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3D Hype Brings Out the Skeptics

While the buzz out of the Consumer Electronics Show in Las Vegas was all about 3D, no one is expecting the masses to flood into Best Buy to demand new sets anytime soon. Major announcements last week from traditional media companies including ESPN, DirecTV and Discovery sent the 3D chatter flying out of Las Vegas, but analysts caution that if it does revolutionize television, it won't happen right away.

“Really, the 3D thing is still 10 years off for the mainstream, just as HD took more than a decade to really become a mainstream product,” says SNL Kagan Senior Analyst Derek Baine. “It will be a function of price point and of finding a way to get around having to use these glasses. That's just a non-starter for most people. It will happen over time. I think it's just a lot of hype at [CES].”

A Goldman Sachs report issued last week stated that “while 3D may drive a replacement cycle in LCD TVs, we think it will fall short of the hype.” The report added that the “time line for mass adoption is at least a few years away,” citing factors including limited availability of 3D content, high TV price points and 3D standards still needing to be finalized.

But the head of affiliate relations for one cable company not involved in any of the announcements last week is bullish on 3D. “Distributor talks are really in the preliminary stages; the issue right now is there's not a lot of consumer demand,” the executive says. “A number of companies launched HD, and within a few years the demand caught up. I think we'll start to see the same with 3D, but the growth curve may take a little longer. It's most likely that consumers would pay to get a 3D picture if companies are producing in that format.”

All of the noise came as a result of several major announcements last week. Panasonic and DirecTV answered weeks of speculation over which U.S. pay-TV operator would be first to launch a 3D service with word that DirecTV will launch three 3D channels by June, two linear and one video-on-demand. According to DirecTV, major programmers providing 3D content include CBS, NBC, MTV, AEG, HDNet and Fox Sports, which will broadcast the 2010 Major League Baseball All-Star Game in 3D.

Earlier in the week, Discovery, Sony and IMAX announced their 24-hour 3D television network. However, they didn't provide any details on carriage with pay-TV operators or the technical infrastructure. Discovery did say it expects the channel to be a broadly distributed entertainment channel, not a premium offering.

The partnership is aimed to launch in the U.S. in 2011 with content including natural history, space, motion pictures and children's programming from Discovery, Sony Pictures Entertainment, IMAX and other third-party providers.

ESPN, meanwhile, plans to roll out ESPN 3D this year. Sponsored by Sony, the new network will feature a minimum of 85 live sporting events in its first year, starting with the first 2010 FIFA World Cup match on June 11 between South Africa and Mexico. Other events to be produced in 3D include up to 25 World Cup matches, college basketball and college football, highlighted by the BCS National Championship game in January 2011.

ESPN did not provide any details about which pay-TV operators would carry the service, but it is committed to the network through June 2011.

The sponsorship commitments by Panasonic and Sony are significant. Programmers, including 3D proponents like Fox Sports Chairman David Hill, have repeatedly said they wouldn't foot the bill for 3D themselves and would require financial backing from set-makers to cover the substantial production and distribution costs. The deals recall the early days of HD, when Mitsubishi underwrote CBS' first season of HD primetime programming and Panasonic subsidized ABC's first year of Monday Night Football in HD.

Such sponsorship deals, along with the joint venture Discovery reached with Sony and IMAX, should allow television networks to keep pace with Blu-ray in the 3D content race without taking much financial risk. What carriage ESPN 3D will get remains to be seen, and the number of DirecTV subs who buy a new 3D set and hook it up this year will likely be small.

But even if ESPN 3D broadcasts are mostly seen by glasses-wearing patrons of its ESPN Zone restaurants, it will be great exposure for 3D to the general public, and ESPN gets to stay on the cutting edge of technology—with Sony footing most of the bill.