Why Is Everyone Buying 3-D TVs If No One Wants to Watch?

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Can a product be considered successful if no one bothers to use its differentiating features? That's what 3-D TV manufacturers must ponder as they grapple with two wildly divergent facts.

On one hand, over 41 million 3-D TV sets shipped worldwide last year.

On the other hand, barely 100,000 American homes watch 3-D channels at any given time. Viewer apathy was so overwhelming, that Disney's (NYSE: DIS  ) ESPN announced that its 3-D broadcasts would cease this year, citing an "extremely limited and not growing" market.

If you can't get sports fans -- male-skewed and ostensibly a prime target for new or improved viewing experiences -- to tune into a channel that'll put LeBron James right next to them as he goes up for a vicious dunk, what hope do you have? Yet, the global flat-panel 3-D-TV market is projected to expand to 200 million in annual sales five years from now.

Has the media consumer ever expressed so much interest in buying a new format while simultaneously expressing so little interest in what that format can do?

Source: Wikimedia Commons. 

Clearly, 3-D-TV manufacturers have an interest in perpetuating the new format, at least for now. LG Display (NYSE: LPL  ) returned to profitability last year, thanks, in no small part, to 33% year-over-year sales growth in large TV panels, about half of which were 3-D capable. LG, which sells many of the TVs equipped with LG Display panels, saw surging profits last year on the sales of high-end 3-D TVs. Yet, at the same time, Sony -- one of the 3-D-TV "Big Four," behind LG and Samsung -- conceded last year that "consumers have decided [3-D TV is] not hugely important."

It could certainly be due to a lack of alternatives. At the turn of the century, you could still find plenty of new cathode-ray tube TVs alongside flat-panel TVs, which often retailed for princely sums. Now, it's a rare sight to see these analog dinosaurs for sale anywhere, even at Goodwill. The price of a flat-panel TV, in the meantime, has crashed through the floor on which CRT TVs used to rest. According to an analysis by Brent Cox of The Awl, a flat-screen TV of 2011, roughly equivalent in size to a CRT of 1996, cost nearly $200 less, when adjusted for inflation. Encroaching 3-D capabilities may inevitably take over all TV production, whether consumers want it or not.

So, 3-D TV is at that awkward stage of its life where producing the sets makes more sense to most major TV manufacturers, but dedicated broadcasts are cumbersome, and viewer interest continues to be depressed for a variety of factors. The "glasses problem" is well-known and, at the moment, nearly 40% of American households take a dim view of the experience. The cost can also be prohibitive, both on the hardware, and on the content side. After consumers buy a 3-D TV, which costs more than an equally sized 2-D version, they still have to pay extra for 3-D broadcasts that usually come bundled as part of a premium service package. And let's face it -- 3-D is more a gimmick than a "killer app." Still, the cost differential between 3-D and 2-D will keep narrowing until, like CRTs, 2-D will simply become outdated.

Unless the next big thing comes along before consumers start to care. TV manufacturers are already pushing new high-end "ultra HD," or 4K, which is four times as sharp as existing high-def 1080-pixel sets. Beyond that, there's not much to be done to really push the TV envelope, short of holograms. That might wind up arriving soon after 4K catches on -- Japanese researchers have already developed real-time holographic color visuals that they hope to make public by the 2022 World's Cup. A consumer introduction, however, might not occur for another two decades. In the meantime, TV manufacturers will need to find a balance between profitability and consumer interest, whether they decide to keep peddling 3-D, or switch wholeheartedly to 4K.

It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But, from its vast catalog of characters, to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch, as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.

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