One Trend to Watch for Hollywood Stocks

The 3-D movie trend is facing a litmus test right here, right now.

A cottage industry of sorts has grown up around the resurgence in 3-D films. It's all RealD (NYSE: RLD  ) does; Sony (NYSE: SNE  ) and Walt Disney (NYSE: DIS  ) have developed their own 3-D projection systems; and what would the larger-than-life IMAX (Nasdaq: IMAX  ) experience be in just two flat dimensions? So there's plenty of money riding on those 3-D-boosted ticket prices these days.

The trial by fire that will show us exactly how investable 3-D tech might be comes courtesy of DreamWorks Animation SKG (Nasdaq: DWA  ) . Shrek spinoff Puss in Boots opens on Friday in a flurry of swashbuckling, milk-sipping 3-D action.

The film itself isn't particularly interesting to us investors. Disney's Cars 2 and DreamWorks' own Kung Fu Panda 2 were far more buzzworthy ahead of their releases, at least according to polls by Box Office Mojo. Neither film lived up to expectations. Only 4% of polled film buffs called Boots the most anticipated cartoon of 2011.

From that perspective, we shouldn't expect a huge opening week. The story doesn't have the legs to carry Boots to much of a follow-up week, either -- it's just another paint-by-numbers revenge yarn with all the desperate pop-culture reaches we've come to expect from DreamWorks. No big deal at all.

But if you go, make sure to catch this movie in 3-D. You see, the whole thing was planned and shot from that perspective, and would lose a great deal of its visual impact without it. In fact, it's less of a movie and more of an experiment in 3-D cinematography.

Puss in Boots hits you over the head with 3-D effects from Scene One and never lets up. If there's any breath left in this title by weeks two or three, it will be because word of the amazing 3-D work is spreading -- and because consumers see this as a good reason to buy a ticket. That might not be the case at all.

So keep an eye on this movie's lasting power if you're at all interested in RealD, IMAX, or any other player in the 3-D space. Add them to your Foolish watchlist -- it'll make things easier for you. Should it sink like a stone in the second week, you'll know that moviegoers just don't care about those fancy effects.

And even if 3-D turns out to be a fad, you can still make money by investing in silver-screen technology. Read a powerful report and see why our top analysts think that the stock could double or even triple your investment. Get your copy now -- it's free!

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of DreamWorks Animation SKG, Dolby Laboratories, IMAX, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can go over Anders' holdings and a concise bio, follow him on Twitter or Google+, or check out our Foolish disclosure policy.


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  • Report this Comment On October 25, 2011, at 12:23 AM, bbflyer wrote:

    Anders,

    Interesting view on Puss in Boots being a test for the longevity and appeal of 3D. I don't think it is a significant enough movie to be so but it sounds like you have seen it and enjoyed the 3D.

    I do need to correct a few statements in your e-mail. Sony's 3D solution in their 4K projector is powered exclusively by RealD. Disney does not have a 3D solution for digital projectors or for exhibitors. They brand their production as "Disney 3D" which is their own in house 3D production. It has nothing to do with RealD's business of enabling exhibitors through license deals to project 3D on their digital platforms.

    Also, you mention 3D as a cottage industry. Considering that 3D made up about 20% of the domestic box office last year and will probably surpass that this year I would hardly count that as a cottage business (worth over $2 billion domestically). In addition, 3D and RealD is expanding rapidly overseas and is on pace to be well over 20% for the international box office which is $30 Billion ++ which equates to over $6 Billion. I think we are past the fad question.

  • Report this Comment On October 25, 2011, at 3:45 AM, DangerousDave8 wrote:

    I agree. There is no fad here o 3s is here to stay. In entertainment, it provides an extra plus to keep people coming to theaters.

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