Monday, June 24, 2013

Does 3D stand for "Dead, Dead, Dead?"

Industry blog "The Wrap" reports that first-weekend 3D ticket sales for "Monsters University" and "World War Z" represented the smallest percentage of total sales since the introduction of digital 3D to theaters. "Monsters University" took in 31% of its revenues from 3D ticket sales; prior to that, the least successful 3D animated movie release was "Brave," with 34% of its tickets sold for 3D showings. "World War Z" took in 34% of its revenues from 3D ticket sales; the previous low was 40% for "Captain America." 3D hardware vendor and licensor RealD tried to put a good face on a bad situation by pointing out that "Man of Steel" opened with 41% of its revenues from 3D ticket sales. The problem, of course, is that 41% number was only 1% higher than the previous all-time low.

Last week, ESPN announced that it's shutting down its ESPN 3D channel because of low viewership. According to the Associated Press, FIFA, the organization behind World Cup soccer, is considering whether to drop 3D coverage of the 2014 World Cup because of cost, and instead is considering 4K Ultra HD coverage. Sales of 3D HDTVs in general are difficult to break out because high-end devices tend to be compatible with 3D whether or not consumers actually use the 3D features. Nevertheless, there's a fairly clear trend toward sales of lower-priced HDTVs that can't support 3D.

Consumer electronics companies have largely come to the conclusion that 3D is a dead end, and are instead focusing their attention and development resources on Ultra HD (UHD). UHD doesn't require glasses and doesn't cause the headaches and dizziness that some people get with 3D. The movie industry is already well along with its transition to 4K production and post-production; the biggest remaining issue is coming up with cost-effective ways to deliver 4K movies. Television producers are further behind because of the lack of a UHD broadcast standard, but the cost of 4K equipment is dropping rapidly, and television shows can be produced in 4K but down-converted to 2K for broadcast.

3D in theaters won't go away, but if the average percentage of box office revenues from 3D falls to 25% or so, studios will have to become much more selective as to which movies are produced in or converted to 3D. Eventually, studios will be forced to drop 3D if the cost of production and post-production is equal to or greater than the incremental revenue that they earn from 3D ticket sales.

Update, July 5, 2013: Yesterday, the BBC announced that it will suspend 3D broadcasts "indefinitely" because of a lack of viewer interest. Coming on the heels of ESPN's decision to discontinue ESPN 3D, the BBC's action makes it even clearer that, for now at least, consumer big-screen 3D in homes is dead. That doesn't mean that 3D is dead everywhere, however. Theatrical 3D remains viable, although audiences have gotten much more selective about which 3D releases they're willing to pay for. Oculus's immersive Rift 3D visor is getting positive reviews and lots of interest from game developers, but the real test will be when Oculus releases its consumer-grade hardware and publishers release 3D games for the device.

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