Kodak Announces Digital System for Full-Length Features

ORLANDO, FL -Oct. 25, 2004 - Eastman Kodak Company announced a series of advancements in its Digital Cinema operations that will generate increased revenue for exhibitors and enhance the movie-going experience for consumers, including the company's first system for the digital projection of full-length features.

Kodak will demonstrate the system at the annual ShowEast exhibitors conference this week in Orlando, Florida. The company's activity at ShowEast includes:

• The official entrance into full-length digital feature projection with the introduction of the Kodak CineServer. The new server is designed to enable exhibitors to decrypt, decompress and send feature-length content to any digital projector of up to 2K resolution. This unique server incorporates Kodak technology and image science, and is driven by proprietary Kodak software. Commercial versions will be available worldwide beginning early next year. Kodak also remains committed to a 4K system and will provide leadership as digital projection technology continues to evolve, using the ever-improving quality of film as the target for digital projection excellence.
• Cinema Screen Media (CSM), the world's largest, independent provider of digital pre-show presentations, has made an additional purchase of more than 200 Kodak Digital Cinema advertising systems. CSM will use the systems to present the CSM digital pre-show entertainment program to audiences in the growing network of Harkins Theatres.
• The naming of Kodak as a "preferred partner" in the Pepsi Digital Alliance, a new worldwide initiative by PepsiCo Inc. to bring innovative solutions to their exhibition customers. This program will give Pepsi's customers special incentives to purchase Kodak Digital Cinema pre-show solutions and to enjoy the benefits of bringing digital advertising to their screens.

"The Digital Cinema marketplace has evolved dramatically over the last few years, and so has Kodak's participation in that market," said Eric Rodli, President, Entertainment Imaging, and a Senior Vice President, Eastman Kodak Company. "We began our efforts in digital cinema by becoming a leading provider of systems that manage and project pre-show advertising. Now we're introducing systems that will allow exhibitors to manage and show full-length feature films while we also expand our efforts in the pre-show advertising market with Pepsi and CSM."

Consistent with the company's strategy of employing a comprehensive approach in the digital cinema market, the Kodak CineServer is more than just a projection system.

"At Kodak, 'digital cinema' represents much more than a new technology or a single piece of equipment," said Bill Doeren, the general manager of Kodak's Digital Cinema operations and a vice president, Entertainment Imaging. "It's a whole new operating model that involves the digital preparation, distribution and display of content. The Kodak CineServer is the heart of our solution; it has our company's unique imaging science 'baked in'. It supports MPEG2 encoded video today, but it's upgradeable to JPEG2000 tomorrow. We intend to be compatible with all industry standards as they evolve."

Kodak, working with its advertising supplier customers, has become the number three provider of digital pre-show systems worldwide during the past eight months. Pre-shows distributed by Kodak are currently seen by more than two million moviegoers per month. This is primarily through its partnership with Cinema Screen Media (CSM) -- the world's largest independent provider of digital pre-show presentations. Since November 2003, CSM has purchased more than thirteen hundred Kodak digital cinema pre-show systems.

Harkins is the fourth major chain with an exclusive partnership with CSM and with Kodak. All Classic, Century, and CineArts theatres are in the process of being equipped with Kodak digital pre-show systems.

"We're helping our partners to build a digital entertainment network," Doeren said. "At present, advertising is the primary application, but these systems can also support alternative programming, special events and now feature-length films."

According to Pepsi, a major cinema advertiser, digital pre-show systems provide exhibitors additional sources of revenue and enable the soft drink company to better target its ad messages and refresh them more often.

Connecting all components is the Kodak network, which serves as a vital communications link. Kodak's Digital Cinema Services uses the network to provide the security keys (which protect against movie piracy), to monitor the health and performance of system components, and to verify that all content has been received and plays as scheduled.

"Digital cinema is a completely different model that creates a whole host of new opportunities," Doeren said. "It also allows for greater flexibility in moving content around, the ability to show alternative content, and much tighter demographic targeting for cinema advertising."

For additional information visit www.kodak.com .