The digital revolution for the movie industry will begin at one of Hollywood_s classic movie palaces, the Egyptian Theater.

Engineers, equipment makers, theater owners and moviegoers will be pulled together to test prototypes of digital projection systems that are expected to become commonplace in movie houses in five years or so. The creation of the Digital Cinema Lab will be run by USC_s Entertainment Technology Center. The digital systems promise sharper pictures and richer sound - the movie theater equivalent of DVDs - along with the potential for new kinds of theme-park-style special effects. By providing a neutral forum for the motion picture industry to evaluate competing technologies, Digital Cinema Lab hopes to speed up the process of setting standards for a new generation of equipment that will project onto theater screens images from computer servers that store movies in digital form. If things go as planned, in a few years when a studio releases a movie, it won_t distribute reels of film. Instead, movies will be delivered over computer networks directly onto servers in each theater. When that happens, studios expect that they will save $500 million a year because they won'_ have to produce or distribute thousands of movie prints. Industry players began taking it seriously in late 1998 after Texas Instruments showed off prototypes of projectors using its newest digital light processing technology. The Texas Instruments projectors create a higher-resolution picture by enhancing the sharpness of individual pixels instead of trying to cram more pixels onto a screen. Those talks led to the idea of creating the Digital Cinema Lab. Another important goal is to develop standards ensuring that digital projection systems made by competing manufacturers will be compatible -- unlike the current mix of movie theater digital sound systems. The cost of upgrading theaters is estimated at about $10 billion worldwide, including $3 billion in the United States. Each theater would need to install a computer server to the tune of about $100,000. The lab_s current budget is $1 million a year, though it expects to get the additional funding it needs from studio sponsors and from in-kind donations of equipment from manufacturers.