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April 25, 2013

The box-office segment of the film industry is relying more and more heavily on 3D screenings as its savior. This is how much:

Box Office Grosses Per Capita - 2D vs. 3D vs. Total

While total box office appears to be steady (the blue line – not growing, but also not declining since 2005), the situation for 2D box office is bad, as the annual per capita spending on them has dropped from over $40/year to under $30/year – more than a 25% drop over the past decade (the original raw data of total nominal grosses and nominal 3D grosses, is from this MPAA report).

Now, you might claim that this is fair, since this is probably similar, for example, to the pattern that analog cameras followed as they were replaced by digital cameras. But here’s the thing: it is still unclear whether 3D is a superior product in the eyes of the consumer, especially since it is not expected to drive down the prices of the cinematic experience – unlike digital cameras or any other truly disruptive technology did in its respective domain. The problem with this industry-experiment is that by performing it, the industry is playing with fire: if 3D doesn’t hit an inflection point soon, there will be no way back to the old paradigm, because most 3D viewers will not agree to go back to 2D for the same price as 3D. Since 3D did not succeed in increasing the total number of tickets sold since 3D was introduced in 2006 (see previous post), in effect what it did was transform 2D moviegoers into 3D moviegoers with higher expectations.

The common perception of cinema has changed: cinemas have conquered the domain of 3D blockbusters, but while doing that they also surrendered the domain of 2D movies to home entertainment. All the people who left the cinematic experience behind over the past decade – be it for other forms of entertainment or for good home cinema systems – are not coming back for 2D cinema. In other words – if 3D fails, this industry experiment will end up proving to cannibalize the industry.

That being said, this may not be all bad, since revenues from home entertainment end up going to the studios and production companies anyway, but my point is that the following equation: “straight to home video” = less prestige, will have to change into: “straight to home video” = 2D. Therefore, independent production companies (which tend to make only 2D films) that adopt this new paradigm, will realize that there is hope for them. Those that stick to the current definitions of prestige, will have to cope with a lot of bleak projections.

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