Since Sony firmware update 2.00 for the FX3, a bunch of videos have popped up on YouTube trying to explain how Cine EI works but most miss the mark. Alister Chapman has written a virtual encyclopedia on the subject but it will make your eyes glaze over before you lapse into a permanent coma. Hopefully, this helps clear up the musunderstandings.
Typically, videographers have increased ISO in order to shoot in low light and lowered ISO in bright light. Increasing ISO does not increase the sensitivity of the sensor, it just applies gain to the signal, increasing noise and not doing any favors to the dynamic range, which can fall off a cliff at higher ISOs on certain cameras. Cine EI works differently, some would say counter-intuitively: in low-key scenes or in any situation where there is an abundance of important shadow information, you would reduce the EI (giving the sensor more light) and when you need to protect highlights, you increase the EI. The total dynamic range remains unchanged; what happens is that at low EIs, you’re allocating more stops of dynamic range below middle gray, along with less noise, whereas at higher EIs, more dynamic range is allocated above middle gray (along with increased noise). So, for example, with the RED Komodo, which works in a broadly similar fashion, if you’re shooting a moody interior, you might rate the camera at ISO 400, while in a bright scene, ISO 800 or 1600 would be more appropriate. We’ll risk stating the obvious: that while some digital cameras that deal with ISO in the traditional way may very well have greater dynamic range and latitude than one with an EI based method, when it comes to cameras that do employ EI, the benefits are significant for those particular cameras. EI allows you to prioritize where the dynamic range is distributed; it does not increase the total dynamic range. As for the new monitoring LUTs on the FX3: we would not gamble on the crappy LCD for evaluating exposure as exposure tools are far more reliable.