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TOPIC: Hollywood Finds Headaches in Its Big Bet on 3-D

Hollywood Finds Headaches in Its Big Bet on 3-D 12 Jan 2009 11:07 #30688

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LOS ANGELES — The imminent full-bore return to 3-D filmmaking, upon which the movie industry is placing many of its hopes, is in danger of becoming Hollywood’s latest flub.

The director James Cameron on the set of “Avatar,” a 3-D space adventure and his first nondocumentary film since “Titanic.”

Some of the mightiest forces in film — Jeffrey Katzenberg, James Cameron, John Lasseter — think the multiplex masses will soon demand that all movies be shown in newly available digital 3-D. Mr. Katzenberg, in particular, has pushed the format, trotting the globe to herald the technology as a transformative moment for cinema akin to the introduction of sound.

His bandwagon has plenty of passengers, at least in Hollywood. The Walt Disney Company alone has 15 three-dimensional movies in its pipeline. Twentieth Century Fox is betting an estimated $200 million on “Avatar,” a 3-D space adventure directed by Mr. Cameron and set for December release, his first nondocumentary film since 1997’s “Titanic,” still the biggest moneymaker in movie history, without counting inflation. All told, the movie factory has over 30 3-D pictures on the way.

But analysts are starting to warn that all of that product could find itself sitting on a loading dock with no place to go. Studios, thrilled by 3-D’s dual promises of higher profits and artistic advancement, have aggressively embraced the technology without waiting for movie theaters to get on board. And without those expensive upgrades to projection equipment at the multiplex, mass market 3-D releases are not tenable.

“It’s starting to look like there will be a lot of disappointed producers unable to realize the upside of these 3-D investments,” said Harold L. Vogel, a media analyst and the author of “Entertainment Industry Economics.” Filming in 3-D adds about $15 million to production costs, he said, but can send profit soaring because of premium ticket pricing.

Only about 1,300 of North America’s 40,000 or so movie screens support digital 3-D. (Imax adds 250.) Overseas, where films now generate up to 70 percent of their theatrical revenue, only a few hundred theaters can support the technology. It costs about $100,000 for each full upgrade.

Studios require about 3,000 screens in North America for most new releases. Popcorn movies like “Avatar” or “Monsters vs. Aliens,” a 3-D entry from DreamWorks Animation, typically open on more than 4,000 screens.

“The crunch has everybody scrambling,” said Chuck Viane, president for domestic distribution for Walt Disney Studios. “We had expected many more screens to be available by now, no doubt about it.”

Upgrades have lagged primarily because of industry infighting over who will shoulder the cost. Studios expected theaters to take the lead because digital equipment would allow them to raise prices — tickets to the new crop of 3-D movies run as high as $25 each — and lure consumers away from their big-screen living room TVs. Exhibitors, hurt by soaring real estate costs, wanted studios to pay for similar reasons.

Movie chains and four of the six major studios agreed in September on a plan to convert upward of 15,000 theaters using $1 billion in debt financing arranged through JPMorgan Chase. But the squabbling took too long: The financing plan came together just as the credit markets froze.

Studios and exhibitors say the upgrade plan is not in jeopardy.

“This is a long-term commitment and a long-term strategy,” Mr. Katzenberg, the chief of DreamWorks, said recently.

Meanwhile, the Digital Cinema Implementation Partners, a consortium of exhibitors and studios, is pursuing alternative financing to allow the plan to proceed in steps. “Rather than just being patient, we are aggressively exploring all options,” said Rich Manzione, the group’s vice president for strategic planning.

Other participants seem less optimistic. Will the credit markets thaw in the first quarter, as Mr. Katzenberg predicts? “Your guess is as good as mine,” said Mike Campbell, the chief executive of the Regal Entertainment Group, which owns the nation’s largest movie theater chain.

Meanwhile, the shortage of 3-D theaters is upsetting profit projections at various studios, with three-dimensional movies probably leaving millions of dollars on the table. When DreamWorks Animation releases “Monsters vs. Aliens” on March 27, it will have to settle for half the number of 3-D screens it wanted. While acknowledging the shortage, Mr. Katzenberg recently told analysts there were enough theaters available to “recover our upfront investment and make a profit.”

To get an idea of how much money is at stake, DreamWorks Animation recently estimated that one of its hit titles, released entirely in 3-D, would earn an additional $80 million in profit.

The shortage is sending mixed messages to moviegoers, many of whom are already skeptical of the claims about 3-D. Because of a shortage of outlets last summer, Warner Brothers had to scramble to change the marketing for “Journey to the Center of the Earth 3D” — dropping “3D” from the title — and offer a two-dimensional release in tandem. Lionsgate will have just 900 3-D theaters available for “My Bloody Valentine 3D” on Jan. 16, forcing the studio to show a standard version on about 1,600 screens.

The delay is also threatening to undercut one of the primary benefits for theaters — the ability to deliver an experience that consumers cannot replicate at home. But the home entertainment market is rapidly catching up, with companies developing 3-D options for the home.

RealD, a California company that is the lead provider of 3-D technology for theaters, last week demonstrated a similar product for televisions at the Consumer Electronics Show in Las Vegas.

Michael Lewis, the chief executive of RealD, said in an interview that he expected Americans to own 10 million 3-D-capable television sets within five years.

People who remember 3-D from the 1950s roll their eyes at Hollywood’s renewed fascination with the medium. They associate 3-D with cheesy films (“Creature From the Black Lagoon”), stiff cardboard glasses and jerky, stomach-turning camera movements.

This time, movie executives insist that everything has changed. Digital projectors deliver the images with perfect precision — eliminating headaches and nausea — while plastic glasses have replaced the cardboard.

Most important, say filmmakers, new equipment allows movies to be built in 3-D from the ground up, providing a more immersive and realistic viewing experience and not one based just on visual gimmicks.

www.nytimes.com/2009/01/12/business/media/12film.html
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 12 Jan 2009 16:59 #30690

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directed by Mr. Cameron and set for December release, his first nondocumentary film since 1997’s “Titanic,” still the biggest moneymaker in movie history, without counting inflation.

Well, at least they noted the caveat re: inflation. But still, if it's not the biggest moneymaker in movie history then don't even bother to include the stat. If I'm not mistaken, Titanic isn't even in the top 10 when measured in real dollars.

It's like saying I'm the tallest man in Ohio, without measuring anyone taller than me.

-David
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 13 Jan 2009 12:41 #30694

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I don't really see how anyone can expect patrons to pay higher prices for digital. And, $25 for a 3-D movie is ridiculous. Raising prices to that level will only alienate our bread and butter clientele and lower our profits, not increase them.

This was the second article I read yesterday about diminished expectations regarding digital cinema.
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 13 Jan 2009 14:35 #30695

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sevstar wrote:

People who remember 3-D from the 1950s roll their eyes at Hollywood’s renewed fascination with the medium. They associate 3-D with cheesy films (“Creature From the Black Lagoon”), stiff cardboard glasses and jerky, stomach-turning camera movements.

This time, movie executives insist that everything has changed. Digital projectors deliver the images with perfect precision — eliminating headaches and nausea — while plastic glasses have replaced the cardboard.

Most important, say filmmakers, new equipment allows movies to be built in 3-D from the ground up, providing a more immersive and realistic viewing experience and not one based just on visual gimmicks.

www.nytimes.com/2009/01/12/business/media/12film.html

That would be me. The trailers I've seen for the Jan 16th release look like the typical "let's throw things at the camera and make the audience jump" film. I don't think Hollywood has the intelligence to get beyond the visual gimmicks. And I don't think most of the movie going public will stand still for ticket price increases. I think the 3-D fad will last about as long as it did in the 50s leaving exhibitors holding the bag for expensive equipment installations. What will bring movie fans to auditoriums is good story writing.
Bob Allen
The Old Showman
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 13 Jan 2009 22:21 #30697

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Thank you Bob. You said everythng that I have been thinking. There's nothing left for me to say.
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 01 Nov 2009 19:44 #32700

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Did anyone else see "Up" in 3D? It was fantastic. Absolutely nothing being thrown at the audience to make them jump. It was just a very well done artful movie, and it showed me that 3D can be used for art instead of disney characters throwing things at the audience.


Personally, I think that unless hollywood moves past making 3D movies just to be 3D movies and instead make good, well written movies and just happen to make them in 3D to enhance the immersion, then we will see the medium of 3D movie theaters dwindle again, just like in the 50's.
Last Edit: 01 Nov 2009 19:50 by Quakken.
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Re:Hollywood Finds Headaches in Its Big Bet on 3-D 01 Nov 2009 20:22 #32701

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Disney's Christmas Carol in 3D was pure magic. It is going to be awesome here and I can't wait for the holidays!!!
"What a crazy business"
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