Six rival studios wrote one open digital-cinema spec and 35mm distribution faded away

By 2000, digital projection worked but cinema chains would not invest: every vendor pushed its own incompatible format, and exhibitors feared buying the loser. In March 2002, seven Hollywood studios — MGM, Paramount, Sony Pictures, 20th Century Fox, Universal, Disney and Warner Bros. — formed Digital Cinema Initiatives (DCI), a consortium with a single job: agree on one open specification for digital cinema systems.

On July 20, 2005, DCI released version 1.0 of its Digital Cinema System Specification: 176 pages covering projection, security, transport and operations, mandating 2K (2048×1080) and 4K (4096×2160) JPEG 2000 images with uncompressed PCM/WAV sound, plus encryption and forensic marking. MGM had withdrawn that May; the remaining six studios 'reached unanimous agreement on the necessary overall system requirements,' said DCI chief technology officer Walt Ordway.

Ordway's pitch was that a common ground would 'spur innovation and encourage many more players who were previously resistant to invest capital in technology that may or may not have been viable,' with equipment prices falling as the market got competitive. Warner Bros. said it would release its films in two formats — 35mm and DCI digital — by the end of 2005, with Fox, Sony, Buena Vista, Universal and Paramount to follow. NATO, the Academy and the American Society of Cinematographers signed up too.

Rivals wrote one open spec, then competed on top of it

The studios were the monopsony: no projector sells if the content owners refuse to feed it, so one buyer-side spec ended the format war without any vendor conceding.

DCI specified performance — resolution, luminance, security — but left file formatting to SMPTE, so engineering details could evolve without reopening the deal.

Building encryption and forensic marking into the base spec answered the piracy fear that had made studios resist digital distribution.

A common spec shifted competition from incompatible formats to price and quality, driving down the equipment cost Ordway called the old barrier.

When buyers deadlock over incompatible formats, they can break the tie themselves: one jointly written open spec turns a standards war into a price-and-quality race.

SMPTE turned the spec into more than 60 formal standards and DCI kept revising it (v1.4.2 in 2022), but the market moved faster than the paperwork. In January 2014 Paramount, a founding member, became the first major studio to stop distributing 35mm prints in the U.S.: 'Anchorman 2' was its last film release and 'The Wolf of Wall Street' its first all-digital wide release. NATO then counted 92% of 40,045 U.S. screens converted to digital.