Part of the charm of Kimball’s Peak Three Theater is that the downtown art house remains defiantly out of step with the times, with an old-fashioned ambiance, a cash-only policy and films that are actually on film.

That commitment to 35mm prints is quickly turning into a liability, however, as more and more studios release their movies only in a digital format, which require entirely new, digital projectors. For studios, digital is much cheaper, reducing printing costs, shipping charges and the repairs and replacements that come with physical film.

Most large multiplexes made the jump years ago, beginning in this area with the Cinemark Carefree Circle on Powers Boulevard, which installed its first digital projector in 2006.

Late last year, Fox Searchlight, a prolific producer of art house films, told independents such as Kimball’s that it would be shifting entirely to digital within a year. It’s not a hard deadline, but the idea of heading into the holiday season, when many studios release high-profile features aimed at garnering Oscar nominations, without Fox Searchlight’s films has Kimball’s owner Kimball Bayles in a cold sweat.

“For me, they represent the biggest pictures that I play,” he said, tossing off recent Fox Searchlight hits like “The Best Exotic Marigold Hotel” and “Slumdog Millionaire.”

Other distributors are easing into the shift, but the transition is reducing the number of 35mm prints available and can mean Kimball’s and similar theaters have to wait to get a popular film.

Distributors have been giving theaters payments called “virtual print fees” to help underwrite the cost of making the switch, but those payments have shrunk over time. Kimball’s is facing a Sept. 20 deadline to sign a contract to go digital and get those payments.

Patrick Corcoran, director of media and research for the National Association of Theatre Owners, said that about 30,000 of the 39,800 movie screens in the United States are now digital, and several hundred screens a week are being switched over. Making the transition, however, he said is still a big challenge for smaller theaters.

“It costs roughly $70,000 a screen to convert,” Corcoran said. “As the technology has evolved, the price of the digital conversion has come down from about $150,000 per screen to where it is today, but it is still a tough business consideration to justify that cost.”

Some theaters are going nonprofit, some are raising money from patrons, some are simply shutting down, Corcoran said.

“We’re hoping that as many as possible can get it done,” he said. “We don’t know how many will or won’t.”

Bayles said he had held off making the switch in part out of the assumption prices for digital projectors would fall over time and in part out of stubborn loyalty to film.

“(General manager Matt Stevens) and I always felt that we were pretty old school here,” Bayles said. “We’ve always been a little funky here.”

Stevens said the switch to digital has been the biggest change in the industry in 75 years, “since they went to sound.”

So, Bayles is considering how to pay what he estimates will be about $250,000 for digital projectors and other required equipment, such as a compatible sound system. He’s talked to his landlord about getting a break on rent and explored bank loans. Raising ticket prices, Bayles said, is not an option, given the difficulty in getting people to come downtown.

He’s toyed with creative ideas: In 2008, many film-lovers ponied up $150 or $250 each to help Kimball’s buy new seats in the theaters, with the promise that they could reserve that seat in perpetuity. That idea is not likely to fly when it comes to projectors, Bayles believes.

The tough part is, for typical ticket-buyers, digital isn’t a huge deal, Bayles said. Sure, there are no scratches on the films and the sound is a little better, but it’s basically the same experience.

“There’s no return on investment,” Bayles complained.

Stevens worries that today’s state-of-the-art digital projectors will be tomorrow’s Betamax tapes.

“Who knows if in five years that equipment is still up to industry standards?” he said.

Bayles said the challenges of making the switch could even shut Kimball’s down, but he remains hopeful.

“I think there is a future here,” he said, as film whirred through a projector behind him. “I think there’s huge support for this theater.”