I recently came across this great two-part article titled ‘The 3D Boom is Just Starting’. It was originally written by Norbert Hildebrand at the folks at Display Central who have kindly allowed me to re-post the article here. Get ready for some interesting stats and another reference to the famous ‘hype cycle’.
Many reports have been published over the last few months about the untimely death of 3D TV and the theatrical counterpart. According to many reporters, 3D is a failure and the success stories of 3D movies are highly overrated. They note that 3D ticket sales are not growing anymore but are declining instead. The only possible explanation seems to be that people do not want to see movies in 3D anymore – right? Wrong.
Jared Newman of Time.com published the article ‘Has the 3-D bubble finally burst?’ in July of 2012. He mentions three major areas of concern about 3D. The first is 3D gaming, where he quotes Nintendo’s president Satoru Iwata who mentioned that 3D is perhaps on the wane again. If you want, you can read the complete interview here: http://www.independent.co.uk. While only one question relates to the state of 3D gaming, his answer was actually quite positive, as he sees 3D as the normal way of watching our environment, it makes graphics more powerful, and it creates a deeper immersion into the game. His concern relates to the fact that all people get acquainted quickly to any form of technology and there will be a backlash in the form of some tiredness for this particular technology. This is true for many technologies before 3D and is certainly true for 3D as well.
The second issue Newman brought up is regression of the box office and the impact of 3D. His numbers are related to the U.S. market only and show that in 2011 the 3D box office revenue fell by 18% versus the year before. May I remind everyone that 2010 was the year where Avatar broke the record for the most successful film ever released (the original release in December of 2009 – but most of the box office was realized in 2010) and a large portion of that success came from the 3D release.
Yes, he is right we did not produce another Avatar movie in 2011 and let us take a look at the results for the USA and Canada. According to boxoffice.com, the revenue in 2010 was US$10.57 billion versus US$10.18 in 2011 (for comparison Avatar alone produced US$478 million in the USA and Canada in 2010). This is a 3.7% decrease in revenue and compares to a 4.5% decline in number of tickets sold. According to boxofficemojo.com studios do not release breakdown data on percentage of 3D versus 2D movies for anything other than the opening weekend.
He also states that we had more 3D movies in 2011 than on 2010, which is completely correct, even though his numbers seem to be on the low side. With a slowly growing number of domestic 3D theaters, more 3D movies are fighting for a chance to be presented in a 3D movie, which will naturally decrease the percentage of 3D income for any particular movie.
Finally he states that even though the sales of 3DTVs is on the rise in the U.S. only 14% of consumers who might buy a TV in the next 6 months believe that 3D is a ‘must have’ feature. His statement includes that even Samsung admits that 3D hasn’t lived up to its hype. If 14% think that 3D is a must have feature and many more will buy a 3DTV as a form of future proving, there a lot of people out there who will buy a 3DTV this year. That’s not a clear indication of a bursting bubble.
He goes on to see 3D as gimmick – something that quickly wears of as a novelty. He also mentions the 3D glasses as another hurdle on the way to mass adoption, but also believes that Nintendo is proving with its mediocre success of the 3DS that even glasses free 3D solutions will run out eventually. This is interesting as the first statement of the Nintendo CEO was that watching anything in 3D is the natural way of how we are supposed to look at things.
He concludes that with the 3D bubble deflated, companies can now focus on the development of the Smart TV and more apps for the Nintendo DS.
Yahoo published a summary of product failures of 2012 on August 15th and of course, 3DTVs made the list. According to Farnoosh Torabi, “While hailed as the IT product of the consumer electronics show in 2010, this tech invention failed to win over consumers and by the beginning of 2012 was considered ‘a has been’. By some estimates 3DTVs are in roughly 3% of U.S. households, far fewer than expected, Llargely due to big ticket prices, a shortage of content and an awkward user experience.”
It seems every time somebody comes up with a story about the failure of 3D he or she has to add some details to make sure we all believe this is the utter and complete truth. Let us take a look at some of these statements and try to put some numbers behind them to better understand the real situation.
As you can see, the number of analysts that voice their dislike of 3D is growing and they are staking out their position of ‘I told you so’. But is this correct or is it just a normal cycle of hype and delusion that we are going through with every product?
The so-called ‘Hype Cycle’ of product introduction was introduced by Gartner Research in 1995 and applies to most product introductions. It breaks down the phases of product introductions into easily understandable stages. This diagram does not refer to specific buyer groups as does the Roger’s adoption lifecycle diagram, but it compares nicely to it as it explains what happens if the product dies after the initial buy in of the early adopters.
After the initial ‘peak of inflated expectations’ we enter the ‘trough of disillusionment’ before further development leads us to the ‘slope of enlightenment’. In the U.S. we are certainly in the ‘trough of disillusionment’, but it is questionable if we are entering it or already passed through.
Not one product has enjoyed exponential growth for its market introduction, as market penetration increases the market growth rate slows. This is natural and doesn’t need any further explanation, but we have become more and more accustomed to faster and faster product adoption in the market. Just think of the last two major product successes in the market: the Smartphone and the Tablet. Both products were not needed in the market, said many analyst during the product introduction. However they managed to take over established markets or create new markets in a hurry. This mentality is what the 3DTV is up against. We expect anything new to take over the world in a hurry or the bubble must have burst.
In the first part of this article published two week ago, I tried to correct some of the facts that some articles are reporting about the 3D industry. I also discussed the Gartner “hype cycle” and the trough of disillusionment phase that 3D is currently in (at least in the U.S.). (One of readers calls this phase the “hate cycle”). In today’s column, let’s take a look at the 3D uptake in historical terms to see if indeed it is a successful product. I think you will find it is.
First, let’s take a look at the success of the color TV versus the good old black and white TV in the U.S. In the attached graph, we show the results of color TV unit sales as a percentage of all TV sales at that time. The color TV was introduced in 1954, and it took the color TV approximately nine years to reach a unit market share of 10%. (All numbers are based on CEA shipment data.) The time from 1956 to 1960 must have been extremely painful, as there was almost no growth in the color TV market share.
I wonder if there was a growing number of analysts that published articles like, “The Color TV Bubble Is Burst.” They had a much better argument back then than today’s analysts have against 3DTVs. If we take recent numbers, 3DTV will reach a market share of 15% or more worldwide by the end of this year, which is the fourth year of 3DTVs in the market.
Another argument is that 3D failed to meet expectations. The questions here is whose expectations? Yes, there were a lot of expectations riding on the success of the 3DTV, as we were going into in a world recession and falling sales numbers for TV overall. Many hoped that 3DTV would renew the interest of consumers to throw out their 2-to-4-year-old TV and buy a brand new one. As it turned out, this was not in the books for the CE industry. Average sales prices of 3D sets versus their 2D counterparts plummeted to almost equal values for smaller sets today. At this point 3D is a feature that makes a lot of sense for buyers of smaller sets up to 37-inch as they got the 3D feature basically for free.
When we take a look at the forecast numbers published by market researchers worldwide, we see that these numbers varied widely. In the next graph, we compare these forecast numbers for all forecasts published in the 2008 to 2011 timeframe. Most of the higher forecasts are from 2011, reflecting an industry feeling or desiring for the success of 3D. Nevertheless, so far 3DTV sales are actually at the upper range of these forecasts. This should not be reason to lead to disappointment, but to a celebration of the success.
So, why is it that we see so many articles and hear so many opinions on the failure of 3D in the market? Is there an underlying regional issue with 3D in different regions of the world? If you believe market research data of 3DTV sales around the globe, this is certainly the case. The U.S. is actually a slow adopter of this new technology compared to other regions, like Europe and China, for example.
Comparing TV set sales is one thing, but is there actually also a lack of interest in 3D in the U.S.? To answer this question we took a look at search-term density for the term “3D” on a worldwide basis. Google allows you see how many searches originate from each country for a specific search term. Searching for the term “3D” as the most generic term in this field, we divided the number of searches per month by the number of inhabitants for each country to arrive at the search term density to get a feel for the worldwide interest in 3D. The result is shown in the next graph.
As can be seen, the U.S. is indeed a more lukewarm type of country when it comes to 3D compared to Europe and some parts of the Near East. The U.S. matches countries like Australia and Argentina when it comes to 3D. The top country: Turkey! Central Europe and Canada are all ahead of the U.S. in this regard as well.
Believing that everything is well in 3D land would be a big mistake and could jeopardize the overall efforts of the 3D introduction. We need to constantly improve on the delivery and availability of good 3D content to convert more people into 3D believers. This is the only way to ensure long-time success.
So far, we have lived by the market push of CE companies, which welcomed 3D technology as a way to increase TV sales. Excellent 3D content in ample quantities is one of the key conditions for 3D to become the market leader in TV sales. We need to move to a market pull situation, were consumers demand more and better 3D content, as well as improved and most likely glasses-free 3DTV technology.
The global interest in 3D ensures that we will reach this point in the not-so-distant future. As I said above — the 3D boom is just starting!
END OF ORIGINAL ARTICLE