(Torsten Hoffmann, February 2014)
By now, it has become very clear that the 3D industry has not managed to reach mainstream consumers – at least not in the living room. And in its’ current form it never will: Broadcasters are stopping with their 3D transmissions, Producers and Distributors have gone bust, Content Buyers have dropped off the map, and 3D websites and Blogs are struggling or shutting down. In my meetings, I hear many reasons for this demise – and most of the time it includes blaming some of the parties in the ecosystem: The 3D glasses that consumers don’t like to wear, the content that is lacking, the bad quality of 2D to 3D conversions, the price premium for the 3D tickets at the box office, etc. While it is easy to point fingers, I think the time has come to take a deeper look at the situation to better understand exactly what went wrong. Let’s examine all the different parties in the industry and what mistakes were made.
My aim here is to show that everyone in the business has played some part and contributed to the current crisis. Moreover, I want to make sure that we learn from past mistakes as we leave 2013D behind and look towards 2014k. We shouldn’t make the same mistakes in 4k and when we eventually enter the world of auto-stereo 3D.
1. Content Distributors
A. I want to start with my own part of the industry. Distributors like 3D Content Hub (and a handful of specialized 3D distributors as well as larger 2D distributors) have a clearly defined role: Monetizing, to license content rights to content buyers. Unfortunately
a few things went wrong. In the beginning of the 3D trend, say in 2011, many distributors at content markets like MIPTV and MIPCOM proudly presented a slate of 3D titles and their vision to become the premiere provider of 3D going forward. 6 months later, they were either gone or 3D was mostly ignored in their catalogues. I am not criticizing the short-sightedness in this part of the industry because obviously these companies need to generate income, that’s what they do. The problem with the situation is that many 3D rights lie with 20 or 30 distributors but were never really exploited. This leaves customers complaining about the ‘lack of 3D content’ and 3D producers left standing convinced that ‘there is no money in 3D content’. In fact, many great stereoscopic 3D titles were never broadcasted as 3D version because of bad rights management or because of exclusive relationships with distributors. I have described this situation before here.
B. Furthermore, I am told that distributors are charging unreasonable MGs, distribution costs, or are using intransparent commission structures, all of which leads to producers not being able to re-invest into making more 3D. I know that this is a big problem in the non-fiction segment where we do business but for feature films below a threshold budget level of, say $20M budget, the situation is even worse
A. I am lucky to work with mostly smaller production firms and independent filmmakers who are entrepreneurial risk takers. Naturally, we have had some spectacular results with monetization, where lower budget films generated big profits (typically films produced early on), others are just about breaking even, and others will probably never recoup their production costs (at least not in the 3D version). So, there are winners and losers – this is how a healthy ecosystem of any new industry should look like. However, among many other (larger) production firms I see a different mindset. I sense a “commissioning attitude” whereby production firms won’t start shooting until distribution money (pre-sales from broadcasters) or government subsidies are guaranteed. While certainly the most prudent thing to do from a financial management point of view, I believe that this lack of risk taking is part of our problem and has lead to less creative ideas, making a lot of the available 3D series resemble each other or follow the 2D TV editing recipes.
B. Furthermore, I sometimes witnessed too much criticism from the top-end of the market towards lower-budget projects. High budget Hollywood filmmakers, IMAX documentary producers or the few premium 3D TV production firms were too eager to point out flaws in other peoples’ 3D work. Instead of appearing as a united group of ‘3D evangelists’, I have seen too often the arguing over bad 3D, cheap cameras, wrong stereo alignments, etc. Most of the time, the criticisms were justified on a technical level, but one cannot compare a Porsche with a Volkswagen, there is justification for both. It would have been wiser to focus attention on convincing the public about the benefits of 3D in general, rather than discuss technicalities, especially in public forums.
Wow, what can I say. I think there rarely has been such a concentrated vendetta against a new form of films. For more than 3 years, most influential bloggers, journalists and media outlets were predominantly anti-3D. Bad 3D reviews were sometimes published even when the writer had seen only the 2d version of a film. The general consensus has now shifted after Gravity 3D and we should expect slightly more favourable press in the future. But what about the specialized 3D blogs (such as this one) and websites? Have the 3D thought-leaders done a good-enough job spreading the 3D gospel? Personally I think we could have done better. Look up your favourite ten 3D news sites and blogs and you will quickly find that consistently good reporting and blogging is rather rare. 3DContentBlog.com has done a few useful interviews and published a number of good opinion-pieces – if I may say so myself, and we were even mentioned by the BBC. However, to really leave a mark, this blog should have had 10 times more articles, more frequent contributors, better in-depth coverage, etc. And you will see that some of the other 3D websites rely on merely reposting news releases. So, again, I think it is the 3D industry itself that is partially to blame for not doing a better job on PR. A notable exception, by the way, is Twitter. By following the top 25 3D enthusiasts one can follow the entire industry ‘in real-time’. Of course, no one outside a few other 3D enthusiasts is really doing that, though.
Within the 3D ecosystem, the operators of Cinema chains are probably the most difficult player to change (given the high CAPEX at play) and the easiest to blame. Here is what’s on my list:
A. Higher ticket prices for 3D films. This almost single-handedly killed the 3D industry. Especially for family-films (animation), the premium price for several children quickly add up and make parents chose the 2D versions despite the kids preference for 3D.
Clearly it must be in the theatres interest to provide a unique entertainment experience, one that cannot be replicated easily at home. Sadly, by making 3D versions more expensive in the cinema, the winners are Video-on-Demand and DVD/BluRay. This means fewer people are ‘wowed’ by the 3D experience in the theatres. Luckily, with more recent films like box office hit Gravity the 3D proportion of total ticket sales seems to be on the rise again.
B. I understand that the box office dictates the entire release plans and that independent films rarely make any money (because the large marketing budgets to draw crowds are lacking). This brings us back to the risk-taking attitude. I would be interested to find out about a case study where theatres showed 3D documentaries in the afternoon in an effort to attract school classes and ‘compete’ with IMAX. Or are there any countries where local/indie 3D productions have performed well? France, Russia and Brazil are known to promote their local creative industries and I am looking forward to your comments on success stories.
C. There are tons of great award-winning 3D shortfilms. I am told that it is impossible to place them before the feature films because the theatres consider this the most valuable advertising slots. Nevertheless, I would be curious to see consumer reactions to such trials. Wouldn’t it be great to see award-winning 2-10 minute shortfilms like Foxed! or Atmosphere or maybe “3D Rides” on the big screen?
D. There was no pushback from theatres for ‘too flat’ content or ‘bad conversions’. The cinemas played whatever came through the Hollywood pipeline without questioning the 3D quality. The reputational damage from disappointed 3D moviegoers shortly after the initial Avatar period still hurts 3D today.
E. At several conferences it was pointed out that the exhibitors oftentimes play projectors below the recommended brightness levels. Hence, some of the films that were criticised as being ‘too dark’ may have actually looked much crisper with the correct projector settings adding to the 3D Wow factor and bringing back more visitors into the theatres.
5. Auto-stereo companies
Since 2010, I have seen countless glasses-free displays. From small mobile phones or the Nintendo 3DS, to medium sized tablets and laptops as well as TVs of all sizes. Every time I hear how auto-stereo is the “Next Big Thing”, but I remain unconvinced by what I see. Yes, I believe that glasses-free 3D is the end-game for our industry (see my blogpost here) but none of the prototypes to date have left a lasting impression. The resolution is either far too low or there is simply no pop-out effect. Yet, there are manufacturers rushing into the market with low quality auto-stereo TVs, mediocre conversion tools and no native content offering. Sounds familiar? Yes, I fear that this market will make the same mistakes as the 3D (with glasses) industry, which, again will hurt the entire ecosystem.
Here is Part 2 (of 2)