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.

My year-end waste of time: Predictions for 2012

I've decided to participate in one of the most potentially embarrassing annual blogging rituals: Predictions for the coming year. So, for what it's worth, here are my predictions for 2012, in no particular order:

eBooks and Publishing

• Both the European Commission's Directorate for Competition Law and the U.S. Justice Department will file suit against Apple and five of the "Big 6" trade publishers (Lagadere's Hachette publishing group, News Corporation's Harper Collins, Holtzbrinck's Macmillan, Pearson's Penguin Group and CBS' Simon & Schuster) for eBook price-fixing under the agency pricing model. Bertelsmann's Random House most likely won't be charged, because it joined in agency pricing long after the other five publishers. All the companies charged will strongly deny any conspiracy to fix prices, but they'll all eventually agree to a consent decree (and the European equivalent) before the cases go to court. The settlement will require Apple and the publishers to make cash payments for consumer damages, and the agency model will be discarded. eBook distribution will go back to the wholesale model.
• There's also a possibility that the U.S. government and European Union will use the antitrust litigation as a lever to force the Big 6 to make their eBooks available to libraries on commercially reasonable terms. Currently, only Harper Collins and Penguin make their titles available for library lending, and both companies impose significant restrictions.
• eBook sales in early 2012 will follow the same pattern as the last few years--there will be a huge burst of sales in January and February as millions of consumers who received eReaders and tablets as holiday gifts stock up on titles. However, the year-to-year growth rate in eBook sales will drop, due both to the increased share of eBooks as a percentage of all book sales and higher prices from the Big 6 publishers.
• Even though the growth of eBook sales will slow, print sales will continue to decline. Independent booksellers in the U.S. won't pick up the slack from the closure of Borders, nor will they make big strides in increasing their overall share of U.S. book sales.
• The Big 6 publishers' pricing policies will continue to encourage sales growth for smaller publishers and self-publishing authors, as consumers experiment with less-expensive titles and find that many of them are just as good as titles from the top publishers.
• While the number of titles from medium, small and self-publishers continues to grow, the Big 6 will continue to cut back on the number of titles that they release, focusing even more on pre-sold authors and titles, series and backlist titles that are reissued with a variety of value-adds.
• The "eSingle revolution" (short eBooks, no more than 50,000 words and typically 30,000 words or less) will grow, with more conventional book publishers offering titles. In addition, more media companies from other fields (magazines, broadcasting, cable and the web) will enter the eBook market with eSingles, either by themselves or in partnership with established book publishers.
• $99 will become the top-end price for dedicated eReaders sold in the U.S.; someone (probably Amazon) will go to $49-$59 for an entry-level model. The ad-supported/no-ads issue will become moot, as consumers show that they're perfectly happy with a cheaper, ad-supported eReader.
• The tablet market in 2012 will look very much the same as the market at the end of 2011: Apple will continue to dominate the high end of the market, with two lines of tablets: A new "iPad 3" (although I'm not sure that'll be its name) at the current iPad 2 prices, and the existing iPad 2, possibly with fewer storage and broadband options, at $100 or so below its current prices (for example, $399 for a 16GB model). At the low-end, a variety of tablets will compete in the $149 to $249 range, led (at least for the first few months) by Amazon. I wouldn't at all be surprised to see Barnes & Noble drop prices of both the Nook Color and Tablet by $50, to $149 and $199 respectively.

Cameras & Camcorders

• We're almost certain to see new cinema camera models from Canon in 2012. The prototype cinema camera based on the EOS body will be launched, as well as at least one new model in the C3XX range, with improved electronics including auto-focus, auto-aperture and auto white balance and 10-bit log output. The new EOS model could be announced as early as NAB in April, and the new C3XX model is likely to be shown at IBC in September.
• Panasonic's AG-AF100/101 is getting a little "long in the tooth", so I expect a refresh of the model in time for NAB in April. I also expect the GH3 to be announced in the first half of the year.
• Given all of Sony's 2011 EVIL, DSLR and camcorder announcements, I don't expect any big announcements from Sony in 2012.
• AVCHD 2.0 (also called AVC Progressive) will become ubiquitous on all new cameras and camcorders supporting AVCHD.

Motion Pictures

• We'll see major consolidation at the U.S. movie studios, like what we've already seen at Paramount, with even deeper cuts. Studios will become even more conservative about which titles they greenlight for production, continuing to focus on remakes, series and pre-sold titles (very much like the big publishers). This risk minimization strategy will lead to even more boxoffice and home video revenue declines.
• Online movie rental services such as Netflix and Amazon will continue to increase their share of home video revenues, but what could have been a huge win for Netflix will be a much more competitive market, due to Netflix's self-inflicted wounds from 2011.
• Studios will rethink the value of 3D given audiences' rejection of the format, and will put more effort into using 3D well on a smaller number of "event" titles. That means that 2D-to-3D conversion, which has never worked well, will go away. Studios will have to come to grips with the fact that 3D, like Blu-Ray before it, will not be their financial savior. Even well-done 3D won't save movies that audiences don't want to see.
• UltraViolet, the "online digital locker" system supported by most of the major studios, will fail to get significant market share, although the studios won't give up on it in 2012. Consumers will find it too hard to use, not worth the effort and not a compelling reason to go back to buying DVDs and Blu-Ray discs.
• With an handful of exceptions, independent films will reach audiences through VOD and online streaming services, not through theatrical exhibition or sales of physical media.

3D: Not dead, but headed for a niche

The New York Times has an article about the back-to-back poor boxoffice performance of 3D versions of "Pirates of the Caribbean: On Stranger Tides" and "Kung Fu Panda 2". "Pirates of the Caribbean" only sold 47% of its tickets in 3D, and "Kung Fu Panda 2" only sold 45%, even though both movies were heavily promoted as 3D titles. In fact, 3D's share of boxoffice revenues has been declining almost since "Avatar" left the theaters. Audiences are getting tired of movies that were originally shot in 2D and then poorly converted to 3D (like "Clash of the Titans" and "Thor"), along with the low brightness, glasses and headache-inducing qualities of 3D as shown in most theaters, and, perhaps most importantly, the steep ticket prices.

As the New York Times points out, the movie studios have a bumper crop of 3D titles coming out this year, and the industry has become dependent on 3D's higher ticket prices to try to compensate for declines in DVD sales and the failure of Blu-Ray to pick up the slack. It now appears that 3D isn't the "Hail Mary" pass that the movie industry was looking for.

That doesn't mean that 3D is dead, but it does mean that the studios will have to become a lot more selective about the movies they release in the format. 3D needs to be reserved for "event" movies that can truly take advantage of the effect--the novelty of 3D for its own sake has worn off. Studios also have to drop 2D to 3D conversions; the audience has caught on, and we're rapidly approaching the point where it will cost more to do the conversions than the incremental revenues that movies will earn with 3D.

The studios also have to, once and for all, get over their spending addictions. DVD sales underwrote a wild period of production and marketing cost escalation, but since the Great Recession, the studios have been looking for replacements for DVD revenues like crack addicts looking for a fix. It's time for the studios to go into rehab. Average production costs of $150 million or more have got to drop to more reasonable amounts. The studios can easily afford 3D becoming a niche format for special events, but only if they bring their spending in line with market realities.

Panasonic to intro Micro Four Thirds 3D lens by year-end

According to Engadget, Panasonic is working on a 3D lens for its Micro Four Thirds cameras (G1 and G2), and plans to ship it by the end of the year. The 3D lens will use the Lumix G-series mount. It will operate on the same principle as the snap-on 3D lens just announced for the HDC-SDT750 camcorder; the right and left eye images will be split and recorded together on one imager. The focal length and aperture range of the lens hasn't yet been disclosed, and the lens shown by Engadget is still a prototype.

Panasonic is clearly very serious about 3D for both camcorders and DSLRs, and it'll be interesting to see how other manufacturers respond.

Panasonic's new consumer 3D (maybe) camcorder

Panasonic has formally announced the HDC-SDT750, a consumer-targeted 3D camcorder. Instead of creating a true full HD 3D camcorder, which would have required two imagers, Panasonic uses a snap-on 3D lens that splits the right- and left-eye images and sends each one to half of the imager, resulting in a 960 x 1080 image for each eye. Both images are captured in one 1920x1080 frame. (When the 3D lens is removed, the camcorder can be used for conventional 1080P recording.) About the only thing you'll be able to do on Day One will be to run the video from the camcorder out to a 3D HDTV for direct viewing, but I suspect that Adobe and Apple will build support for Panasonic's format into future versions of Premiere Pro and Final Cut Studio. The HDC-SDT750 will ship in October, priced at $1,399 in the U.S.

It may require a new generation of game consoles to do true 3D

The first reviews of Sony's 3D games for the PlayStation 3 are coming in from E3. Keep in mind that the games being shown are alpha or even pre-alpha, so the experiences that reviewers are having could improve by the time the games are released. Nevertheless, reviewers are complaining that the resolution of 3D games is significantly lower than that of the same games in 2D mode. In addition, the requirement to use 3D glasses both decreases contrast and makes everything look darker; this is especially a problem with adventure and first-person shooter games that already fairly dark to begin with. The combination of these two problems makes some games much less enjoyable in 3D.

The reason that the resolution of 3D games is significantly lower than the same games in 2D is that the game console has to render images twice as fast in 3D than in 2D. Even the vaunted Cell processor in the PlayStation 3 doesn't have the horsepower to double its rendering speed for complex images, so game designers have to render lower-resolution images for 3D and hope that the 3D effect compensates.

It may take a new generation of game consoles to provide 3D games that look as good as today's 2D games. Nintendo is hinting that the successor to the Wii will be built for 3D from the ground up, and Sony's likely to find that it will take a PlayStation 4 to truly do 3D justice. Dual GPUs are likely to be needed in order to render graphics equal to the best of today's 2D games for 3D.

Microsoft's Applied Sciences Group demonstrates glasses-free 3D system

At last month's SID conference in Seattle, Microsoft's Applied Sciences Group demonstrated a 3D display technology that doesn't require glasses. It uses a "wedge lens" which modifies the critical angle of light coming from the lens/backlight to determine the direction and location of light coming through the LCD. The system also requires a camera to determine the location of viewers in order to provide a convincing 3D effect, but Microsoft's new Kinect (formerly Project Natal) should do the job.

There are some limitations to the system: A minimum 240Hz refresh rate is needed for two people to be able to simultaneously view 3D video, and the viewing angle is currently only 20 degrees, although Microsoft hopes to increase it to 40 degrees. Microsoft is also encouraging LCD manufacturers to go beyond 240Hz in order to increase the number of simultaneous viewers.

My belief is that 3D in the home won't really take off until glasses-free systems become practical, both technically and economically. We may still be five years away from that happening, but once it does, demand for 3D will explode.

Sony to clone Panasonic's 3D Camcorder

Engadget has published a picture of a prototype 3D camcorder from Sony that's based on its XDCAM PMW-EX3. It looks very much like the dual lens from Panasonic's AG-3DA1 3D camcorder has been transplanted on the front of the EX3. We're likely to see this camcorder "in the flesh" at IBC in Amsterdam in September, if not before then.

Attention 3D filmmakers: Here's your $300 iPhone app

Want to calculate parallax and lens separation for shooting 3D film and video? RealD has the iPhone application for you--the RealD Professional Stereo3D Calculator. It does lots of great stuff, including automatically calculating the settings for each shot that will keep parallax within preset maximums. But that's not why I'm writing about it.

The reason I'm writing about it is...well, let's do it like the voiceover for a movie trailer: "In a world where iPhone apps cost $9.99 or less, RealD has released a $299.99 iPhone app! They dared to mark it down from $300! Directed by James Cameron and featuring 10-foot-tall, blue, furry iPads that don't cost much less than RealD's application, and Munchkin-sized iPhones that cost much less, the RealD Professional Stereo3D Calculator with improve your parallax and lighten your wallet!"

It may be worth the money, but it seems expensive to me. Any bets on how soon we'll see a comparable application in the App Store for under $30?

Panasonic may be making the biggest news at NAB

A few years ago, I was at NAB when Panasonic announced its P2 flash memory camcorders and media. They were models under glass, not even working prototypes. The P2 media was going to be very expensive, capacities were low, and the whole idea of using flash for professional video production was untested. Sony had recently introduced its XDCAM optical disc technology, and the company laughed at Panasonic for moving to P2. Flash forward a few years, and flash memory has become the standard for most video production; even Sony has jumped in with both feet. In a few years, I think that we'll look back and see that Panasonic is doing the same thing this week.

The first big news is the $21,000 AG-3DA1 3D camcorder. There are a number of things that make the AG-3DA1 interesting: First, it's a one-piece 3D AVCHD camcorder that records in 1080p and 720p at frame rates up to 60fps, depending on resolution. It can adjust and track convergence points and horizontal/vertical alignment from within the camera, without using a separate computer. It uses dual SDXC cards for storage and weighs just over 6 pounds (2.8 kg). In short, it's a professional 3D camcorder that you can take out and start shooting with immediately. 3D production is much harder than shooting in 2D, but the AG-3DA1 could make 3D both easier and faster.

The second major announcement is the (estimated) $6,000 AG-AF100, which I wrote about earlier this week. The AG-AF100 takes the guts of Panasonic's Micro Four Thirds digital still cameras and puts them in a camcorder body. The biggest single complaint that cinematographers have with DSLRs is that their ergonomics are designed for photography, not video, so they have to kludge together eyepieces, external monitors and mounting hardware to make DSLRs handle like camcorders. The AG-AF100 offers the sensor size and interchangeable lenses of DSLRs together with the ergonomics and features of a professional camcorder.

The AG-AF100 is a harbinger of what's to come. Consider what would happen if Canon put a 7D, 5D Mark II or 1D Mark IV, or if Nikon put a D3s, in a camcorder body: High resolution, big sensors, multiple frame rates and interchangeable lenses (including some new killer prime lenses from Zeiss.) If you've been following the DSLR shootout that Zacuto's been doing, you know that the new DSLRs can do things that motion picture cinematographers have dreamt about for years. Put that capability into a familiar package,  and you redefine the professional camcorder business.

The AG-3DA1 and AG-AF100 are both game-changers. Even if they don't go on to be big sellers, they're establishing new directions for professional camcorder design that will fully play out over the next few years.

3D Comes to Cable

There were two announcements of new 3D cable networks at CES today. ESPN announced plans for a new 3D network, as did a joint venture among Discovery Communications, Sony and IMAX. ESPN's channel will launch this June and broadcast a minimum of 85 3D sporting events in its first year, the first one being a World Cup soccer match between South Africa and Mexico. The 24-hour Discovery/Sony/IMAX channel will launch next year and will feature programming from a variety of Discovery's channels.

It's far too early to tell whether these channels will turn out to be short-lived gimmicks or pioneers of a new generation of broadcasting. However, it's likely that other networks will follow suit, launching their own 3D services and putting additional demands for channels onto already crowded cable, satellite and IPTV systems. In turn, this will spur cable operators in particular to move even faster to Switched Digital Video and IP Video architectures.

As a practical matter, if you're in the market for a new HDTV display, you should probably go for one with at least a 120Hz refresh rate. There are no guarantees that it will work with 3D content, of course, unless the manufacturer says that it does.