Fox, glasses, and the 3D value proposition

Fox executives have recently said that they are against paying the cost of the glasses handed out to ticket buyes for their theatrical 3D features. They argue that they have been down this route before and won’t get burned again.

They took part in the negotiations that designed the national digital transition from analog to digital broadcasting. They absorbed the cost of converting their production, post production, and distribution infrastructure. Consumer electronics companies sold lots of digital TVs and peripherals. But Fox did not earn one extra penny, they say, as a result of the huge investment.

Their position is that they will create 3D content for theatrical release. And they will license it at a higher rate to cover the added cost of production as well as to receive fair compensation for the added value of the 3D experience. But this time they expect the player that benefits from their product, the exhibitor, to absorb the cost of the portion of the 3D rollout that they control; the glasses that make viewing the content in their theatres a destination experience.

I am old enough to remember when airlines charged a fee to watch the inflight movie. In the beginning the headphones were hollow tubes that channeled the sound from the seat armrest to your ear. The attendants showed a preview then came down the aisle and collected cash from anyone who wanted to hear the movie. Everyone could see the movie, so there was a second buying frenzy once the feature began. The headphones were pretty useless for anything other than inflight use, so few people bothered to steal them.

When airlines converted their cabins to electric headphones, some of them used the same jacks/plugs in their armrests that were used in consumer electronics devices. Some people soon discovered that they could use their own headsets. This added a policing component to the flight attendants’ job for a while. They would walk up and down the aisles looking for people who were watching the movie without paying.

Soon the language and perception changed from ‘would you like to watch the movie’ to ‘would you like to rent headphones.’ The airline attendants gave up on enforcement. A growing percentage of people brought their own headsets. The movie became part of the in-flight experience purchased with the ticket. The airlines continued to collect extra cash from passengers for drinks, and more recently, food.

Today many groups, including my Consumer 3D Experience Lab at USC’s Entertainment Technology Center, are working to establish a pleasant purchasing and viewing experience for 3D in the home, on personal devices, and in public spaces. Consumers can already buy their own glasses for many of the 3D projection technologies used in theatres today. As designers come on board, these glasses may become trendy and cool.

Fox wants the exhibitors to absorb the cost of the glasses. They expect to maintain a higher licensing fee for 3D content over 2D content.

Has anyone done consumer research into what parts of the in-theatre 3D experience consumers feel is worth the extra price?

In all of my discussions with people at studios and networks, they assume that people value the 3D experience. I wonder what percentage of theatergoers think that the added cost covers the price of the glasses? Is that percentage growing? Do consumers feel that if they bring their own glasses to the theatre, they should pay a lower ticket price – say the price of the 2D movie showing in on the next screen in the multiplex?

On the flip side, is anyone organizing a marketing campaign to link the higher ticket price to the added value of the 3D experience? Is anything being done to bolster the studios’ position during content licensing negotiations that the added cost of production translates into added value for the exhibitor?

Or will consumers start bringing their own glasses to the theatres. Will ticket buyers begin requesting a discounted ticket price because they are saving the exhibitor money by not taking the theatre’s glasses.

Is Fox’s perfectly reasonable position something that will turn into something worse than their HDTV experience, because they had a chance to understand and shape the value proposition and didn’t?

If there is market research out there on this topic, could someone please point me to it via a comment to this blog?


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