3-D Tipping Points


In a recently
released report Eyes Wide Open: 3-D
Tipping Points Loom
, PricewaterhouseCoopers estimates that 3-D-capable television
sets will be in 15- 25% of all
U.S. homes in 2014, and that about 20-30% of
U.S. cinemas will be able to handle 3-D films. HD
Update contributor George Winslow talked to one of the report's authors, Vincent
Teulade, a director in the telecom media and technology in the consulting practice
of PricewaterhouseCoopers.

MCN: How do you see the prospects for 3-D?

Vincent Teulade: When
you speak with people involved in 3-D, they fall basically into two categories.
There are people who say, "Wow, it is coming on in a big way and everyone will
move to 3-D." Then on the other side, there are people are saying, "3-D was
launched in the 1950s and it never really took off, and that is what will
happen this time."

Vincent Teulade

If I tried to put everything in a nutshell, our analysis is
really that 3-D TV is here to stay, but not necessarily in the form of TV that
we are used to.

We believe that 3-D is really about immersion and it will
work best for genres and content where that is important. So video games are a
strong fit for usage in the home. We also think that one of the first uses in
the home will be for 3-D movies on home theaters.

Generally, you find hard core gamers in about 10% of homes
and home theater fans are also around 10%. So there is an early adopter population
that is large enough to enable an eco system and some viable economics to be

The real question is whether 3-D will go beyond these early adopters,
this 10% segment. And that is a different story, I have to say.

If you look at the 3-D movies, the genres that are a strong
fit for 3-D include animation. This is not so much because of immersion but
because of economics and the fact that it is a computer generated image [that
can easily be formatted for 3-D].

You also have some concert movies that will work very well
in 3-D. Those films account for about 9% of movies in the U.S.
and probably about the same proportion in Europe.

We are already seeing a strong push towards 3-D by animation
studios, because they are generating more revenue but the success or failure of
Avatar with a significant production
budget will be a real test for 3-D. If it is a success there are many producers
that ready to pull the trigger. If it is a failure it will delay the adoption
of 3-D.

The real change today for 3-D versus 1950s is that you have
digital 3-D technology that is really taking off in cinemas. In the first half
of 2009, revenues for U.S.
movie theaters and exhibitors increased even though the number of tickets
decreased because of 3-D.

The average movie ticket price in the U.S.
was $6.88, but theaters can charge an extra $2 for a 3-D film. That is a significant
premium for theater owners and the distributor/producers. It is even more
important if you remember that the movie economy is not great. It is not a very
profitable industry right now.

MCN: If 3-D has been successful in cinemas,
what are some of the big challenges facing people who are trying to bring it into
the home and spread the technology beyond the early adopters to a wider base?

VT: You have
several challenges. One of main ones for home theater usage is really the
standardization. The Blu-ray Disk Association is working on it but there is
still are no standards.

I don't think we are in a situation like Blu-ray versus HD
DVD. I think the industry learned from that. But they need to agree on some

Another challenge is even more basic. What is the customer
benefit for 3-D? We believe it is immersion and emotion.

So what are the forms of entertainment that are compatible
with value proposition? I think premium sports are compatible. They can be a
very immersive experience.

I don't know if you saw the 3-D demonstration that Panasonic
did with NHK's 3-D production of the opening ceremony of the Olympics in Beijing.
That was magical. When I saw it, I was like the kid who sees the bicycle going
up in the air in ET. It was that magical.

So live, big events -- sports, concerts -- will be compatible
with 3-D. But if you consider other types of programs like reality TV, you have
to wonder: What is the point?

Some movies, yes, are also compatible. But if you look at commercial
TV in the U.S.,
3-D movies might not be compatible with the rhythm of many channels where
programs are regularly interrupted by ads.

Another issue is multitasking, where people are watching TV
but they have their computer on and they are sending e-mail or surfing the Web.
I don't think that kind of casual TV usage is compatible with 3-D. I think 3-D works
when you turn everything off and you just want to watch the content, a big
game, a movie without ads.

There is one TV channel broadcasting some 3-D programs in Japan.
In the U.S.,
you could think about creating a 3-D channel but not before five years. You
need to have strong adoption of TV sets.

MCN: What are biggest challenges for
multichannel providers? Bandwidth? Set-top boxes?

VT: For the moment, it depends on which technology you are using. For
cable operators capacity is an issue and it also maybe difficult for [telcos]
that are doing for TV over DSL. But if you
have fiber, like Verizon, then you have a way to differentiate yourself with 3-D.

For terrestrial TV, I don't see any spectrum available for 3-D.
Everyone is fighting for spectrum, so I am not sure regulators are ready to
give away spectrum for 3-D.

Set-top boxes are not an issue. [BSkyB in the U.K.]
is ready to launch a 3-D channel and offer that they say will work with
existing set-top boxes. So that is not a barrier.

Whether they can get some extra revenues from consumers is
another issue. And penetration of 3-D TV sets would be another factor.

It is important to remember that every consumer survey shows
that 20% to 25% of people either don't like 3-D or experience eye strain when
they watch it. So there is work that needs to be done there.

The other bit is how you capture the image. What we are
learning about 3-D shooting is that you need to have a much slower rhythm than
2-D. You need to place the camera differently. We are still learning the best
way to shoot 3-D and that probably results in some eye fatigue for some people.

Beyond that, you need two crews of people to shoot
sports, one for 2-D and other for 3-D. You can only afford to do that for
premium sports that have strong base. You can do that for the Olympics but not
for a swimming championship.