Have you noticed the abatement in hype surrounding 3-D TV? The question cries out: What has happened to last year's declared “breakthrough technology of the year?” That such a declaration was made at the Consumer Electronics Show is no surprise, for who but consumer electronics manufacturers stand to gain most by hyping 3-D as the latest and greatest living room must have?
In a study by Retrevo, it found the average price premium for a 3-D TV receiver over a standard 47in-50in HDTV receiver, which once stood at just over $900 in July of 2010, had decreased to $400 by July 2011. Despite the narrowing of that price premium, set sales still are lackluster. The study also projected that, by this year's holiday shopping season, price premiums would be down to just $150-$200. So, set manufacturers are hopeful a minimal price premium will attract more consumer interest in 3-D. An emerging new sales strategy now is to promote 3-D as a feature of an HDTV set, much like sets being marketed as Internet-ready.
Perhaps the lack of consumer interest in 3-D TV sets for homes is not a pricing function at all. It just may be that 3-D is again fading. The movie theater environment, where ticket purchasers have essentially committed to spending a couple of captive hours, is the ideal setting for 3-D viewing. But, even here, interest is waning.
With each 3-D fad reincarnation, a new generation of viewers is introduced to it by a Hollywood forever looking to enhance box office receipts. Several years ago, Hollywood created the current 3-D wave as a way to enhance revenue, and, at its peak in 2010, theaters charged as much as a 25-percent premium over standard 2D ticket prices.
Since then, however, despite more than twice as many 3-D releases in 2011 versus 2010, box office admissions through Labor Day weekend were down 5.1 percent, and box office revenue down 4.3 percent compared to the same period in 2010. The ticket price premium today for the 3-D version of a movie is now as little as a dollar. The public's latest fascination with 3-D seems to have peaked in 2009 with “Avatar,” when 3-D ticket sales accounted for a whopping 85 percent of its total gross. In 2011, in the latest release of the successful “Pirates of the Caribbean” franchise, 3-D ticket sales accounted for only 47 percent.
On the television side, ESPN 3D launched with great fanfare in June 2010, but appears to be on the verge of dying. It continues to broadcast with virtually no viewership only because it still has ad revenue. Who are the sponsors? If you said consumer electronics manufacturers that are trying to hype 3-D set sales, well done.
In a September interview with the New York Post, TVPredictions.com publisher Philip Swann said he believes 3-D has scared and confused consumers — and is now tanking the entire retail television marketplace. Swann also predicts display manufacturers will give up on advertising on ESPN 3D, at which point it will go dark.
Forward-thinking Mark Cuban, who started up the 24-hour, all HD channel HDNet when there was virtually no HD, put it pretty succinctly when he said, “3-D on TV is a bust.”
Also owner of the Dallas Mavericks, Cuban's insight went deeper.
“On the Mavs' run to an NBA championship,” Cuban said, “despite me always throwing stuff at the 3-D cameras and having fun with them, not a single person mentioned the 3-D broadcast to me.”
The Nielsen Company, in its recent “State of the Media: The Cross Platform Report,” said two-thirds of television households now have HDTV sets. So, with households without HDTVs approaching 40 million, there is still a huge remaining addressable market for HDTV. Clearly, penetration will never be at 100 percent. But, add to that the second set and replacement market for existing HD households, and that defines a market still in the tens of billions of dollars.
So, why is the CE industry trying to sustain life in the gasping canary of Hollywood's 3-D coal mine?
The CE industry should be advertising on your TV station for that multibillion dollar HDTV market. It is an opportunity to be leveraged, while another run at 3-D, consumer-be-damned, we know will come.
Anthony R. Gargano is a consultant and former industry executive.
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