3D Proponents Decry Exuberant Forecasts, Provide a Look Into 3D’s Future

Halfway into its second year, 3D TV is struggling for respectability amid gloomy market research projections and slowing interest in 3D movies at cinemas. The negative press prompted Shawn DuBravac, chief economist at CEA, to publish a blog post last week refuting negative research reports and defending progress of the technology. “Despite all of the hype and all of the panning, 3DTV is on the exact trajectory we would expect a new segment like 3DTV to experience in the early years of its adoption by consumers,” DuBravac said.

DuBravac cited research from SNL Kagan which projected sales of 3D TVs would drop in 2011 due to issues with glasses, dearth of content, and price, leading the market research company to estimate 3D TV household penetration of 2 percent by year-end. CEA research suggests “a very different picture for 3D TV,” DuBravac said, noting that CEA’s recent “13th Annual Ownership and Market Potential Study” pegs U.S. 3D TV ownership at 3 percent halfway through the year. He said CEA’s ownership rate data aligns with the number of 3D TVs that have shipped from OEMs over the past 12 months and that ownership rates overall will “increase significantly” in 2011 compared with last year. In the current environment, retailers aren’t taking stock of products that aren’t selling through over an extended period of time, DuBravac said. Over the last two months, unit volume of 3D TV is up nearly 200 percent over the same period a year ago, he said.

At the recent CEA LineShows conference in New York, industry executives on a 3D panel discussed the impact of pricing, available content and 3D movies on the 3D TV market overall. Overzealous expectations were cited several times. Steve Shannon, executive vice president, RealD Home, said original expectations for 3D were realistic but then “fervor started to build” and expectations ramped up considerably. But in comparing the adoption of 3D TV to historical deployments of other electronics such as DVD and Blu-ray, “it’s growing rapidly,” he said. Dan Schinasi, senior marketing manager at Samsung, said Blu-ray players didn’t reach one million units in their first year on the market, but 3D TV did. Last year, 1.1 million units shipped in the U.S., he said.

Retail cost, heavily cited as a 3D TV deterrent, will soon be a moot point, Shannon said, saying “it really doesn’t cost money” to make a 120-Hz TV that’s 3D-capable. Soon, consumers faced with a choice of a TV that’s 3D-capable and one that isn’t, will have little incentive to choose the latter, he said. “It will eventually be hard to buy a TV that’s not 3D,” he said.

Ken Lowe, founder of Vizio, which is selling a 42-inch 3D TV for under $700, blamed lack of content, rather than price, as the reason 3D has been “slow on the uptake.” With 3D becoming “a natural part of the 200 million TVs sold every year,” that will create the installed base that “content guys are looking for,” Shannon of RealD said. The installed base will provide the audience that content creators need to justify experimenting with programming, and it will “spur more interest in 3D” and create a cycle that will “fuel more demand,” he said.

Customer confusion remains an obstacle for widespread 3D TV adoption, panelists said. According to Michael Cai, vice president of research for Interpret, 30-40 percent of consumers think they can watch 3D content on a 2D TV, for instance. The picture gets murkier with the addition of technology issues such as passive versus active and “whether it’s full 3D or not,” Cai said. “We're not doing a great job of ironing these things out for consumers,” Shannon said. Because there’s so little content, he said, “consumers don’t have the motivation to learn about it or understand it.” A driving force to encourage mainstream adoption will be episodic TV series in 3D, he said. “Until you can see “American Idol” in 3D, people aren’t going to pay close enough attention to those kinds of questions,” he said. Lowe of Vizio cited company research last year showing that a lot of consumers were hesitant about 3D “because they thought if they bought a 3D TV, that was all they could watch on it. … The next thing is to get a broadcast standard so programs like ‘American Idol’ will be shot in 3D.”

Schinasi of Samsung, co-chair of CEA’s 3D Video Work Group, said the group is working on standards and an education program to clear up some of consumers’ confusion about 3D. “You'll see a concerted effort to promote 3D” that will address compatibility questions and different formats, including side-by-side, top-and-bottom and frame-packing, he said. “CEA is working on a definition that will assure buyers that” TVs they buy are compatible with the 3D signals they receive, to give consumers “peace of mind,” he said. The group is also working on a logo program that will help define 3D technology in “much the same way” that HDTV was defined, Schinasi said. “It’s good that the industry is doing this so consumers who have bought a TV don’t get home and find out it can’t connect to a DirecTV box,” he said. Regarding a date for release of the standards and logo program, Schinasi told us, “We have a little bit of work ahead of us, but we're very close."

Meantime, the supply of 3D cable content and Blu-ray 3D titles is inching ahead. The Digital Entertainment Group estimates that 100 Blu-ray titles will be available in 3D by the end of the year. ESPN continues to add live coverage to its 24/7 3D channel, and additional content has come on board from 3net and various video on demand and connected TV channels, Shannon noted. “About 30” games are available in 3D, and Vizio’s Lowe cited “excellent-quality” in streaming 3D programming from Vudu.

Still, there’s a long way to go with 3D content, Shannon of RealD said. “There’s a learning curve on the production side,” he said, citing schedule impact, equipment budgets, camera costs and an overall skill level “that needs to grow.” The latter “is a precursor to getting content out in the marketplace,” he said, but he believes lower priced TVs will spur the sales needed for content providers to invest more heavily in 3D. “It’s going to happen, no doubt about it,” he said. In 2012, the chicken-and-egg problem “will break down and you'll start to see a lot of content that will create a cycle of demand,” he said.

According to Cai, consumers surveyed last year said they'd be willing to pay a 20 percent premium for 3D, but this year that delta evaporated to zero. Lowe of Vizio said those findings mesh with what the company is finding as well: consumers don’t want to pay a premium for 3D. “Unfortunately there are costs involved,” he said, “and we're trying to drive those differences down but it’s difficult.” Schinasi of Samsung referred to the price gap that existed between 240Hz TVs using active-shutter glasses and standard HDTV. Costs are coming down, he said, and Samsung, too, has 3D models under $700.

Drastic reductions in cost of 3D glasses should also help adoption, panelists said. Samsung offers active-shutter models for $49 a pair, Schinasi said, and Vizio sells a two-pack of passive glasses for $25, according to Lowe. Shannon noted that RealD is “working very hard with Samsung LCD’s division to create a next-gen passive panel that will be full 1080 resolution for both eyes,” he noted. Panels should be available early next year, he said. Schinasi said a number of considerations have to be made before TVs are commercialized, not the least of which is cost.” Based on prototypes Schinasi has seen, the RDZ technology “promises to deliver a compelling experience” and is the “same full 3D experience you get today.”

3D Notes

Samsung had a 61 percent market share in 3D TV from May 22-June 18, according to NPD data, following 50 percent share for 3D TV from April to May. As a sign of Samsung’s reserved marketing strategy for 3D -- where 3D is just one feature among several in mainstream TVs -- John Revie, senior vice president of home electronics for Samsung, said in a prepared statement, “A TV isn’t just about 3D. We also are leaders in design” and “leaders in connected TV with our … Samsung Apps platform,” he said. “Consumers don’t need to compromise when they choose a Samsung TV."

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As part of an effort to “innovate and do new things,” ESPN plans more 3D programming at the All England Lawn Tennis and Croquet Club next year as part of its exclusive U.S. TV rights to Wimbledon, said John Skipper, ESPN executive vice president-content, during a webcast Tuesday. ESPN said it signed a 12-year deal, including men’s and women’s singles finals, to provide “comprehensive coverage from start to finish across a variety of platforms.” All coverage will be live, with re-airs showing at selected times on ABC, ESPN said. Most of the mobile viewing will happen on the “linear network through mobile platform,” Skipper said. “That usage is becoming increasingly important to us,” he said, saying that due to the time difference between the U.S. and England, “lots of people will watch the linear networks on a mobile device.”