Market Watch

Pirates in 3D Fails to Resonate Fully at US BO


Display Driver IC Forecast

Disney's Pirates of the Caribbean: On Stranger Tides grossed an estimated $90.1m at the US box office at opening weekend translating as the largest opening revenue haul of 2011 to date, but nonetheless coming in lower than the two previous iterations in the franchise. As the first in the franchise to be produced and released in the 3D format, 3D screens generated just under half of total box office revenue (reported 47/48 per cent), in turn the lowest 3D box office ratio of a live-action 3D movie since the widely slated 2D to 3D conversion of Warner's Clash of the Titans in March 2010. Imax theatres contributed 9.0 per cent of total box office or 18.5 per cent of 3D box office from just 256 screens, leaving non-Imax 3D with only 39 per cent of total opening revenues. In a major reversal of fortune, the average 2D theatre grossed over twice the box office of the average 3D venue. However, each 2D theatre had an average three dedicated screens compared with just under 1.5 screens per 3D theatre, based on initial estimates. That said, average attendance per screen was also lower for 3D than 2D.

However, total revenue attributed from 3D screens in the US opening weekend for Pirates 4 now features as the fifth highest (from 3D only screens) to date, a score card led by two other key Disney 3D vehicles, namely Alice in Wonderland ($81.5m) and Toy Story 3 ($65.5m) followed by Fox's Avatar  ($54.7m) and Paramount's Jackass 3D ($45.0m). Despite the low scoring 3D box office split, the total revenue haul from 3D-only screens is also largest of the year to date (ahead of Paramount's Thor), in what has been a relatively slow start to the box office year, both in terms of major 3D output but also overall box office performance.

Analysis
In 2011 to date, titles released in 3D have grossed an average 64.4 per cent of total box office from US 3D screens, a slight reduction from the 69 per cent 3D/2D split in the first three months of 2011, and below the full year 2010 average (66.8 per cent). However, the small drop has not been widely sustained and is not yet sufficient to show the market for 3D has experienced a major adjustment.

The 2011 3D market split is therefore slightly flat, but still holding up in the general market context, more so considering the lineup of 3D tentpoles still to come. To date, 3D's contribution equates to 16.0 per cent of total US box office revenues in 2011 according to IHS Screen Digest research, representing a slight rebound from a low of 14.6 per cent set in Q1 2011, but again under the 20.6 per cent achieved in full year 2010.

For Pirates 4, there is currently little direct comparison for a major live-action studio franchise vehicle being released in 3D for the first time, with forthcoming releases of Harry Potter and Transformers the closest in this regards. Similar also is Fox's Narnia, which achieved a 54 per cent 3D split at opening weekend, a slightly higher, albeit not dramatically so, 3D split.  The 3D box office split for live-action titles in 2010 averaged 74.1 per cent, but this includes smaller releases and niche titles, some of which have a very strong affinity with 3D as a concept, for example the horror or music genre. 

In addition, the US box office results for Pirates 4 comes in contrast to the UK where the majority (66 per cent) of opening weekend box office derived from Imax and non-Imax 3D according to Rentrak EDI.  However, even for the UK market, where there is a higher concentration of 3D screens (one third of UK screens are now 3D) the 3D split for Pirates 4 did finish lower than the 2010 average 3D split (77 per cent), but interestingly matched Narnia (also 66 per cent). Together, these factors indicate that several titles may struggle to present themselves as full 3D vehicles, instead perceived as mainly 2D films with a 3D option. In general, a low 3D ratio is a clear indication that a particular title does not have a strong affinity with 3D as a concept or is viewed as tokenistic or cynical in an attempt to charge higher prices for a purportedly superior experience. The move shows how some US consumers have flipped in their appreciation of broad market 3D and in certain cases may believe it offers little incremental value over the standard 2D version. This discerning attitude is linked to many factors but crucially a) the quality of 3D, although this criteria has now improved following earlier rushed conversions b) the sincerity of 3D and c) whether it dramatically improves the 2D version. A point to note is that many consumers have remarked on the darker projection for 3D films and may now believe 3D, in certain cases, offers an inferior experience.

However, in Europe, the transition into 3D by several noted arthouse directors (such as Wim Wender's Pina) has given credibility to 3D titles. Pina has grossed over $5.5m in Germany alone. Despite recording one of the lowest 3D splits of a title, 3D has boosted Pirates 4's overall box office in the region of $11.3m or approximately 13 per cent of total opening weekend revenues purely from 3D and Imax premium pricing. While Studios have continued to show a very high support for 3D content, several could now begin to re-assess whether a subsequent release in a franchise takes a U turn back into 2D or ramps 3D up to a higher degree in terms of quality, content and association. However, as 3D momentum is building in downstream revenue windows, it appears likely studios will need to reserve 3D as an option, but may reconsider how and when content is produced/translated into 3D in the first instance.

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