SBJ/20100628/SBJ In-Depth

A new dimension

South African striker Siphiwe Tshabalala got the World Cup off to a rollicking start on June 11 when he scored in the 55th minute of the tournament’s opening game between the host country and Mexico. His goal sent the Johannesburg crowd into a frenzy, vuvuzelas buzzing ever louder.

Roughly 8,000 miles away at ESPN’s Bristol, Conn., headquarters, where the company was debuting its new, dedicated 3-D TV channel, the replay of Tshabalala’s beautiful crossing goal produced an audible gasp among those watching the game in the enhanced format. Thanks to a 3-D camera positioned just behind the goal, the ball looked as if it was leaping out of the screen and directly toward the viewers as it rocketed into the net.

Things jumping out at viewers is a long-standing element of 3-D, sometimes devolving to cheap gimmickry. But the Tshabalala replay — occurring just moments after the live event itself — also contained depth, immersive realism, a perfectly located camera, and the importance of the first goal scored in one of the planet’s most revered sporting events.

“That’s the wow factor,” said Chuck Pagano, ESPN executive vice president of technology. “I have to admit I didn’t get it at first, when I first saw a 3-D demonstration roughly four years ago. But then I saw the wow factor later on, and now there’s a [3-D] tsunami coming.”

Indeed, a 3-D TV tsunami is crashing through the sports and entertainment landscape. Fresh off a historic spate of 3-D TV-related announcements at January’s International Consumer Electronics Show, nearly every major manufacturer, programmer, distributor and sports property in the business is now actively engaged in some type of 3-D TV project, ranging from full-time dedicated channels to special events such as the upcoming MLB All-Star Game.

Nearly all of them involve delivery of the enhanced format to the home, where many believe awaits an even greater economic prize than the more than $1 billion-per-year business for theater-based releases of Hollywood films in 3-D. In the case of sports, 3-D TV typically involves live game productions, still the critical core of the sports business.

But moving 3-D TV from “wow factor” to a truly viable, scalable business is already proving far easier said than done.

Actor and South Africa native Sharlto Copley was
among those who watched the first game of the
2010 World Cup as ESPN demonstrated its
3-D broadcast.

ESPN’s 3-D channel is available in more than 45 million homes thanks to distribution deals with Comcast, DirecTV and AT&T’s U-Verse, but is actually being seen in a tiny fraction of that number because of the limited numbers of 3-D sets currently in homes. Other 3-D programming and distribution efforts, such as DirecTV’s new four-channel 3-D tier, face a similar issue with regard to reach.

3-D-enabled televisions began showing up at major retailers such as Best Buy this spring, and while anecdotal evidence suggests that early sales have been good and future projections are bullish, it will still be years before sales of 3-D TVs reach truly critical mass.

On the TV production side, developing a live game in 3-D currently involves an entirely separate technical crew than the ones working in the regular 2-D format. That additional expense in manpower and technology for dual productions is unsustainable long term, many industry executives say, mandating the arrival of a blended production system that does not yet exist.

6.2 million
Number of 3-D televisions projected to be sold worldwide this year, representing 3 percent of the sales market
83 million
Number of 3-D televisions projected to be sold worldwide in 2014, representing 31 percent of the sales market
Source: Displaybank

And there’s the broader, more fundamental question: Is 3-D TV something consumers will truly embrace, and more directly to the point, pay for?

High-definition TV, after a slow start early last decade, is now an indispensable element of the business. But even those directly involved in 3-D are not yet fully certain whether that dynamic will be fully repeated for 3-D TV, and even if so, how quickly.

“We’re all sort of throwing spaghetti against the wall,” Pagano acknowledged. “But we’re committed to this going forward. It’s new territory for everybody, but terribly exciting.”

Chasing the carrot

To understand the financial motivation for the onslaught of 3-D TV efforts, look only at the last 18 months in Hollywood. In 2009, 3-D films represented 11 percent of the $10.6 billion overall cinema business in the U.S. and Canada, according to the Motion Picture Association of America, a massive jump from just 2 percent in 2008.

Developing a live game in 3-D requires an
entirely separate technical crew.

That percentage is poised to surge much higher again this year, particularly as James Cameron’s 3-D epic “Avatar” has become the highest-grossing movie of all time. And for films released simultaneously in 3-D and 2-D, 3-D tickets now typically outsell 2-D by more than a 3-to-1 margin, despite the 3-D tickets typically costing more.

Live TV sports, of course, cannot generate those direct-from-consumer returns given how the economics of sports television work. But the hope all the same is for higher fan engagement and ratings, which would then translate into larger rights fees and advertising rates.

“Any time you are able to improve the engagement of your product, it becomes a more valuable product and your business gets stronger,” said Dan Ronayne, MSG Networks’ executive vice president and general manager. MSG in March showed a live New York Rangers-New York Islanders hockey game in 3-D to strong reviews and is pursuing more such productions. “That’s what we are always focused on. Ultimately, that’s what the promise of 3-D will or won’t be.”

Expecting no rush to 3-D
The following are results of the Turnkey Sports Poll taken in May. The survey covered more than 1,100 senior-level sports industry executives spanning professional and college sports.
Electronics makers began selling 3-D televisions to consumers this year. When do you think viewing sporting events in 3-D will be as widespread as watching sports in HD currently is?
2010
0%
2011
1%
2012
17%
2013
12%
2014 or later
51%
Never
15%
No response/Not sure
5%
 
What is the biggest obstacle for the at-home 3-D TV viewing experience to becoming widespread/common in the next two to three years?
Source: Turnkey Sports & Entertainment in conjunction with SportsBusiness Journal. Turnkey Intelligence specializes in research, measurement and lead generation for brands and properties. Visit www.turnkeyse.com.

TV manufacturers, similarly, are looking to hasten a replacement cycle, despite the fact that more than 40 million HD sets were sold between 2007 and 2009, according to Forrester Research. But unlike the early days of HDTV, when some sets cost roughly the same as a new car, 3-D TVs now on the market or soon to arrive don’t carry huge upcharges for the enhanced technology. Best Buy, for example, recently was selling a 50-inch Samsung plasma 3-D set for $1,800, certainly higher than the $1,069 listed for a similar set without 3-D capabilities, but nowhere near the tripling or quadrupling in price many feared less than a year ago.

Because of that relative lack of price escalation, research firm Displaybank recently projected that 6.2 million 3-D TVs will be sold this year worldwide, amounting to 3 percent of the sales market, quickly soaring to 83 million units globally and 31 percent of the overall TV market by 2014. Individual manufacturers such as Samsung, Sony and LG are all expecting strong returns beginning this year on 3-D TV sales.

3-D additionally is being eyed to provide a big new spark to flagging DVD sales. Blu-ray DVD players with 3-D capability are beginning to hit the market, again with fairly affordable pricing often below $300. On top of the expected blitz of Hollywood features in 3-D for the home, led by “Avatar,” several sports properties are seeking to develop 3-D highlight DVDs.

“I definitely see a market for us in DVD for this,” said Steve Hellmuth, NBA Entertainment executive vice president for operations and technology. The league, perhaps the most active historically among major U.S. properties in 3-D activity, is developing a 3-D DVD retrospective of February’s record-setting All-Star Game in Dallas, along with highlights of other NBA events produced in 3-D. No release date has been set. “It’s something that can give us extra legs on this, and encourage more sampling of 3-D, which is going to be very important as this continues to develop.”

And on a longer-term perspective, selling larger sets of broadcast rights to 3-D broadcasts also is being eyed closely.

Comcast partnered with the Augusta National
Golf Club to produce this year’s Masters in 3-D.

“This is something where we’d obviously be working on in close partnership with our [existing] TV partners,” Hellmuth said. The league has set no 3-D plans yet for the 2010-11 season. “Not only is there opportunity here, but perhaps even more so overseas where we can use 3-D to re-create more of that feeling of the in-arena experience.”

Major sports events, where maximum buzz can be generated, will be among the first to get snapped up. Comcast partnered this year with the Augusta National Golf Club to produce the Masters in 3-D.

“What’s been missing with 3-D for the past several years was the set and a sufficient amount of content to play on the set,” said Matt Strauss, Comcast senior vice president of new media. “Doing additional tent-pole events like the Masters is something that presents a lot of value, and producing select tent-pole events is something that we’re looking at very carefully.”

Clearing the hurdles

For all the allure and promise of 3-D TV, however, there are still many major hurdles that must be addressed for the technology to grow fully and prosper. Foremost among them, predictably, are the glasses.

Every 3-D TV requires either passive or active-shutter glasses to create the 3-D effect, and those darkened glasses can inhibit the social nature of watching sports. Active-shutter glasses, typically much more expensive but also more frequently used for TVs targeted for home use, use motorized lenses to shutter the views at high speed. Passive glasses typically employ polarization filtering techniques, and are akin to what viewers get at 3-D cinemas.

What the nets have planned
ESPN 3D
The country’s first stand-alone 3-D channel launched June 11 with the World Cup. ESPN 3D has close to 100 live sporting events planned for its first year, including NBA games and the X Games. The channel goes dark when it’s not showing a 3-D telecast.
Fox
The network is testing 3-D next month with its MLB All-Star Game, which Fox is co-producing with DirecTV. The broadcaster hasn’t announced any other 3-D telecasts on its schedule.
YES Network
The New York-based regional sports network will be the first to telecast an MLB game in 3-D when it co-produces two New York Yankees-Seattle Mariners games with DirecTV just before the All-Star break, July 10 and 11. The RSN does not have any other 3-D telecasts on its schedule.
MSG Network
The Cablevision-owned RSN won raves for its initial 3-D telecast, a March 24 NHL game with the New York Islanders and New York Rangers. MSG does not have any other 3-D telecasts on its schedule, but is planning to produce more events using the technology.
Discovery
Next year, the documentary channel is launching its own 3-D network, a 24/7 service that will be a joint venture with Discovery, Sony and IMAX. Earlier this month, it named longtime Discovery executive Tom Cosgrove as the channel’s president and general manager.
— John Ourand

U.K. broadcaster BSkyB has garnered some decent early returns on a test effort to bring 3-D TV into roughly 1,000 pubs there, using inexpensive passive glasses. Anecdotal evidence there has pointed to strong consumer acceptance in that communal setting, and important for the pubs, sizable increases in food and beverage purchases.

But in the home, more challenges exist. 3-D TV sets typically come with only one or two sets of glasses, and sometimes none at all. Buying more to accommodate bigger groups requires incremental expense, with prices well in excess of $100 each for active-shutter models. And even if a friend brings over his 3-D glasses to a viewing party, they almost certainly will not work, because there’s no universal set of 3-D glasses compatible with every set on the market.

More fundamentally, the 3-D glasses conflict with the multitasking that now exists in concert with watching TV. Nielsen Co. earlier this year said that 59 percent of U.S. consumers watch TV and surf the Internet simultaneously, with both that percentage and the amount of time spent performing those tasks together continuing to rise.

“You can’t cook or read or text, be on Facebook, or whatever while you’re watching 3-D. That’s why for the near-term future, we see this as more of a big-event thing and something we’re really delivering a differentiated experience compared to watching a great HD presentation in 2-D,” Hellmuth said.

TV manufacturers, technologists and others are working actively on 3-D technology that does not require the glasses. But there is no timetable on when that will become available, much less reach mass adoption.

What’s it cost?
A scan of Best Buy earlier this month gives consumers a good idea of what they can expect if in the market for a 3-D television. Here’s a sampling of prices:
Samsung 55-inch $3,149.99
LG 55-inch $3,299.99
Sony Bravia 46-inch $2,699.99
Panasonic Viera 50-inch $2,599.98
You may also need:
3-D glasses designed to work with the television, which may or may not be included with your television purchase
A 3-D-ready Blu-ray player to watch 3-D Blu-ray discs
Source: Best Buy

For 3-D TV shoppers, the in-store experience is similarly challenged. With the technology still so new, there are no definitive benchmarks on what consumers need, should have or should expect to spend. Package deals, though often attractively grouping a 3-D TV set, 3-D-enabled Blu-ray player and home theater system, only muddy the waters further. And employee training among many retailers appears to be lacking.

“The level of misinformation out there is really, really severe,” said Steve Schklair, founder and chief executive of 3Ality Digital Systems, a California-based technology provider that has aided the NFL, BSkyB and many others on their 3-D efforts. “I’ve been told all sorts of wacky things [by salespeople] in the stores. There’s no real consumer education happening out there.”

Programmers additionally are looking for financial help on building out an infrastructure to support future 3-D productions. That, of course, leads in part to the traditional dance between programmers and distributors over carriage fees. But again, with no concrete sales data, ratings or definitive consumer behavior for 3-D to guide negotiations, those discussions remain hamstrung to a degree.

“The road map has already been paved,” said Ray Hopkins, YES Network chief operating officer. The regional sports network, along with DirecTV, will produce the first baseball game shown in 3-D next month with a pair of New York Yankees-Seattle Mariners games that will serve as a run-up to the MLB All-Star Game production. “Given how expensive it is to produce sports in 3-D, networks need to be compensated in order to share costs, in a similar manner they were compensated for HD.”

Staff writer John Ourand contributed to this report.

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