In the golden age of Hollywood, there was a limit to how many screens could show a particular film. Since individual prints had to be commissioned and shipped around the country, the number of screens a given film could play on was limited. The studios would often reserve the latest films for the biggest theaters in the biggest cities. People living in smaller cities would often have to wait months to see the biggest films. When digital projection became available, the studios saw an opportunity to reduce their costs.
As recently as ten years ago, however, most theaters retained old projection equipment. Investing in newer projection equipment was seen as being too expensive with no benefit for the theater itself. Why should they spend millions to save money for the studios? The first theaters to make the change, however, saw huge benefits. Previously, theaters would have to turn away customers when they were sold out. With new digital projectors, they could switch out films easily, replacing slow selling movies with extra capacity for the bigger hits.
“Sleeper” hits that surprised everyone would gain because theaters could shift screens to their advantage. These digital systems have contributed to the rise of mega blockbusters because theaters can instantly allocate more screens and resources to the bigger films, meaning that nobody gets turned away. With this shift, theaters without digital projection were at a huge disadvantage. Studio incentives and market forces made upgrading to digital equipment a no-brainer.