Will 3-D Encounter Resistance?

A 3-D dinosaur jumps out of the screen.Yesterday, The New York Times published an article entitled “Resistance Forms Against Hollywood’s 3-D Push” in which the Times highlights the growing resistance from some directors against adapting and producing upcoming films for 3-d venues.  According to the Times, the Hollywood joke is that “If you can’t make it good, make it 3-D.”

Over the past year, IMAX (NASDAQ: IMAX) has been one of the market’s more exciting stocks, and the recent IPO of RealD (NYSE: RLD) generated much hype and enthusiasm in its early days as a publicly traded company.  This summer’s hit movie, Toy Story 3 greatly benefited from its presence in the premium 3-D format, and the digital version of Inception, while not 3-D, also claimed a good share of the box office revenues.  As an investor in IMAX, I believe this to be a good opportunity to discuss some of my thoughts about the future of 3-D movies.

While the Times article cites several examples of resistance from film-makers to the growing 3-D trend, the article suggests that not all movies are suitable for the newly popular format.  To me, this suggestion is right on point and is exactly where the future lies. Traditionalists often resist the push into new, innovative technological realms.  This is true whether we’re talking about film, medicine or computing.  Additionally, many movies in production now are for scripts written before the 3-D became a real trend.  It comes as no surprise that some film makers are resisting their movie being made in a third dimension and it is equally unsurprising that some directors don’t see their particular movie as a 3-D release.

Jos Whedon, the producer of the upcoming horror film The Cabin in the Woods himself enthusiastically proclaimed that “I’m totally into [3-d].  I love it….” but he’s looking to make The Cabin in the Woods “the only horror movie coming out that is not in 3-d.”  From the article, I get the impression that Whedon has one primary aim with resisting 3-D on this particular film: overzealous producers were far too willing to convert ANY movie, particularly in the horror genre, to the 3-D variety.  Just because some individuals prefer that their movie not be reformatted for 3-D as well as 2-d, does not mean that there is any sort of wide scale push-back against the genre generally speaking.

3-D as an added visual element to movies naturally lends itself more to stories based around fantasy and the suspension of reality.  The more surreal the better in 3-D.  Think of it this way: a movie like Star Wars, based in a future world, with space traveling characters and light-savers swirling through the screen would look particularly neat in 3-D, whereas seeing a movie like Rudy, an uplifting biographical story, would look rather strange having a mere one or two scenes of football action come to life in theater form.  Star Wars is designed to take people to a fantasy world, while Rudy is designed to induce human emotions.  These movies at their essence are designed to evoke a different response from the moviegoer.

From the early days of my investment in 3-D, I have firmly believed that the next leg of the transition to 3-D will only take place once writers embrace the notion that 3-D requires a unique type of script.  To maximize 3-D, movie scripts need to be geared towards a story line which is particularly stunning in life-like popout graphics.  James Cameron recognized this natural synergy when he turned Avatar into the world’s highest grossing movie of all-time.  It wasn’t that Avatar as a movie could not hold up on its own merits as a film.  It was more the fact that Avatar, as a futuristic movie with a stunning visual elements looked particularly awesome in 3-D.  3-D functioned both as an enhancement to the visual element and a component of the plot in attempting to take readers to a new, different world.

The growth in 3-d screens is unquestionable.  In the article, the Times cites that by 2011, 12.5% of all movie screens will be of 3-D capable digital variety.  Investors in IMAX need to consider the fact that not all movies need to be made for 3-D to benefit from the enhancement of the digital screen.  More recently, Inception has demonstrated that your classic 2-d movie can create a more exciting and worthwhile movie experience for theatergoers.  Whether film makers like it or not, success (or lack thereof) for 3-D will be determined by consumer demand.  As long as consumers continue to express their desire for more 3-D films with dollar bills, then as much as some subsets of the movie community may not like it, 3-D films will continue to evolve and develop.

To me, the entire debate comes down to this: movie tickets are so expensive to begin with, at the same time that household technology has quickly caught up to the perks of the theater experience.  People at home have beautiful and gigantic HD, widescreen TVs, with ear-shattering surround sound systems , all at a relatively affordable price.  Movie ticket sales had been slumping for some time before the emergence of the 3-D boom and that is largely due to the fact that there was little incentive for a movie watcher to leave the couch and watch in a theater.  There simply was not enough added value. The 3-D/digital format, although slightly more in cost, actually affords theater-goers a unique experience from that of the home entertainment system.

Disclosure: Long IMAX