The State of the 3-D War

3-D seems to be all the rage these days. Nearly every movie is hitting the theaters with a 3-D version. As far as movie theaters are concerned, this is finally a leg up. With the size of home theater screens increasing and prices dropping, it's becoming harder and harder to get people into the theaters. Theatrical admissions have stayed relatively flat over the last 10 years though higher ticket prices have contributed to a general rise in revenue. Overall, going to the movies has continued to be the most popular form of entertainment with more people doing so than all major sporting and theme parks combined. This is primarily due to lower ticket prices.

But with 3-D in the mix, this might change. Ticket prices for 3-D movies are typically a little more than a $3 premium than standard tickets. In the case of the recently released Monsters vs. Aliens, even though only 2,080 of the 7,300 screens were 3-D, they accounted for 56 percent of the movie's gross. People are excited about 3-D, at least for now.

The fact is that anyone in the consumer electronics industry has been aware of 3-D for some time. Manufacturers have been working on versions of 3-D displays and using them to lure convention goers into their booths. Generally, they take one of two forms - a prismatic screen that doesn't require glasses but has inconsistent results (especially off axis). The other, more typical, solution requires glasses. Currently, there are a number of displays on the market by Samsung and others that work with HTPCs (home theater PCs).

More and more 3-D home products are showing up including to the PS3 and Mac (soon on the XBox 360) through a program created by Next3D. Panasonic is even how working on a 3-D camcorder for home use. It has dual lenses and it'll recorded in 1080p to P2 cards (a high capacity storage card that will store up to 64GB currently). A Korean company (CompoBank) is even releasing a 3-D camera and photo frame this fall. 3-D is coming to your home whether the movie theater likes is or not. But the problem is that only the newest displays have 3-D capability.

Currently, if a studio wants to make a 3-D movie it costs an extra $10 million to $15 million. Don't expect that number to come down either. As effects and the 3-D technology evolve, prices are more likely to increase. What movie makers really want right now is more 3-D outlets not less. With the annual licensing and maintenance cost for a Real D theater at $25,000 to $30,000 per screen, movies are fighting for limited 3-D space. Coraline's director Henry Salick highlights this issue, "We were given only three weeks on the 3-D screens." Other new releases bumped it long before it's run was concluded.

UK BSkyB satellite TV provider is calling for 3-D now, not later. "We can deliver 3-D to people's homes using the investment we have already made in broadcasting," said Gerry O'Sullivan, director of strategic product development. "I think that should be the first step for 3-D in the home." Strong words for sure. There have already been tests in the US demonstrating that our infrastructure can support 3-D. So the question is when?

More likely, the movie theater owners are hoping never.

While it makes sense for content providers to have as wide penetration of 3-D as possible (can you imagine what a 3-D Blu-ray disc will cost?), theaters are investing a lot of money in the hopes that they'll keep customers coming (or coming back). HD, VCRs, and wide adoption of TV ownership didn't stop people from going to the movies, it's unlikely that 3-D will either. But in the current economy, any output of money by a theater has to come with some expectation of returns. At an estimated $100,000 per screen conversion cost, this is no modest expenditure.

But they have an ally in this - hubris. Panasonic, Mitsubishi, Samsung, and Philips are all working on 3-D technology. What do you want to bet they aren't exactly working together? Panasonic is working with James Camereon on this (predicted to be) landmark Avatar 3-D movie. This may give them a bit of a perceived edge, but we all know from the HD DVD and Blu-ray battle that it isn't always enough. Disney motion pictures group president Mark Zoradi has already recognized the impending war and has called for manufacturers to be "flexible." If a 3-D format war takes place, the theaters can sit back and sell tickets while the manufacturers fight amongst themselves. Let's hope the display manufacturers band together rather than spit apart. If they don't, we may not see a viable in-home 3-D solution for quite some time.