As co-owner of Landmark Theatres, a chain of 60 cinemas he purchased two years ago, Mark Cuban is building the first all-digital theater empire. His goal is nothing less than to take the film out of the film industry.

In March, the conversion to digital begins with two Landmark theaters in San Francisco and Dallas.

Of course, change will come slowly. Even if Cuban converts all 270 Landmark screens – an effort that will cost him $10 million and probably most of his hair – that’s less than 1 percent of the 36,485 screens in the US. The most he can hope for is to prod an entrenched industry to embrace an inevitable future. Cuban is optimistic; he’s pushing to complete the Landmark rollout within two years and believes widespread adoption of digital cinema will happen by 2012.

He dismisses talk that the industry isn’t ready. “People get frightened about all kinds of things in Hollywood,” he says. “That’s not my system. I don’t have a business to protect. I have a business to build.”

It’s a business filled with promise – and no small amount of uncertainty and financial peril for the key players. First, the upside: Going digital would be a boon for studios, theater owners, and moviegoers. If studios no longer had to make thousands of copies of each film to deliver to theaters, they could save hundreds of millions of dollars a year. According to the Motion Picture Association of America, the studios spent more than $631 million in 2003 on film prints for the North American market alone. Taking these reels out of the equation could snip distribution costs by up to 90 percent, says Patrick von Sychowski, marketing director at Unique Digital, which places ads in European cinemas. When you factor in the cost for foreign releases and overseas distribution, cutting out the prints translates to an eventual savings of as much as $900 million a year.

Likewise, switching to digital exhibition systems would give theater owners unprecedented flexibility. If a blockbuster packed more seats than anticipated, an owner could quickly reallocate screens that weren’t selling as well to handle the overflow. In a film-based world, such changes can be cumbersome, time-consuming, and costly – requiring an additional print from the studio and a reel swap. With digital, they would be nearly instantaneous and come at almost no cost, once the onetime hardware expenses were recovered.

Moviegoers, for their part, would be treated to a future that promises no more out-of-focus projection, out-of-order reels, or scratchy footage on heavily played film. Even more exciting to Cuban is the broader range of content that digital systems make possible: Beyond movies, theaters could offer live, hi-res broadcasts of sports events, Broadway plays, fashion shows, and multiplayer electronic games.

So if digital cinema is so great, why isn’t it here already? Well, it is – in the editing stage, but not the distribution and exhibition end. While nearly all wide-release movies are shot on film, they are “cut” digitally. (The exception: productions by Steven Spielberg.) Footage is converted into data for postproduction, where scenes are put together, sound is laid down, and effects are added. When that’s complete, the movie does a somersault back to analog, where it’s printed onto reels, copied, and released to theaters. It’s essentially a one-person operation.

But like a wide shot of bathing beauties in a Busby Berkeley number, going fully digital requires elaborate coordination and synchronized movement. Studios, filmmakers, theater owners, and manufacturers must each put one foot forward at precisely the same moment – but there are a number of financial, technical, and political obstacles that stand in the way. Who will pay to update the theater projection equipment (and just what that equipment will be and who will fix it so moviegoers never see the equivalent of the “blue screen of death”) has been the biggest sticking point to conversion to date. Of course the logistics of exhibition don’t matter if the filmmakers aren’t on board. As it stands, many directors still believe analog is aesthetically superior to digital and they haven’t seen anything to convince them otherwise. And then there’s the studios’ hysteria over piracy.

Back in Dallas, Cuban isn’t waiting for industry consensus, and he’s not wondering who will fund Landmark’s conversion to digital. He will.

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