Industries Are Ready For 3-D TV, But Are Consumers?

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Ready or not, a new era of 3-D 1080p (for each eye) high-definition video for the home is just around the corner. Executives from the largest Hollywood studios to the top-ranked consumer electronics companies demonstrated at a 3-D Summit, co-hosted in Los Angeles by TWICE sister publication Variety last week, that they are hell-bent on making this happen, and for the near term at least, it promises to bring CE retailers and manufacturers new profit opportunities. But to what level consumers will spend more on TVs for 3-D capability remains difficult question, especially if recent recessionary conditions continue.

Highlighting the bill was keynoter Jeffrey Katzenberg, CEO DreamWorks Animation SKG, who has long championed the cause of 3-D and enthusiastically pointed out that FullHD 3-D entertainment for the home is coming next year.

Katzenberg assured the audience that the first 3-D products would see price points starting at levels affordable by a wide audience. Yet he acknowledged that it may be some time before deep household penetration of 3-D TV systems is achieved, given the added cost and strong level of 2-D digital TV penetration.

In the meantime, Hollywood is rapidly beefing up the supply of movies shot and distributed in 3-D as theaters acquire the financing needed to add new 3-D digital cinema projectors across the country.

To illustrate the potential, Hollywood representatives said theater managers are using 3-D to boost the take on theatrical tickets by as much as $6 per ducat compared to the same features in 2-D. Attendance figures for 3-D features regularly exceed the draw for the same 2-D content, exhibitor representatives said.

Home entertainment companies hope the same will be possible for their products.

Currently, Samsung and Mitsubishi Digital Electronics America are selling 3-D-ready TVs designed to take signals from special entertainment PCs that play mostly 3-D video games. David Das, Samsung LCD/LED TV marketing director, and David Naranjo, Mitsubishi product development director, each said their companies are developing a migration path to make future 3-D-ready televisions compatible with forthcoming specs for a 3-D Blu-ray standard coming at the end of the year. They also said their companies will try where possible to make legacy products compatible with the new system standards.

Meanwhile, Panasonic and Sony, which are aggressively preparing to market 3-D systems that will be 3-D Blu-ray compatible and based on active shutter glasses technology next year, are expecting big results to be achieved within the next decade.

“Over time, I fully believe we will migrate, whether that is five years or eight years, to where the vast majority of televisions are 3-D-enhanced high-definition televisions,” said Bob Perry, Panasonic Consumer Electronics North America executive VP, speaking on a panel at the event.

“The availability of the product, content and accessories all put out in the marketplace, combined with a really compelling demonstration, is what is going to get the customer excited about this technology,” said Jeff Goldstein, Sony home division television product marketing VP.

To prime the pump, Mitsubishi added 300 merchandising displays to the floors of key retailers this year, said Mitsubishi’s Naranjo.

“People push a button and they can see a four-minute clip with a wide variety of content in 3-D and 2-D, from movies to sporting events,” he said. “After they see 3-D they want to have it, but, quite frankly, the question they ask is, ‘Where’s the content?’ ”

Meanwhile, work continues on a standard for 3-D Blu-ray Disc content. Special 3-D-capable Blu-ray Disc players and a new generation of enhanced Blu-ray media offering both 3-D and 2-D versions of the same 1080p movies will arrive next year.

“Blu-ray is the killer app for HD television, and I think Blu-ray is the killer app for home entertainment. Studios are trying to create a path to the living room in what, frankly, HD television has already created as an installed base, and Blu-ray is enjoying both sides of it. Anything we add as a feature set of Blu-ray is something we hope consumers would be attracted to and I’m interested in 3-D for that reason, because it adds some volume to what is already a great picture and audio experience,” said Chris Fawcett, Sony home audio-video group VP.

The Blu-ray Disc Association (BDA), meanwhile, said the format continues to use new feature sets and capabilities such as 3-D to exceed the introduction of the highly successful DVD format.

“The adoption rate of Blu-ray is really ahead of where DVD was at this point in its life in terms of content sales,” said Andy Parsons, senior VP of advanced product development of Pioneer Consumer Electronics USA and a point man for the BDA. “What we wanted to do was add 3-D functionality to Blu-ray in such a way that we would add value without breaking it.”

“The 3-D task force set out to come up with a series of recommendations or performance expectations that we want Blu-ray to deliver in 3-D. That would include things like: full 1080p per eye, and being fully backward compatible with existing 2-D players. So if you have a 3-D disc and put it on any 2-D player on the market, that player would be able to deliver the same 2-D experience that it always has,” Parsons said.

He continued that the BDA’s goal is to have a set of specifications fully completed and ready to deliver to all of the manufacturers that are in the BDA by the end of the calendar year. The specs will contain provisions for both the discs and the players.

“We’re adding another layer of functionality to the Blu-ray spec without requiring anyone to go out and buy a new player. They can buy 3-D when ever they like,” he explained.

Parsons said everyone is aligned “in the same direction.”

The spec, Parsons said, will be agnostic to the type or brand of television that displays the signal, including whether the televisions use active shutter or passive glasses technologies.

The spec will define for set manufacturers exactly what signal is coming out of the back of the Blu-ray Disc player so the set makers can design TVs to accommodate it.

“Things are moving well forward, and we are quite pleased with the progress we’ve made,” Parsons said.

As for potential demand, analysts speaking on another panel at the Summit, said 3-D TVs will carry a premium to start, but likely not at the same levels seen for HDTV when that system was introduced.

Paul Gagnon, director of North American TV research for The NPD Group’s DisplaySearch, said 3-D TV sales next will likely start out moving less than 2 million units next year, but, he added, that will quickly ramp up to more than 6 million in 2012 moving to 12 million in 2013.

As for consumer willingness to pay more for a 3-D product, Michelle Abraham, principal analyst at In-Stat Digital, noted surveys have found some reluctance to paying more for the ability.

In-Stat’s studies, she said, found that 54 percent of respondents are either very or somewhat intent on buying another TV set. But they were only willing to spend a less-than-$200 premium on a 3-D set over a 2-D version. Another 33 percent said they would pay less than $50 more for 3-D over 2-D.

“The consumer is not putting a high value on this over 2-D content,” Abraham said. “The perception could change. People seem to want a lot for nothing.”

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