Market Insight

Sony makes stand over 3D glasses

October 04, 2011

Charlotte Jones Charlotte Jones Associate Director – Research and Analysis, Cinema, IHS Markit
This product is included in:

Want to learn more?
Have an expert contact you.

Sony Pictures has signalled its intent to stop subsidising incremental cost of 3D theatrical eyewear in US cinemas starting May 2012 onwards. This move has met with strong resistance from exhibitors, who are keen not to disturb the now well established model for 3D disposable eyewear in US cinemas. Sony is so far the only studio to have come forward in defiance of the existing model, whereby the studio foots the 3D glasses bill. Earlier attempts by Fox to also avoid being wholly financial responsible for 3D glasses costs in anticipation of release of Avatar in 2009, failed to make an impact and were later withdrawn.

Studios have traditionally covered the cost of disposable 3D glasses in US cinemas, where the vast majority or over 85 per cent use the RealD system which operates under this model, including those with Sony 4K projectors installed. The precedent was first established by Disney following release of Chicken Little in November 2005 to fewer than 100 screens. In the early stages, studios were also keen to incentivise exhibitors to upgrade theatres with both digital and 3D equipment and despite the earlier plea by Fox, the model remains intact.

With the rapid growth in 3D screens to  approximately 13,000 in North America in September 2011, the stakes have have intensified with an average eyewear bill of over $2m per 3D title in US cinemas in YTD 2011 (or maximum $8m in 2011) equivalent to a total US studio industry bill of $53m in YTD 2011, according to IHS Screen Digest estimates. This is based on per unit costs of $0.5. A total of over 40 3D theatrical releases are expected in US cinemas in 2012, which will for the first time include a higher proliferation of library titles in 3D.

Sony was an early pioneer of 3D, its first title Monster House released in 2006. It had a relatively quiet 2010 with only one major 3D release, which accounted for just 2.3 per cent of total US 3D box office revenues in 2010. In 2011, it ramped up its 3D slate with an expected five titles including current release, The Smurfs, which has now grossed over $500m worldwide, of which around 75 per cent derived from international grosses. It has a similar number of 3D titles slated for 2012 including anticipated major blockbuster The Amazing SpiderMan.

RealD also accounts for majority of 3D systems deployed internationally, but in comparison in its key strongholds such as UK and Australia, the cinemagoer typically pays the nominal charge for the 3D glasses, and is offered an incentive to bring back glasses next time. There is also a higher proliferation of competitor 3D systems (Dolby, XpanD, Masterimage) internationally which typically operate with repeat use eyewear, although a 3D ticket premium is still the default model.  The customer retention model for disposable glasses is so far unfamiliar to US cinemagoers, who arguably associate part of the existing average $3.25 upcharge in 2011 with the glasses. Audiences are asked to recycle their 3D glasses but can retain them too. The stand by Sony comes as premium eyewear providers are stepping into the potential market for sale of more durable 3D glasses aimed at cinema audiences, although so far with little potential for dual use in the home where TVs compatible with active 3D glasses dominate.

Sony has given exhibitors a long lead time of six months in order to reach an alternative or other mutually agreeable system. The topic is likely to be fiercely debated by both sides, not least due to the costs at stake, and it has yet to be seen whether other studios will step up to argue and whose backing will be necessary if a new industry wide model for 3D glasses for the US is to be pushed and later accepted. Both sides are likely to want to avoid alienating US audiences which have become increasingly impartial to 3D for certain titles, if a more compelling experience is not evident.

Share facebook Twitter Google Plus Linked In Add This Contact Us