Studios See Big 3-D Bucks in 2010

Fans scrambled to see 3-D movies such as "Cloudy With a Chance of Meatballs" in theaters this year, and new 3-D televisions could soon have home viewers feeling as if they're surrounded by a spaghetti hurricane on their couches.

Next year, major electronics manufacturers Sony (NYSE: SNE) and Panasonic plan to introduce 3-D-capable high-definition televisions for the mass market. You'll still need to wear special glasses, though.

Movie studios hope 3-D can help lift the sagging home video market the same way it has pushed up box office results.

Buying In

The initial price of such sets is expected to be high -- perhaps 20 percent more than normal sets of the same size. But costs should come down in the coming years.

Depending on prices, 3-D-ready TVs could be in 28 million to 46 million homes worldwide by 2013, predicts Alfred Poor, an analyst with GigaOM Pro. He estimates that next year, as many as 2.5 million sets worldwide will be sold with 3-D capability.

"We're raising a whole generation of kids who expect to see this effect for their movies at home," said Poor. "I think people want 3-D. I just don't think they're going to want to pay a whole lot more for it."

To avoid the need for special screens, some manufacturers of TV sets are shunning the 3-D technology common in theaters in favor of what's known as "active shutter." That uses an infrared emitter on the TV to tell battery-powered glasses when to flicker the left and right lenses in conjunction with the images on the screen, which gives the perception of three dimensions.

The sets themselves will require relatively minor upgrades from today's models, but the glasses will cost more, raising the price of the overall package.

3-D Mania

There's no question 3-D movies are popular.

They generated more than US$1 billion at box offices worldwide this year, and on a per-screen basis, 3-D showings typically bring in more than double the revenue of regular screenings when a movie is offered in both versions.

For hits like Disney/Pixar's "Up" and 20th Century Fox's "Ice Age: Dawn of the Dinosaurs," more than half of ticket revenues came from 3-D screens, despite accounting for far fewer showings, according to research firm Screen Digest. Those screenings tend to fill up, and moviegoers are willing to pay a few dollars extra per ticket.

Making these 3-D movies hasn't been cheap, and so far there hasn't been an adequate way to recoup those higher costs in the home video market, which brings in far more dollars to studios than the theatrical release.

In September, DreamWorks Animation SKG released a two-disc pack of "Monsters vs Aliens" with just a 3-D bonus vignette accompanying a 2-D version of the movie. It comes with cardboard glasses with magenta and green lenses that create a 3-D effect. The so-called "anaglyph" technology is out of date and can distort colors but works with regular TVs.

"We think for 10 minutes or so, it's a fun experience, but it's not a great experience for an hour-and-a-half or two-hour-long movie," said John Batter, DreamWorks' co-president of production for feature animation.

The studio is considering a rerelease of the movie at higher prices using modern 3-D technology, followed by future releases after 3-D TVs become available next year. Batter said 3-D releases "will certainly grow over time and it will become I think a significant part of our home video business in a three- to five-year cycle."

Meanwhile, Universal Studios Home Entertainment released the stop-motion animated movie "Coraline" in July both in 2-D and 3-D with the cardboard glasses, but director Henry Selick said he was disappointed with the result.

"I wish they'd waited to do the home 3-D release until the technology caught up to what it was in the theaters," Selick told a conference last month. "I'm disappointed in how few people got to see it in the best possible way."

Push for the Living Room

As more living rooms are equipped for movies in 3-D, studios will have stronger incentives to release them for home viewing, especially as 3-D movies are expected to spend less time in theaters.

With about 30 3-D movies headed for theaters next year and only enough screens to show one major picture at a time, the average theatrical run will shrink to less than two weeks in 2010, down from nearly nine weeks in 2008, according to Charlotte Jones, a senior analyst with Screen Digest.

That could put more emphasis on recouping filmmaking costs on the home market, she said. But the home market is also coming under pressure.

U.S. home video revenues in the first half of 2009 fell 3.9 percent from a year ago to $9.4 billion, despite increases in rentals, Blu-ray disc purchases and orders for movies on demand over set-top boxes, according to an industry association, The Digital Entertainment Group.

Tom Adams, president of Adams Media Research, said 3-D videos could be the shot in the arm the industry needs, especially because it will take a lot longer for 3-D TV signals to reach people's homes by cable or broadcast.

"Among the early adopting crowd, they're going to go out and buy practically everything that comes out," Adams said. "It could be pretty lucrative for studios even if it's fairly small in terms of the number of households."

Cable and Tech Companies

Cable networks are experimenting with 3-D, too. Last month, ESPN hosted test screenings of a USC-Ohio State football game in four U.S. cities, following similar events put on by technology provider 3ality Digital.

Many technology companies are banking on a 3-D-at-home boom.

RealD, the leading provider of 3-D systems in theaters, is preparing to expand production of "active shutter" eyewear.

Sony has plans for a range of new 3-D products, from Blu-ray players and TVs to PlayStation games. Meanwhile, Sony Pictures Animation's latest 3-D feature, "Cloudy with a Chance of Meatballs," was an unexpected box office hit, and it could make its way into homes in 3-D once the technology catches on.

With standards being finalized and demand for 3-D content booming, "2010 is definitely the year for us to start the 3-D business," said Hiro Kawano, senior vice president of home products for Sony Electronics.

© 2009 Associated Press. All rights reserved.
© 2009 ECT News Network. All rights reserved.