Hollywood sticks with 3D, despite fall from dizzy heights of 'Avatar'
HOLLYWOOD will continue to push 3D movies to bolster box-office revenue even if profits aren't what the studios envisioned when 'Avatar' ignited widespread enthusiasm for the format.
Studios will release at least 26 films in 3D next year, up from 22 in 2010, according to Hollywood.com. The 3D winners include James Cameron's 'Avatar' (the No 1 film of all time), and Walt Disney's 'Toy Story 3'.
"Jim showed how it can be done well," said former chairman of 20th Century Fox and producer of the 2009 3D release 'Coraline', Bill Mechanic in an interview. "A lot of it depends on how you use it."
For many of this year's releases, the typical $3 (€2.31) to $3.50 surcharge for a ticket to a 3D film more than covered added production costs of $5m (€3.85m) to $20m (€15.39m) per movie, studios say.
Still, not all 3D movies have succeeded, and 2012 may see a smaller number as studios complete projects approved in the glow of 'Avatar' and become more selective.
"If you get a 10 or 15pc boost in your box office, it's completely worth it," Mr Mechanic said.
Executives are meeting in Los Angeles this week to discuss the success and future of 3D films at the 3D Entertainment Summit. Speakers include DreamWorks Animation CEO Jeffrey Katzenberg and 'Sixth Sense' director M Night Shyamalan.
The biggest cost factor is the added time needed to set up scenes to accommodate the depth that 3D allows, said Mr Mechanic.
In the stop-motion animated 'Coraline', 3D added $5m-$6m to the budget, Mechanic said. The film, based on the Neil Gaiman book, was made for about $60m and generated $124.6m in worldwide ticket sales, according to industry website Box Office Mojo.
DreamWorks Animation, based in Glendale, California, spends about $15m extra to make its computer-generated films in 3D, Mr Katzenberg said in May 2009.
"3D is one of the most profitable investments we've made as a company," he said in July.
The 3D viewings have generated sales of $1.49bn this year, or about 20pc of the total domestic box office, according to Bloomberg Research.
For all of 2009, 3D films generated $1.1bn, or 11pc of the total, according to the Motion Picture Association of America.
'Avatar' has taken in $2.77bn in box-office sales, including $2bn since January 1, on production costs of $230m, according to Box Office Mojo.
The movie was released on December 18. 'Toy Story 3' cost about $200m and has had sales of $1.04bn following its release on June 18.
'Toy Story 3' helped lift third-quarter operating profit in Burbank, California-based Disney's film division to $123m from a loss of $12m a year earlier.
'Avatar' and the 3D 'Ice Age: Dawn of the Dinosaurs' increased fiscal-year operating income in New York-based News Corp's movie unit to a record $1.35bn, the company said last month.
"3D will be meaningful, but right now it is more of an event technology," News Corp president and chief operating officer Chase Carey said at the Hollywood Radio and Television Society in Los Angeles. "You can't put it on every movie."
3D doesn't guarantee box-office appeal. New York-based Time Warner's 'Cats & Dogs: The Revenge of Kitty Galore' cost about $85m and generated $98.4m in global ticket sales, according to Box Office Mojo, located in Sherman Oaks, California.
The Weinstein Co's 'Piranha 3D', made for $24m, has taken in $24.3m since its August 20 release.
The share of sales generated by 3D showings of films has declined since 'Avatar' set a benchmark at 80pc.
'Toy Story 3' produced 57pc of its sales from 3D showings, according to Bloomberg Research, possibly a sign that some fans were unwilling to pay the premium and chose 2D instead.
The flops may help studios focus on those best suited to 3D, said Matthew Harrigan, a Denver-based analyst with Wunderlich Securities.
"The experience is going to improve over time," he said.
Theatres are likely to keep the ticket premium at about $3, particularly if studios become more discerning about which movies are worth the extra investment, said Michael Pachter, an analyst with Wedbush Securities in Los Angeles.
Attendance has fallen 1.6pc this year even as the $3 surcharge has boosted revenue.
"It's going to be hard for them to raise 3D prices," said Mr Pachter. "Right now, I'd say no way." (© Bloomberg)