Qualcomm today has struck a new joint venture that will create technology to distribute digital movies to theaters across the country.
As part of the deal, Qualcomm said it will use compression and encryption technology from its Digital Media unit to develop film distribution technology with Technicolor Digital Cinema. The venture plans to introduce the collaborative technology by early 2001, with plans for commercial availability by the end of 2001.
Known primarily as a wireless semiconductor and technology provider, Qualcomm's entry into the digital media businesses could be a lucrative opportunity--just as Wall Street is looking more skeptically at the profit potential of the company's core business.
Expected slower mobile phone sales in Korea caused some analysts to cut their earnings projections for the company this week. Qualcomm stock fell following the news.
Once the movie industry embraces digital technology, Qualcomm believes that its entry in the market could prove to add solid incremental revenue to its books. Kodak is already testing Qualcomm's video encryption and compression technology.
For Technicolor, a major film printing and distribution company formed in 1915, the deal represents a way for the company to maintain its business position as the industry makes its way from film to digital formats, something that could help save movie companies millions of dollars. Analysts say the motion picture industry is expected to migrate from film to digital media over the next seven years.
Gerry Kaufhold, a multimedia and broadband analyst at Cahners In-Stat Group, estimates the U.S. film distribution industry annually is a $700 million market. "If (Qualcomm) can suck off 10 percent of that, that's a pretty good business," he said.
The joint venture, to be called Technicolor Digital Cinema, could face competition from companies such as CyberStar, a unit of Loral Space & Communications.
CyberStar already has a deal with National Cinema Network to deliver via satellite promotions and advertisements to theaters nationwide.