How 3-D Movies Will Save Theaters

Since that pesky Internet started nibbling away at Hollywood's traditional income streams, the movie industry has been trying to figure out how to entice us back into theaters. At last, it looks like they've finally hit on a big audience-grabbing idea: 3-D movies.

Red-green flicker? You're kidding, right?
I know, I know -- it sounds like a bad flashback to the headache-inducting red-and-green plastic glasses of the 1980s. Jaws 3-D, anyone? But I'm excited about the all-digital incarnation of 3-D movie technology, simply because it works so well. The polarizing glasses look like nothing but clear plastic. Tilt your head or look sideways at the screen, and the 3-D effect is still there. I didn't walk out of Dreamworks Animation SKG's (NYSE: DWA  ) Monsters vs. Aliens with a booming headache and tired eyes. The technology didn't get in the way of the material.

RealD, whose technology enabled the film's 3-D effects, claimed that $25 million of that movie's $58.2 million opening weekend box office came from showings on RealD-equipped 3-D screens. The total 3-D take may be even higher.

Theater owners care, too
On top of the benefits for the individual moviegoer, cinemas have plenty of incentive to roll out the underlying technology everywhere. Cinedigm (Nasdaq: CIDM  ) has installed more than 3,700 digital screens in North America, all using Texas Instruments' (NYSE: TXN  ) DLP projection technology. The company intends to grow to nearly 10,000 screens in the next few years, through a partnership with Sony (NYSE: SNE  ) Pictures. Some cinema chains like AMC have their own digital platform rollouts slated, too.

Once the screen and projector are in place, theater owners can simply attach any of the major 3-D screening technologies -- Dolby (NYSE: DLB  ) 3-D, or DreamWorks or Disney's (NYSE: DIS  ) versions of RealD, for example -- and usher in the audience. This technique even works in digital IMAX (Nasdaq: IMAX  ) theaters, too.

This means that filmmakers can start making movies with 3-D in mind. This stuff looks great in the cinema, but it's not easily replicated by your home theater. Downloading and watching it on your computer starts to seem like a silly idea. Dreamworks Animation will release everything in 3-D from now on, and other animation studios will probably follow. There's no reason why live-action movies couldn't enjoy the same enhanced cinematic language.

Get used to those 3-D glasses, folks. This is the wave of the future. Who would have thunk that 3-D would rescue cinema?

If and when RealD goes public, it might make a pure-play 3-D investment worth investigating. In the meantime, we can stock up on Dolby, or digital cineaste Cinedigm, or the company behind the hardware curtain -- Texas Instruments.

Further Foolishness:

Walt Disney is a Motley Fool Inside Value recommendation. IMAX is a Motley Fool Rule Breakers selection. Walt Disney, Dolby Laboratories, and DreamWorks Animation SKG are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in Disney and Cinedigm (formerly known as Access Integrated Systems), but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like. The Motley Fool's disclosure policy has some paddleball tricks it wants to show you.


Read/Post Comments (4) | Recommend This Article (8)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 30, 2009, at 4:31 PM, juliehowe wrote:

    For this two-income, no kid family, there isn't much any movie theater chain can do to bring us back. 3-D won't do it.

  • Report this Comment On March 30, 2009, at 8:15 PM, AnnapolisGuy wrote:

    Oh, really!

    For the last 15 years, 3-D has been the quote-unquote next-big-thing. Every 2 years or so, some big movie exec raves to the fawning media about how EVERY movie from now on will be in 3-D.

    A few (animated) movies are then actually made in 3-D, the fad goes away, and then we all forget about it...

    Until a couple years go by and SKG (I think THEY'RE the propagandists here) releases another mediocre animated flick IN 3-D! and they breathlessly announce -again- that 3-D is the future of movies.

    Can you feel the excitement fade? Tune back in 2011 when 3-D will once again be the most important part of the movie industry EVER!

  • Report this Comment On March 31, 2009, at 8:51 AM, TMFZahrim wrote:

    AnnapolisGuy, I know what you mean. The difference is that this time, it works. It's good enough now that the only thing left to do would be losing the glasses altogether. (3D polarized contacts? Eye socket implants? Beaming images straight into my cortex? Either way, it's not happening anytime soon.) So, until that experience can be duplicated at home, that gives the ciname a homefield advantage. Let's see how they use it.

    Anders

  • Report this Comment On August 17, 2012, at 11:47 AM, nflgator wrote:

    Well it is now 2012, and 3D has been in full swing for some time.

    It's interesting that no one considered how many theaters would close due to the advent of the costly technology necessary to project 3D.

    Small theaters in particular have long struggled to keep their doors open - before 3D ever came along. Now comes the time where movies on film will no longer be made, everything will be digital. The cost to upgrade a single screening room is upwards of 60K. Multiply that by 3 cinema screens for a single small movie theater business and it is practically out of reach. If you own a small theater that scrapes by (lets say 150K annual gross), with net about 35K, what bank would even consider giving you a loan? That's not even considering the 3D upgrades. Theaters in large metropolitan areas probably do just fine, especially the chain multiplexes. However, theaters in the many small rural towns across the country would be better served by opening a convenient store.

    The demands placed on small theater owners by filmmakers and distributors are unbelievable. You wonder why it costs so much to go to the movies? I imagine those conversion costs would be one reason why prices at theaters went up. I read an article on face book posted by the Perry Theatre which is located in rural north Florida called: Everything you wanted to know about a movie theatre but were afraid to ask. I guess they plan to do a series of articles so movie-goers will get an idea of why it costs so much and also get a peek into the movie industry few people know about. It was an eye opener for me.

    I bought a Sony 3D HDTV two years ago and regularly purchase 3D movie DVD’s. It is awesome technology.

    But I also still go to my small town theater once a week to show my support. It allows me to preview movies before I buy the DVD. $10 buck gets me a ticket, a drink, and a small popcorn!

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