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Tuesday, May 27, 2008

3-D Cinema: A 2-D Perspective

Already faced with the problem of conversion to digital cinema, exhibitors now have the added worry of 3-D. Just as Cinemascope was created and adopted by theatres to get people away from that new gadget, the TV, now Hollywood’s newest lure is to give people that extra dimension they can’t get at home (yet).

On the distribution end, this concept will definitely float, because even if only a fraction of theaters are equipped with 3-D projection equipment, their film can still be screened on both formats. They already get the majority of the box office and nothing comes out of their pocket for the equipment on which it is projected.

However for exhibitors, it’s more sink or swim. If you’re not already equipped with 3-D (and chances are you’re not, since digital screens alone in the U.S. are only around 4,000 out of 38,000), here are your options. If you already own a D-Cinema projector, great, you only have to drop around $15-20,000 per screen to kick it up to the 3-D notch. If you’re looking to upgrade from your 35mm to 3-D, the sticker will be $100-150,000 per screen. For the big chains who are publicly traded, where’s that money going to come from, we’ve seen your numbers. And for the small circuits, good luck in finding the bank that’s willing to back you.

Once you have the money, here are some options. Real D, out of Beverly Hills, has developed software that upgrades your 2-D digital projector into the third dimension, but at a price of $20,000 per screen for the conversion and maintenance. The good news is you can gradually pay them back with a royalty fee of $.50 per ticket. After subtracting what the distributor takes off your box office, that $.50 can add up. And, just so you’re aware, with Real D you will need a silver screen. There’s good news if you don’t like the sound of installing a new screen, Dolby Laboratories has developed technology that uses your existing one.

To combat the bite of the price tag, exhibitors have been charging a higher admission for 3-D films over the boring old 2-D. So pose this to your average customer, would you pay $15 over $7 to see Indiana Jones come off the screen? Sure, but would you answer the same for Made of Honor, Baby Mama, and the rest of the 90% of releases that are not the heavy hitting blockbusters? Right now only ten films are slated to be released in 3-D in the next year, with possibly 20 following in the next. It is still a small number compared to the number of releases annually – over 450 for the year 2008.

And let’s not forget about the 3-D glasses. They’re not your parents’ glasses, they are special polarized ones, that, with Real D, will run you $2 a pair (recyclable yes, but they don’t have that environmental friendliness that more and more people are looking for), while Dolby’s glasses have a price tag of $40 a pair (reusable yes, but they will need to be cleaned by your staff and closely watched to prevent theft).

Let’s look to Hannah Montana for further analysis. “The Best of Both Worlds” 3-D concert film scored well, considering it only opened on 683 screens. $30 million was grossed in its first week in that handful of theatres, but Disney took 90% of it back before you blinked, and many of those $40 a pair glasses were damaged or walked off. It’s success could also be largely in fact due to that tweener demographic that has made Hannah Montana a sold out arena phenomenon. That, and the pressure of those little girls, “Well Kaitlin’s Mom is taking her to see the movie!”

With technology there’s always risk involved. The software and hardware you install today, could be replaced by the software and hardware they develop tomorrow. At least with 35mm, it’s the same device that has been used for over a hundred years, it’s mechanical, a belt breaks, you replace it. You oil its gears and it does its job. It won’t crash, it won’t require periodic system upgrades. Technology’s lifespan is somewhat short to that of something mechanical. Just as CD’s became MP3s and movies can be watched on laptops and iPods, it’s predicted that in the next five to ten years, 3-D will reach the home theater, at which point then, what will be the next fad to get people back?

- Tracy Janis