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Say it’s 1975. You’re a movie-loving entrepreneur and want to open your own cinema. Couldn’t be that hard, right? Find yourself an auditorium, some padded seats, put up a screen, buy a ton of popcorn—oh, and you’ll need a projector, but nothing too highfalutin. The 35-millimeter film they were projecting 20 years ago is the same as the 35-millimeter film they’re projecting today, which will be around for at least another 20 years. The format is static, and the equipment used to project it is built to last.

Anyone hoping to open a small theater in 2012 has to deal with much tougher circumstances: Digital is the way now, and while that makes life easier for distributors, the cost for small cinemas across the country could be enough to put a lot of them out of business.

A few weeks ago, the D.C. area’s E Street and Bethesda Row cinemas, both part of the national Landmark Theatres chain, wrapped up a complete conversion from that century-old method of film projection to the Digital Cinema Package projectors that are now the industry standard. The other major chains in town are at or near full-digital conversion, too: AMC Theatres’ Shirlington location is the national chain’s only house still showing 35-millimeter prints, and it’s been more than a year since I saw a film print at Regal’s theaters in Silver Spring or Gallery Place. (Regal didn’t respond when I asked how long ago the company went digital.)

The digital format comes with a lot of convenience, of course. There’s no more shipping and lugging huge reels around. And where early digital projection systems produced a notably substandard picture, as the technology has matured, the digital edges have been smoothed: Now, hardcore cinephiles usually only quibble with digital’s tone or lack of warmth—traits that are likely invisible to the average filmgoer.

But while digital may be easier, it still presents a significant barrier for would-be theater owners, and threatens the livelihood of existing ones. Few smaller theaters in town have them yet.West End Cinema opened nearly two years ago at the site of the former Cineplex Odeon Inner Circle, which had operated there from the mid-1980s until the early 2000s. When co-owner Josh Levin tapped the location, he updated the screens, the sound, the seats, and the décor, but there was one thing that didn’t need upgrading. “I inherited a theater that had 1980s vintage projectors, and we didn’t have to change any of the video components,” Levin says. “And 10 years from now, if there was a 35 print, it would still play on that.”

But obtaining a 35-millimeter print to thread through those projectors isn’t going to be easy 10 years from now. For new releases, it’s going to be almost impossible in only a year. “There came a time when we decided we needed to go in [the digital] direction primarily due to announcements that there may not be film available as early as 2014,” says Ted Mundorff, CEO of Landmark Theatres. His nationwide chain will be all-digital by the end of the month.

Todd Hitchcock, director of programming at the nonprofit AFI Silver Theatre in Silver Spring, also figures that 2014 is the drop-dead date for new 35mm content from the studios. But the digital revolution has already presented problems for AFI, which shows a lot of vintage-film retrospectives. He worries that the supply of prints of older films is drying up, as the big studios cut the staff they devote to booking those prints down to a handful of people. Hitchcock says he’s asked studios for prints and been told they either don’t have them, or don’t have any to lend. The studios’ solution? Settle for the Blu-ray, a format that looks just fine, but is subject to skipping and other glitches. “Studios are actively encouraging that…[and] that’s not what we’d like to be hearing from them,” Hitchcock says.

It’s not just big studios that are crossing over, though. European independents have gone digital, too. “There’s not even talk of having made a 35-millimeter print,” Hitchcock says. That can be a big hassle when booking big events like AFI’s ongoing Latin American Film Festival and its European Union Showcase, which begins Nov. 3. Museums, with all their international programming, are dealing with the same thing. “Last year was the first time I could not show a film because they were only making it available in [Digital Cinema Package], and that’s increasing now,” says Tom Vick, the film curator at the Freer Gallery of Art. “It’s definitely becoming an issue.”

So the obvious solution is for theaters to just bite the bullet and snag a fancy new DCP projector, right? It’s not that easy. Unlike those vintage 1980s projectors that came with West End, there’s no inexpensive option to make the leap to DCP. “Quotes we’ve gotten, and word amongst our friends in the art-house world, is that we should budget $60,000 per screen, and that’s the projector, the server, and the other pieces you need, and it also includes an electrical upgrade,” says Levin. “These things can burn a lot of juice.” The total cost for Levin to upgrade to DCP on all of West End’s screens would be around $200,000, a figure he calls “completely untenable.”

If the cost burden is so great for a changeover that’s designed to save the studios vast sums of money, why haven’t the studios offered to help presenters upgrade their equipment to show the product they’re providing? Well, they have—sort of. Distributors have developed something called a Virtual Print Fee that’s meant to help theaters with the changeover by redistributing money that the studios are saving to fund the upgrade.

That sounds great in theory, but it’s more complicated in practice, particularly for small independents and theaters that don’t do as much first-run content. While Mundorff describes the VPF programs as “incentives,” Hitchcock and Levin use less positive language. “My gut-level take on it,” says Hitchcock, is that “it’s sort of like taking out a mortgage.” Levin praises the way the program addresses the needs of most theaters, but he describes the restrictions as having “very strong strings attached, and it’s much more geared for studio product than for indie. We would be giving up programming control and not getting very much from it.”

Levin says accepting VPF money means entering into a contract that obligates the theater to show VPF films. “There’s going to be not just pressure, but a legal requirement in the contract to book VPF films,” he says. Major distributors and larger indies are part of that system, including enough of those providing content to Landmark Theatres, which has signed up for a VPF program. But the smaller indies, foreign distributors, and self-distributed films that make up much of the programming at cinemas like West End, the AFI, and Chevy Chase’s Avalon Theatre are not included. Those theaters would be forced to make their programming more mainstream and less diverse in order to take advantage. “We feel that the terms of the agreement would potentially limit the programming flexibility that we need to operate as an independent nonprofit,” says Bill Oberdorfer, the Avalon’s executive director.

The Avalon has plans to upgrade to DCP, but hasn’t nailed down a date yet; West End is still exploring its options. Hitchcock says the AFI has cobbled together funding, and is making decisions on the final system’s design; he estimates it’ll be ready in early 2013. The Freer is making the switch soon, too, and will be the second Smithsonian institution to move to DCP after the Museum of American History’s new Warner Bros. Theater. The Freer traveled a less bumpy road than its nonmuseum colleagues, though: “We had a new deputy director come in who was focused on technology…I very early on made a case for DCP, and he found the money; I don’t know where he found it, but he did,” Vick says. That director has since left.

The gradual changeover to digital dominance doesn’t necessarily spell death for celluloid. Almost every local indie theater plans to continue showing actual film. “Those old films that are still being kept in archives, we’re definitely committed to showing them,” says Vick. Hitchcock says the same. Even at Landmark, Mundorff sees value in having a 35-millimeter projector around just in case. The company plans to keep at least one in each market.

But what if houses like West End can’t afford to make the jump? What’s at stake for filmgoers? Much more than “warm” film quality or nostalgia for the golden years of cinema, say Levin. “We as film fans lose variety,” he says, “and the chances taken on films that come up from outside the mainstream.”