By Sue Zeidler

LOS ANGELES (Reuters) - DreamWorks Animation SKG Chief Executive Jeffrey Katzenberg on Tuesday said he was disappointed with the pace at which movie theater chains were moving to deploy digital and 3-D technology.


"Things haven't progressed as well as I had hoped," Katzenberg told analysts on a quarterly conference call.

"I feel as though things have dragged along, and it's been pretty disappointing," said Katzenberg, a huge proponent of 3-D films, who has pledged to make all future films in 3-D at an incremental cost of $15 million per film.

For Dreamworks, which makes about two films a year, that commitment to 3-D amounts to about $30 million per year.

Katzenberg on the conference call said he still believed DreamWorks will see a good return on its investment based on projected ticket prices and the number of 3-D screens he is certain will be in the market by the time his studio's first 3-D film, "Monsters vs. Aliens," is released in spring 2009.

"But whether or not it achieves the fullest potential and outside goals I've set for ourselves and challenged exhibition with, is the thing up for grabs right now," he said.

We have indicated that we would like to see 5,000 3-D screens domestically by the time we released 'Monsters vs. Aliens,' but we need to make sure that major theaters chains are committed to getting these screens in the next 30 days or it's unlikely we will get all 5,000 screens," said Lew Coleman, Chief Financial Officer for DreamWorks in an interview.

Katzenberg had hoped by now the Digital Cinema Implementation Partners, owned by Regal Entertainment Group , Cinemark Holdings Inc and AMC Entertainment Inc had reached a $1.1 billion financing deal with Hollywood studios to deploy cinema digital technology. Once outfitted with digital projectors, theaters can then add 3-D technology.

The DCIP first hoped to clinch the deal by the fourth quarter of 2007, but various issues prolonged the talks.

Travis Reid, chief executive of DCIP, last month said he hoped to conclude a deal in the second quarter 2008. Reid declined comment on Tuesday.

About 4,000 of the 37,000 cinema screens in the United States are digitally equipped, while a little more than 1,000 screens have 3-D capability.

Some analysts have cited concerns there will not be enough 3-D screens to accommodate all the upcoming 3-D titles from Dreamworks and other studios due out in coming years.

Many in Hollywood look to the success of the 3-D concert movie, "Hannah Montana/Miley Cyrus: Best of Both Worlds Concert Tour," which grossed nearly $30 million in its opening weekend as a template for the future. Tickets sold for $15.

Once the DCIP digital upgrade starts, it is expected to take about three years to complete the upgrade of the 14,000 screens of those theater chains involved.

"In terms of getting the big three on board and actively moving forward, I feel as though things have dragged along, and it's been pretty disappointing," Katzenberg said, referring to the movie chains.

"If these guys don't get their act together very quickly in the next 30 days, they're not going to be able to achieve that goal and it will start to deteriorate quickly. Every week that goes by will be several hundred less screens that will manage to be rolled out in the timeframe," he said.

(Reporting by Sue Zeidler; editing by Carol Bishopric)
© Copyright 2007 Reuters.

Photo:
Jeffrey Katzenberg, president of Dreamworks Animation Studios (L), listens during a news conference for directors Karey Kirkpatrick and Tim Johnson's out of competition animated film 'Over the Hedge' at the 59th Cannes Film Festival May 21, 2006.