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Analyst: 3D Movies Losing Appeal

23 May, 2011 By: Erik Gruenwedel

'Pirates of the Caribbean: On Stranger Tides'

While Disney’s Pirates of the Caribbean: On Stranger Tides dominated the domestic (even more so international) box office, 3D ticket sales waned, leaving one analyst to declare the U.S. consumer’s love affair with the format over.

Despite a record 2,747 theaters showing the movie on 3,708 (non-Imax) screens, Pirates 4’s 3D box office represented just 38% of overall box office revenue, compared with 57% for How to Train Your Dragon and 54% for Shrek Forever After during May 2010.

Pirates generated nearly 851 viewers per screen, down 32.6% from 1,129 viewers per screen for Shrek Forever and down 23.3% for Dragon with 1,049 viewers.

Richard Greenfield, analyst with BTIG Research in New York, said the downturn in 3D moviegoers underscores general fatigue with the format, in addition to the format’s premium pricing.

“If the exhibitors’ goal is to fill seats (to sell ultra-high margin popcorn), pushing 3D screens is starting to work against them,” Greenfield wrote in a .

In fact, Greenfield argues that had theater operators pushed Pirates in 2D (instead of 3D), overall attendance (and popcorn sales) would have increased. He said 3D screen allocation should have been limited to about 30% of total screens.

“To make matters worse, Pirates (and Thor) is the type of movie that is supposed to outperform in 3D given the ‘fanboy’ demo focus, compared to the animated/family segment were 3D is burdened by young children not wanting to wear 3D glasses,” Greenfield wrote.

The analyst said theater operators’ apparent indifference toward higher priced 3D tickets soon will backfire with the onslaught of 3D releases — most without the production quality of Avatar.

He said the upcoming weekend’s release of Kung Fu Panda 2 would see a child’s 3D ticket priced 40% more than a comparable 2D ticket. In addition to price, Greenfield said eye fatigue with the format is undermining 3D theatrical attendance. He advises studios to curtail 3D movie production.

“We believe they should start to limit 3D presentations of each film released — shifting the mix back in favor of 2D presentations,” Greenfield wrote.

Richard Schackart, analyst with William Blair & Co. in Chicago, countered that 3D movies are picking up momentum entering the summer season and poised to generate more than $1.7 billion in first-quarter (2012) box office.

In all, 21 movies are slated for 3D theatrical release this summer, including already-released titles Rio (April 15), Hoodwinked Too! Hood vs. Evil (April 29), Thor (May 6), Priest 3D (May 13) and Pirates 4.

“We remind investors that fiscal 2012 (March) will be the strongest year to date for 3D movies with an estimated 42 movies in the format to be released, up 55%, versus 27 movies in 3D in fiscal 2011,” Schackart wrote in a note. “If the slate of 3D films lives up to expectations, this summer will be the largest ever for 3D and by a wide margin.”

About the Author: Erik Gruenwedel

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