Will 2011 Be 3D Blu-ray’s Year?

3 Jan, 2011 By: Chris Tribbey

It started with the International Consumer Electronics Show and ended with Oprah.

2010 was home 3D’s coming out party, with every major consumer electronics company debuting 3DTVs and 3D Blu-ray Disc players, and roughly a dozen content owners taking the leap and releasing titles on 3D Blu-ray Disc. Research firm The NPD Group reported that 15% of Blu-ray Disc players sold during the important Black Friday weekend were of the 3D variety, and a full quarter of Blu-ray players available at retail by mid-November were 3D capable, according to the Blu-ray Disc Association.

“The biggest story of 2010 for our industry was certainly the launch of Blu-ray 3D,” said Lori MacPherson, EVP and GM of Walt Disney Studios Home Entertainment. “The opportunities that it presents for creative and immersive in-home entertainment are immense.”

“The launch of Blu-ray 3D has certainly been impactful at a time when consumers have demonstrated a demand for high-quality 3D content, both in theaters and in their living rooms,” added David Bishop, worldwide president of Sony Pictures Home Entertainment. “With the success of recent theatrical 3D films and with many more high-profile 3D releases on the horizon, now is the ideal time to bring that experience into the home.”

London-based Futuresource Consulting estimated that 3DTVs accounted for nearly 5% of flat-panels sold in the United States for the year, and Jim Bottoms, director and co-founder of Futuresource, credited that to a quick 35% to 40% drop in initial 3DTV prices in major markets.

“I think realistically everyone should feel pretty happy with 3DTV sales [in 2010],” he said. “First-year sales have outstripped first-year HDTV sales and when the consumer was also switching to panel TV from [cathode-ray tube TV] and, in the U.S., to widescreen.”

Indeed, a late-December report by The Nielsen Co. revealed that of approximately 27,000 online consumers across 53 countries, 13% said they already own or “definitely will” purchase a 3DTV set in the next 12 months, and an additional 15% said they “probably will” purchase a 3DTV.

“The DEG is enthused by the positive response of consumers and initial uptick in 3DTV sales,” said Amy Jo Smith, executive director of DEG: The Digital Entertainment Group. “We believe that bringing 3D to the home will be an exciting driver for viewing content by all age groups.”

Lastly, in late November Oprah Winfrey listed 3DTVs among her “ultimate favorite things” on her nationally syndicated TV show, likely bringing smiles to every consumer electronics company in America.

But while some of the numbers for 3D Blu-ray are bright, one number may be cause for concern for 3D in the home: 40. That’s roughly the number of 3D Blu-ray Discs released in 2010, with nearly half of those tied in to a specific 3D hardware purchase.

The Panasonic tie-in with 20th Century Fox Home Entertainment’s Avatar, the all-time box office king, may be especially disconcerting for owners of LG, Samsung or Sony products, after it was reported that arrangement will last until early 2012.

“There are definitely too few,” said Chris Chinnock, president of Insight Media, which oversees the cross-industry 3D@Home Consortium. “Consumers want more content to buy 3DTVs, and 40 discs are not enough.”

Adam Gregorich, administrator with the Home Theater Forum, said the number of tie-ins has to be especially upsetting for owners of new 3DTVs. He pointed out that owners of a new Panasonic 3DTV are already shut out of all the tie-in titles from other manufacturers, such as Sony and Samsung, including the “Shrek” collection and Michael Jackson’s This Is It.

“I don’t think the title support has been nearly enough there,” he said. “It’s a chicken and egg argument, but there’s not much out there for 3DTV owners.”

The lack of ‘A’-list 3D Blu-ray content has created a second-hand market for bundled 3D Blu-ray titles on eBay. A week before Christmas, the asking price for the 3D Blu-ray of Bolt was as high as $125, while Avatar was going for as much as $400.

“I’m embarrassed to say I spent $86 for How to Train Your Dragon,” Gregorich admitted. “I would have spent that money for two 3D Blu-rays at Best Buy, but let’s be honest. These Imax titles [available there] are special interest. I want the blockbusters.”

He pointed to the four-disc 3D Blu-ray combo releases of Alice in Wonderland from Walt Disney Studios Home Entertainment and Despicable Me from Universal Studios Home Entertainment.

“That’s the way to sell it,” he said.

Yet Scott Hettrick, publisher and editor in chief of HollywoodInHiDef.com, said there’s a good reason for the trickle of releases so far: The studios can get a premium from consumer electronics companies for an exclusive license window for the bigger titles, much more than they could get by releasing more titles straight to retail. And “filmmakers are reluctant to make their titles available in the early days, knowing that initial sales will be so tiny,” he said.

“As the market becomes bigger and more lucrative, and as consumer electronics companies like Panasonic and Samsung are less willing to fork over huge premiums for exclusives, every title will soon be available at retail,” Hettrick said. “We’ve already seen the second biggest 3D title, Alice in Wonderland, leave its exclusive window with Sony and come to retail.”

And Futuresource’s Bottoms added that while bundling may frustrate consumers and discourage retailer support of 3D Blu-ray, “Who can blame Fox for taking an offer from Panasonic that generated far more revenue for Avatar on 3D than they could have hoped to raise in 2011 from a 3D BD release of the title?”

Andy Parsons, SVP of corporate communications and new product planning for Pioneer and chair of the Blu-ray Disc Association promotion committee in the United States, noted that bundling is common during an initial launch of a new product, noting, “I think the practice makes sense business-wise for both the content providers and hardware companies when the initial installed base is small.”

“Of course we’d always love to see more content, but we know it takes time to get a new product category into consumers’ homes, and this never happens overnight,” he said. “Meanwhile, a number of strong 3D theatrical titles, both recent holiday releases and those announced for next year, suggests that we should see some very strong 3D content on Blu-ray 3D throughout 2011, which should help encourage more consumers to take the plunge.”

Chinnock said he believes that bundling won’t last much longer.

“It helped initially, but it will hurt going forward. Most recognize this,” he said. “There may be exclusive bundles in the future, but probably short-duration exclusives, So I would not be too concerned.”

Even before standalone retail 3D Blu-rays come in waves, Hettrick hopes brick-and-mortar retailers will start making room for 3D software, “even if it’s only a small section, to get customers excited and educated and let them be confident that their retailer is going to be on the cutting edge in offering the newest format.

“Even if there is a relatively small number of 3DTVs and Blu-ray players out there — estimated at anywhere from 2 million to 4 million by year’s end — the more Blu-ray 3D product and 3DTV networks and programming the better to make those early adopters more satisfied and, therefore, become evangelists for 3D in the home,” Hettrick added.

Russ Crupnick, VP and senior entertainment analyst for The NPD Group, agrees. He believes 3D Blu-ray will be only part of what makes home 3D launch.

“3D is a more holistic experience in that, unlike high-def discs, it will take pressure from sports programming, gaming and home video to push consumers toward 3D devices,” Crupnick said. “It’s more about concept adoption leading content availability.”

The DEG estimates that during 2011, about 25 3D video games and more than 1,000 hours of 3D broadcast programming will help supplement 3D Blu-ray. And in another study done by Nielsen, the Cable & Telecommunications Association for Marketers and CBS Vision, 64% of consumers surveyed after watching 3DTV content said they were most interested in sports in 3D. Six in 10 agreed 3D content was better than 2D, and nearly half said they found 3D content more engaging.

David Poltrack, chief research officer of CBS Corp. and president of CBS Vision, said he’s confident 3DTV is “just going to be a part of television” like cable and high-definition.

“No one has taken the really powerful TV dramas and made them with the eye toward 3D,” he said. “I think once that happens, you’re going to see regular television programming capturing [and] being enhanced by 3D, and people are going to watch special episodes of their favorite programs in 3D.”

Crupnick added that once the studios see a higher adoption curve of 3D hardware, they’ll be more apt to release more 3D Blu-ray titles, and retailers will start showing off their 3D Blu-ray section more.

“But we’re likely at least a year away,” he said.

Technicolor hopes it happens sooner. It began 2010 by partnering with Samsung and DreamWorks Animation on the first full-length feature 3D Blu-ray, Monsters vs. Aliens, and ended it by offering 3D Java interactive tools, 3D menus and 3D games. Doing all the 3D Blu-ray work for Warner Home Video, which had the most 3D Blu-ray releases at retail in 2010, the replicator has a major stake in the 3D Blu-ray game, according to Bob Michaels, Technicolor’s VP of worldwide DVD.

“From where we stand, we’d like to see more [releases],” he said. “The hardware guys told the industry this was real, and they’ve proven it.”

One of Technicolor’s main tasks regarding 3D Blu-ray has been “overcoming the nuances of the new players,” Michaels said. Every 3D Blu-ray must be tested on every 3D Blu-ray player available, and early on, some discs exhibited some trouble on some players. But those kinks have been worked out, and now that Technicolor has come close to pushing 3D Blu-rays off the line at the same pace as standard Blu-rays, “We have put ourselves in an accommodating position to go in whatever direction the industry wants,” Michaels said.

“There has been a lot of investment in developing the 3D Blu-ray authoring tools and quality control measures,” Chinnock said. “All the quality control stuff had to be invented, people had to be trained in 3D and to find problems, new workflows are needed and at least twice as much time is needed to author the disc.

“It is a costly and time-consuming process with control in the hands of only a few players,” he added. “There needs to be a pretty good return on this investment. I think you will see a steady increase in content release going forward.”

For 2011, a handful of titles have either been released or announced: Lionsgate will join the 3D Blu-ray ranks Jan. 25 with the release of a 3D Blu-ray combo pack of Saw 3D, Universal’s Coraline comes out on 3D Blu-ray Jan. 4, A&E Home Video’s The Universe: 7 Wonders of the Solar System gets a 3D Blu-ray release Jan. 11, and Image Entertainment will add to its 3D Blu-ray line-up with the March 29 release of Kenny Chesney: Summer in 3D.

Sony Pictures Home Entertainment, the first studio to release a 3D Blu-ray not tied into hardware (Cloudy With a Chance of Meatballs), will do it again Jan. 11 with Piranha 3D.

That offers hope for people like Gregorich.

“I want it to succeed. I think it will succeed. But we need more titles,” he said.