This comes from Variety:

Digital ""Menace'' unveiledBy Marc Graser

HOLLYWOOD (Variety) - The digital projection of ""Star Wars: Episode I-- The Phantom Menace'' in four theaters in New Jersey and Los Angeles is being heralded as far more than the first commercial presentation of its kind; representatives from Lucasfilm and 20th Century Fox are calling it the ""future'' of cinema.

Reps from both studios, including Tom Sherak, chairman of 20th Century Fox Domestic Film Group, and Rick McCallum, producer of ""Phantom Menace,'' on Thursday gave a sneak peak of the digital projection technologies developed by CineComm Digital Cinema and Texas Instruments at AMC's Burbank 14.

The digital print of ""Phantom Menace'' was compared side-by-side with a traditional 35mm print of the film, the same as seen in theaters.

In the comparison, the digital image appeared crisper with brighter colors. Pixilations, however, could be seen, a bug that CineComm reps saidwould be worked out once digital projections are more widely used by exhibitors. The film stock appeared blurrier in parts, darker and grainy.

""The digital version is the film we made,'' McCallum said. ""The focus, color reproduction, brightness is what we wanted. To be able to see a film without any loss in image quality throughout its entire run is a dream Lucasfilm has had for 20 years.''

But although ""Star Wars'' is being screened, no exhibitor has yet to retrofit its theaters for digital projection on a regular basis.

""It's not economical without a delivery system,'' Sherak said. ""We're not going to see exhibitors retrofit theaters tomorrow. That won't happen until satellite. Satellite is the only way it can be affordable. There are alot of questions to be answered before that happens. There are a lot of partners that have to get together.''

But the future also depends on how well the public and the creative community accepts the technology.

""It's a personal, questionable taste at this moment,'' McCallum said.""It will be the creative side and business side with the economics that has to be convinced.''

During its one-month run, ""Phantom Menace'' won't utilize the satellite system, but will instead run the pic off of a hard drive system.

The film begins its digital run today through July 18 at Loews' Route 4 Paramus, N.J., and Loews' Meadows 6 in Secaucus, N.J., and L.A.'s Pacific's Winnetka Theater and AMC's Burbank 14.