Black Level Performance
Excellent home theater type black levels don't start for the most part, until close to $2000 (US). All the sub-$1000 projectors are entry level with some variation. These lower cost projectors can look virtually as good on daytime and average lit scenes, as more expensive projectors. It's the really dark scenes where the differences can be substantial.
Keep in mind that big differences are reduced to small differences when there's more than a little ambient light. Even one small light in the back of a very dark room makes a massive difference on very dark scenes. It's the same reason why in my last home, where my primary viewing room was a great room, movie viewing was limited to evenings when at least ambient light was pretty low, but still present.
The assumption that you've chosen this Epson 1040 because you want a high brightness projector for rooms with more than a little ambient light, so by definition, black levels are far less important to you, than to anyone putting a projector in a dedicated home theater or "cave."
Even my many times more expensive Pro Cinema G6550, with 5200 max lumens has black level performance not significantly different than the HC1040.
Sharpness is also very good. This is a 3 chip projector as are all LCD projectors (thus the 3LCD moniker). Whether 3LCD, LCoS or those very expensive 3 chip DLP projectors (typically starting over $10,000), there is always some mis-alignment. That said, the alignment of this review unit was very good, and the overall perception is a very sharp image.
All of this adds up to a very enjoyable viewing experience, that I can recommend. Black levels, as noted, are purely entry level, but as also pointed out, while some DLPs under $1000 do better, when it comes to the rooms that the HC1040 is prepared to handle, those differences are very secondary.
If your room is much better light controlled, as I have indicated earlier, you could go with Epson's HC2040 projector for the same price, not quite as bright (about 1700 lumens with best color, vs 2300, if my memory serves correctly, but instead you get some other features.
Of the assorted DLP and LCD projectors down under $1000 targeting the home market, I do not believe I have reviewed any others that are as good when it comes to delivering good color in a less than ideal room when regarding ambient light.
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