Is 3-D dead in the water? A box-office analysis.

Arts, entertainment, and more.
Aug. 24 2010 6:15 PM

Is 3-D Dead in the Water?

A box-office analysis.

Also in Slate, Daniel Engber and Dana Stevens debate whether 3-D makes movies any better to watch.

Piranha 3-D.
Piranha 3-D

Another summer weekend, another 3-D blockbuster (Piranha 3-D), and yet one more round of industry speculation: Will newfangled stereographic technology save Hollywood? Or has the 3-D revival run its course?

Daniel Engber Daniel Engber

Daniel Engber is a columnist for Slate

Just a few months ago, Tim Burton's three-dimensional Alice in Wonderland pulled in $116 million in its opening weekend, and a few months before that, Avatar started its 3-D fueled, $3-billion rampage around the world. New 3-D projects were flushed into the pipeline, and industry executives joyfully asserted that the format brought with it a 20 percent boost in revenue. But in recent weeks, some observers have started wondering whether the 3-D bubble has already burst. Critics may have liked Piranha 3-D well enough, but the new creature feature earned just $10 million in its opening days—putting it in sixth place at the box office, behind flat-screened flicks like The Expendables and Eat Pray Love. Is 3-D dead in the water?

Exhibit A for the curmudgeons is the following chart, showing the opening-weekend revenue from 3-D theaters as a percentage of total revenue for a handful of recent releases:

3D BOX OFFICE, OPENING WEEKEND

According to Daniel Frankel of TheWrap.com, who published a version of the graph late last month, "no matter how it's spun, the data on the expected 3-D explosion just isn't going in the right direction." Hollywood isn't ready to give up, he reports, but there's serious concern over the downward slope. As one theater-chain executive told Frankel, "the truth is probably that not everything should be in 3-D."

In the cinema blogosophere, Frankel's numbers went viral. For Patrick Goldstein of the Los Angeles Times, they were evidence that "audiences are abandoning 3-D at an even faster rate than previously suspected. … They've come to realize that, with some exceptions, most Hollywood films simply aren't noticeably better in 3-D." Even big-budget directors are worried that exorbitant ticket prices and lousy products will take their toll: Avatar director James Cameron has warned repeatedly that poorly executed films—what he calls "2.5-D"—could ruin everything.

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Maybe so, though you wouldn't know it from the chart shown above. There's no easy way to infer the viability of 3-D from opening weekend returns, but we can at least come up with a smarter approach to the problem. I've presented my own analysis below, based on a more careful parsing of the box-office numbers, and it looks to me that the revival is even worse off than we thought. Not only has the profitability of 3-D fallen in the past few months; it's in a slide that goes back years.

Before we get to that, let's review what makes the first chart so misleading. First of all, the data are incomplete. Fill in the gaps—one film released in Apriland three more from August—and you get a very different picture:

3-D Box Office, Opening Weekend.

But don't be fooled into thinking that 3-D is making a comeback-within-a-comeback. As defenders of the industry have already pointed out, the numbers plotted above—3-D revenue as a proportion of total revenue—aren't likely to reflect consumer demand. They have more to do with the number of 3-D theaters that happen to be available at any given time. A movie that gets shown on a few thousand RealD screens is going to make a lot more money (and a higher percentage of its gross) from 3-D than one that gets shown on a few hundred.

Here's an example: Avatar opened last December in 3,450 theaters nationwide; Despicable Me opened this past July at 3,475 theaters. Sounds about the same, except Avatar had a much bigger presence in 3-D venues—some 2,000 of its showings were set up for stereo projection, compared to 1,550 for Despicable Me. (The latter had to compete for screen time with Toy Story 3 and The Last Airbender.) Given that spread, it's no wonder that Avatar got a higher proportion of its revenue from premium showings.

If we really want to see what's going on with the 3-D revival, we'll have to consider both revenue and capacity. One way to do this is by asking whether 3-D screenings are doing better or worse than 2-D screenings on a per-movie, per-screen basis. The idea is simple: When Avatar opened, how much money was it making, on average, from each 3-D theater, and how much was it making, on average, from each 2-D theater? The ratio between those two numbers gives a sense of what extra money could be squeezed from the 3-D premium.

(To put it another way: If half of a movie's screenings were in 2-D, and the other half in 3-D, which half would take in more money—and by how much?)

Let's go back to Avatar and Despicable Me. The former earned, in its opening weekend, $26,800 for every theater that showed the film in 3-D, and $15,800 for each one that screened in 2-D. We might assume that if the film's backers had converted any one of those flat-screen showings to a 3-D projection, they would have realized an additional profit of $11,000—or an extra 70 percent.

What about Despicable Me? That movie took in $16,400 for each 3-D theater in its opening weekend, versus $16,100 for each one that showed it in flat format. If the studio and theater chains had upgraded one 2-D screening of Despicable Me to the fancier format, their added profit would have been just $300—or 2 percent.

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