Service Providers Looking to TV Makers To Support High 3D Costs

Absence of a sound business model still plagues 3D TV as the nascent technology approaches the six-month milestone since ESPN launched ESPN 3D. At the “3DTV 2011: What’s Next?” event in New York Thursday, video content and service providers cited the increased costs associated with developing 3D content with a lack of advertising support, sponsorships and subscription fees to help recoup those costs.

As the industry scrambles to find content for the 3D TVs in the market, few providers are willing to impose hefty premiums on content as a way to offset costs while 3D is struggling to get out of the gate. ESPN and Verizon FiOS are using TV’s heaviest sales season to put more 3D programming on the air, with ESPN ramping up college football and basketball coverage, along with some NBA games. Verizon launched a nine-title 3D VOD movie slate last week.

DirecTV is offering 3D for free to subscribers for the time being, and Discovery’s 24/7 3D channel will likely be free to subscribers when it launches next spring. “We think distributors will offer it [free] to those with 3D sets at the onset, said Meg Lowe, senior vice president of domestic distribution for Discovery Communications. But Lowe “wouldn’t be surprised” to see it go to a tiered model depending on “what the market is willing to bear,” she said. She added that advertising support for 3D is crucial to the channel’s success and that Discovery has been “pleased with interest and support from advertising community."

Tricia Lynch, senior programming executive for Verizon, said FiOS “will learn” more about consumers’ appetite for 3D after its two-month VOD program, which began last week and will be ongoing. “We'll see how many people will be willing to give an extra $2 per movie,” she said, with 3D VOD prices set at $5.99 and $7.99. She “doesn’t anticipate” being able to offer a $40 3D package bundling Discovery and ESPN down the road. “I would love to get $40 from people but I don’t know if that’s going to work,” she said.

Lynch said the logical wallets to fund additional 3D content are TV manufacturers, “the most likely to make money from 3D immediately.” Service providers want 3D content, she said, but don’t want to pay for it. “We intend to do 3D, but who’s got the money?” she said. “We're all trying to figure out how to get them to sponsor something,” she said. She said TV makers need to sponsor programming that can be shown at retail along with commercials that run in the U.S. and worldwide.

In comparing the HD rollout with 3D, Verizon’s Lynch said 3D will always have a more limited appeal. Verizon FiOS offers more than 100 HD channels, she noted, but she doesn’t expect the number of 3D channels to ever top more than 20 or 30. According to Clyde Robbins, technical staff member at Motorola, the transition to 3D is farther along than HD was at this time because the transition to digital TV -- and to projectors and flat-panel displays -- has already occurred. “There’s a ready market for it,” he said. He warned that sales numbers “may disappoint people” in the first two years, “but after that it will go very fast.” The cost of producing content will come down “somewhat,” he said, but will always be higher than 2D content. But the cost of TVs will continue to fall and “will come down rapidly,” he said.