slowed the revolution to a near stop. Technicolor has installed systems in only 39 theaters.

Last November, Technicolor put on hold its plans to sell additional equipment to movie theaters and cut its business development and marketing groups.

Qualcomm shares closed unchanged at $38.64 Thursday on Nasdaq. Thomson shares trade in France, where the company is based.

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