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To match or improve the theater experience of movie audiences, sebuah sistem pawagam digital mesti memberi gambar dan bunyi berkualiti tinggi. Tambahan pula, pengurus pawagam memerlukan server controls untuk mengurus dan menayangkan filem dalam pelbagai pawagam, dan studio inginkan filem mereka encrypted with secure delivery, playback, and reporting of play times to the distribution company.

Digital Cinema Initiatives (DCI), a joint venture of the six major studios, published a system specification for digital cinema.  Briefly, the specification calls for picture encoding using the ISO/IEC 15444-1 "JPEG2000" (.jp2) standard and use of the CIE XYZ color space at 12 bits per component encoded with a 2.6 gamma applied at projection, and audio using the "Broadcast Wave" (.wav) format at 24 bits and 48 kHz or 96 kHz sampling, controlled by an XML-format Composition Playlist, into an MXF-compliant file at a maximum data rate of 250 Mbit/s. Details about encryption, key management, and logging are all discussed in the specification as are the minimum specifications for the projectors employed including the color gamut, the contrast ratio and the brightness of the image. While much of the specification codifies work that had already been ongoing in the Society of Motion Picture and Television Engineers (SMPTE), the specification is important in establishing a content owner framework for the distribution and security of first-release motion picture content.

Digital cinema conforming to the DCI Standard is referred to within the film industry as D-Cinema while all other forms of digital cinema are referred to as E-Cinema. Thus, while D-Cinema is a defined standard, though one that is still partly being framed by SMPTE as of 2007, E-Cinema may be anything, ranging from a DVD player connected to a consumer projector to something that approaches the quality of D-Cinema without conforming to some of the standards. Even D-Cinema itself has evolved over time before the DCI standards were framed. However, the current DCI standards were made with the intention of standing the test of time, much like 35 mm film which has evolved but still retained compatibility over a substantial part of a century.

In addition to DCI's work, the National Association of Theatre Owners (NATO) released its Digital Cinema System Requirements.

The document addresses the requirements of digital cinema systems from the operational needs of the exhibitor, focusing on areas not addressed by DCI, including access for the visually impaired and hearing impaired, workflow inside the cinema, and equipment interoperability. In particular, NATO's document details requirements for the Theatre Management System (TMS), the governing software for digital cinema systems within a theatre complex, and provides direction for the development of security key management systems. As with DCI's document, NATO's document is also important to the SMPTE standards effort.