Is 3D TV Dead or Just Dormant?

Once anticipated as the next big thing, 3D TV has fallen out of favor. Can it make a comeback?

Jan 21, 2014 at 3:50PM

Having been a major focus at the Consumer Electronics Show in 2011 and 2012, 3D TV receded in focus in 2013, and all but disappeared at the 2014 show where it was largely supplanted by 4K technology. While some signs point to the technology being dead in the water -- and it's certainly no longer the belle of the ball -- it just might have a future yet.

First, the bad news

At one point 3D channels were announced (and in some cases launched) by Disney's (NYSE:DIS) ESPN, MSG Network (a joint venture between Imax and Discovery Networks), another joint venture from Panasonic and DirectTV, and a handful of others in the United States and abroad. Though some still operate, none have taken off wildly and the prospects seem much dimmer than in 2011 or 2012. ESPN had been perhaps the largest supporter of the technology, announcing its new ESPN 3D Network in 2010 with great fanfare after what appeared to be some careful research.

In its launch press release, the company said that the new network was "the culmination of more than three years of testing 3D television." To prepare for the launch, ESPN produced several 3D telecasts, including the Masters in April 2010. The company also developed best practices for using the technology in live game applications, which have provided the ability to streamline workflow operations, adjust 3D camera positioning, perform transmission tests, and gauge fan reaction to a 3D telecast versus a traditional telecast.

In 2013, with much less fanfare, the company shuttered the network because consumers simply weren't watching it. The sports network told the Associated Press in June 2013 "there weren't enough viewers to make 3D broadcasts worth it." ESPN didn't say exactly how many viewers it had, but the number was "extremely limited and not growing." 

According to the same article, an estimated 6% of TVs in the U.S. were able to show 3D programming in 2012, according to the most recent data from research firm IHS Screen Digest. Even homes that have 3D TVs don't appear to be using them very much, said IHS analyst Sweta Dash.

In general, the audience for 3D TV has been so small that it's impossible to measure. In September 2012, AP reported that "fewer than 115,000 American homes are tuned into 3D channels at any one time. That's less than 1% of the 20.2 million-strong audience that saw television's highest-rated show "NCIS" this week. 3D viewership is so tiny that the Nielsen Co.'s methods are unable to capture any meaningful data about viewers' programming preferences."

No, really, there is good news

One of 3D TVs early supporters, TV-marker Vizio, announced at the 2014 Consumer Electronics Show that is was dropping support for 3D TVs.That, coupled with the much lower profile 3D TVs had at the show, has been taken by many as proof that the 3D TV is dead. The Vizio announcement, however, was a bit misleading as the company has not dropped 3D from its plans or stopped developing the technology.

"Vizio has moved away from 3D based on glasses and redirected all of its development effort on glasses-free 3D," the company's chief technology officer, Matt McRae told Variety. "Vizio believes consumers enjoy 3D content, but the living room is a very different environment than a movie theater."

That is where fans of 3D can find a ray of sunshine -- Vizio is not alone. Starting with models displayed at 2013's CES, Sony (NYSE:SNE) made the feature a default feature in all of its TVs -- meaning that you get it whether you plan to use it or not. It'll be there if something  -- perhaps the next "Avatar" -- comes along to get consumers interested.

The really good news for 3D TV supporters is that while it may not have worked as a premium service to get people to pay more for TVs, it is becoming affordable and just another bonus feature. It's now possible to buy a 40-inch 3D TV from Samsung (NASDAQOTH:SSNLF) for a little over $500,   a 50-inch model from Vizio for under $800, and a 47-inch Smart TV from LG for under $1,000.

A lot to lose

While the major players in 3D TVs don't break out how much they have invested in 3D from their overall reported research and development numbers, one Panasonic executive told at CES 2013, that 3D has been a bust. Panasonic's senior manager for TV, Fabrice Estornel, said that while the company "spent a lot of money investing in 3D," the investment "hasn't really worked." "Significant R&D and marketing spend has been piled into incorporating 3D into Panasonic's TV range, over 90%" of which now offers 3D, since its first 3D TVs arrived in 2012. Estornel added that Panasonic's "customers are telling us not to bother" with 3D, that it is not a significant draw for new TV buyers.

According to NPD Research, the early numbers may not be encouraging, but the demand for 3D TVs should grow exponentially. "The 3D display market is set to grow from 50.8 million units and $13.2 billion in revenue in 2011 to 226 million units and $67 billion in revenue in 2019 worldwide, according to the NPD DisplaySearch 3D Display Technology and Market Forecast Report. Those increases can't come fast enough for the industry as Sony, for example lost 203.2 million yen (around $194 million U.S.) in 2012 and 84.3 million yen (about $80 million U.S.) in 2013 in its Home Entertainment division, which includes TVs .

According to Bloomberg, Samsung has also been battling problems in its TV division, some of which can be blamed on slow adoption of 3D . In the final quarter of 2013, "Operating profit at Samsung's consumer-electronics division, which oversees the TV and home-appliance businesses, probably fell to 418 billion won from 700 billion won a year earlier, according to the analyst survey (one won equals 0.00094 U.S. dollars, so that's a profit drop of $264,322,211.65) -- not as catastrophic as Sony, but still not good.

People are getting it (whether they want it or not)

While consumers are not flocking to 3D TV willfully at the levels that the TV industry had hoped for, falling prices and including the technology whether consumers want it or not has led to an increase globally in homes with 3D TVs. Futuresource Consulting, which tracks sales quarterly, says the market is on track to achieve 157.7 million 3D TV sales in 2017, up from a forecast of 59.3 million for 2013.

"In 2017, 3DTVs will account for 58% of all TVs sold across the globe, rising from 18% last year," said Sam Leech, a research analyst for Futuresource Consulting, in September 2013. "Growth in the delivery of 3D content to the home is less apparent, with a varying array of broadcaster strategies -- some are ending current commitments whereas others continue to increase output. What is clear is that 3D content will become increasingly restricted to premium and on-demand offerings."

So while 3D content may for a while be limited, homes are going to have 3D TVs even if they aren't buying them intentionally. While 3D as a marketing gimmick may be dead, 3D as a technology may become a bit like secondary audio programming or closed captioning where most people have it but not everyone uses it. For those who do use it, however, it's a well-liked and even needed feature.

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Fool contributor Daniel Kline has no position in any stocks mentioned. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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