Taking the Pulse of 3D Marketing & Promotions

There have been a few recent stories that are cause for concern for 3D enthusiasts. 3D TV sales are not going as well as originally projected, and there are rumblings about some of the major networks that are early supporters of 3D broadcast having reservations about their long-term plans.

Here are links to two of the articles I’m referring to:

http://blog.broadcastengineering.com/3-D/2010/11/22/disappointing-3-d-tv-sales-loom-for-holiday-season/

http://gizmodo.com/5677813/espn-3d-isnt-making-any-money

In short, 3D hasn’t taken over the world of home entertainment in it’s first year of availability! Pundits are already predicting the swift and utter demise of the format.

Let’s put some context behind all of this. New formats typically several years to become adopted by content providers and a bit longer to gain widespread acceptance among consumers. For example, HD TV’s first became available in the US in 1998. The first major broadcast was Super Bowl XXXIV on January 30, 2000, 2 years later. Satellite providers like DirectTV and Dish network didn’t start broadcasting in HD until 2002, and cable carriers like Comcast didn’t support the format until 2003. In short, it was about five years after HD TV technology was available that broadcasters began any significant level of support for HD content. The first movies to be released on Blu-Ray, the only full HD hard-media format, were released in June 2006, nearly 8 years after the launch of HD TV. As of November 2009, about 40% of US homes had at least one HD TV, and as of July 2010, only 17% of US households had at least one Blu-Ray player.

In contrast, all the major cable and satellite networks are already providing at least some 3D VOD and/or pay-per-view content, and multiple networks have already broadcast in 3D and are planning expanded 3D programming in 2011. There are several 3D Blu-Ray titles available now, and about a dozen more that will become available by the end of the year. So while the lack of content availability remains a serious obstacle to 3D TV growth, it’s actually dramatically outpacing the development of availability for HD content at its inception.

There are some challenges for the consumer electronics industry in driving sales for 3D TV. Many of the best movies currently available in 3D come bundled with a 3D TV and Blu-Ray package, preventing consumers from building a library of titles in the format. Each brand of 3D TV has active shutter glasses that ONLY work with that brand of TV. This failure to adopt standards of interoperability severely limits consumers from being able to enjoy 3D broadcasts of live events like sports and concerts, which are usually social events. 3D TVs are overpriced, based on the actual cost to implement the technology, and many consumers have just recently upgraded to HD (in the past 2 or 3 years) and are at least a couple years away from needing to buy a new set. Most retailers are doing a very poor job or presenting the technology. I’ve been to several prominent electronics retailers who have broken glasses or glasses with dead batteries. Often there is no sales representative available to explain that the glasses need to be powered on, and do not clarify that many of the 3D TVs also happen to be the top-end state-of-the-art 2D TVs. Instead, they frequently try to show off soon to be extinct features like auto 2D-to-3D conversion. This tech is effective at creating bad 3d and creates the impression that a 3D TV is for watching ALL content in 3D, a behavior most consumers will probably never adopt. Networks are hesitant to fully embrace the technology, because production costs are higher than for 2D, and many have yet to recoup the costs incurred for moving to HD, which did not allow for any incremental advertising revenue to offset those production costs.

To sum all of this up, I believe there is still great potential for 3D in the home, and a very bright future ahead for both manufacturers and content – if we don’t screw it up! TV manufacturers need to agree on standards for glasses to allow for interoperability, and 3rd party players need to get involved so viewers have options for less expensive eyewear. The bundling model for 3D blu-ray and 3D TVs needs to be phased out, so that early adopters can build their libraries of great content. The “my neighbor’s new TV is awesome!” factor helped to drive HD TV sales, and is going to be critical in driving adoption. A variety of great content is key for this to happen. Broadcasters and advertisers need to develop a model to monetize 3D more effectively than they did for HD, so there is a business incentive to create more 3D programming. Retailers need to do a better job selling the value of the 3D experience and showcasing the benefits of these top-line sets, not making them seem like extremely expensive gimmicky toys. Prices are already dropping, and there are a few really quality sets available for around $1000.

I’m excited to see what 2011 brings for this great technology.

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