The battle lines are starting to harden around who’ll pay for those lame-looking 3D glasses. I’ve learned that other studios might line up behind Sony’s decision to stop paying the average 50-cents a pair fee beginning in May. Rival studios tell me Fox is on board. “We’re studying our options, but haven’t made any decisions yet,” denied Fox Filmed Entertainment spokesman Chris Petrikin. Remember, Fox was first in line to try to stop paying for glasses back in 2009 when it released Ice Age. But then had to abandon that effort after theaters rebelled. Sony was technically correct today when it said in a statement that “there never has been” a formal agreement stipulating that studios would shoulder the cost of 3D glasses. But it’s easy to understand why exhibitors are stunned by Sony’s stoppage. Because it changes an understanding that’s been in place since 2005 when Disney’s Chicken Little kicked off the 3D movie phenom.
“It is a radical departure from what the practice has been,” National Association of Theater Owners President John Fithian tells me. Now Regal CEO Amy Miles warns that if studios end the practice then it could “result in fewer screens exhibiting 3D films”. That’s bad news for Hollywood, which plans to release 39 films in 3D next year, vs. 36 in 2011. Exhibitors might encourage consumers to bring their own 3D glasses. That may be the future anyway. But BTIG analyst Rich Greenfield says if theaters require payment for 3D specs on top of the typical 3D surcharge ($3.25 to $4 a ticket), then “the U.S. moviegoer will reject this as another way for exhibitors to milk them and further decrease their interest in 3D (and perhaps going to the movies in general)”.
The fight is over glasses manufactured for RealD which it, in turn, supplies them to theaters. RealD’s stock price was down -14.7% today on the Sony news. The 3D tech company won’t disclose how much it pays for the specs, but it’s said to charge anywhere from 40 cents a pair to $1 depending on the size of the order. Some exhibitors grumble about dealing with a monopoly, but RealD spokesman Rick Heineman tells me that the system “allows us to do quality control.” He adds that the company is open to other business models. For example, moviegoers in Europe and Australia frequently buy glasses for about $1 at the concession stand. RealD also wouldn’t mind if people keep and reuse their glasses. Or shell out as much as $150 for a classy-looking pair from manufacturers including Polaroid, Gunnar Optics, Marchon, and Oakley. (What, no Prada yet?) Manufacturers say that the costly specs provide a better 3D experience, though Heineman says RealD certifies that even the cheap models meet its minimum specifications.
Meanwhile, some studios are now claiming that a lot of their parent companies have environmental policies that run contrary to petroleum-based glasses that just end up in landfills — and there have been probably hundreds of millions of the glasses used so to date — so that is a
significant environmental issue as well as financial one. That isn’t a concern among theater owners who maintain that studios already have a good deal. Hollywood collects about 52% of the box office revenue in the U.S. vs. 40% or less in Europe and Australia. Sony is holding out an olive branch of sorts by asking exhibitors to “engage in a collegial dialogue with us about this issue, including at ShowEast next month.” But Fithian says the studio “should have started by talking to their partners”.
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