The release of James Cameron’s Avatar is considered a watershed event that has introduced the world to the potential of 3D movies. Beyond the cinema, technological progress and the development of new displays and content are bringing 3D video to the TV screen – so the critical question is “What will be needed for 3DTV to succeed as a mass market proposition?”
From a technical perspective, TVs have not previously been built to the necessary specifications for 3D viewing. Only recent advances in technology (such as faster refresh rates or more vivid colours in high-definition (HD) televisions) have made accessing 3DTV in the home possible. From a consumer perspective, wearing flimsy 3D glasses, particularly for extended periods of time, has put consumers off 3D viewing.
At the recent Consumer Electronics Show in Las Vegas, Intel displayed a glasses-free 3DTV concept; however, the current generation of 3DTVs still requires glasses for viewing. Two options are currently available: circular polarised glasses or active LCD shutter glasses. Circular polarised glasses are used in cinemas, but are not best-suited to home use due to the high price of the special screens and projectors required. Most TV manufacturers, including Sony, Samsung, Panasonic and Mitsubishi, have therefore focused on active LCD shutter glasses due to the lower cost to the consumer. This technology also offers sharper contrast and brighter screen colours than circular polarised glasses, and a wider viewing angle.
Aside from consumer reluctance to wear glasses, significant barriers still need to be overcome before 3DTV becomes a mass market proposition. Competing formats and technologies mean consumers may be unwilling to invest in a 3DTV until they know which will become the prevailing standard. Judging by the battle between Blu-ray and HD-DVD, this could take several years.
The impact of this uncertainty over format may also be exacerbated by many consumers having only recently purchased HDTV-capable sets. They may therefore be reluctant to write-off that investment so soon and commit to another significant device purchase. In order to make 3DTV attractive to consumers, device manufacturers will need to provide incentives for current HDTV owners to upgrade to 3DTV or purchase converter packages.
The anticipated slow take-up of 3DTV is precedented by that of HDTV device ownership in the USA: although the first HDTV content was broadcast in the late 1990s1, research firm SNL Kagan estimates that by 2005 HDTV penetration in US households was only 16%. Satellite and cable TV providers then began to offer an improved stream of HD content, such as Verizon FiOS’s TV service, increasing the number of HD channels offered in 2008 from 50 to 150.2 By the end of 2009 an estimated 71% of US households owned an HDTV set.3
In the same vein, media industry players worldwide continue to be very active in promoting and developing 3D propositions, with Discovery, ESPN and DirecTV expected to launch 3D channels in 2010. DirecTV has also partnered with Panasonic, CBS, NBC and other content providers to provide three dedicated 3D channels for all US DirecTV subscribers for free, and in the UK, Sky has announced the forthcoming launch of a 3DTV channel that focuses on sports, the English Premier League in particular. 3D gaming on next-generation systems, such as PlayStation 3, may help promote 3DTV. High-profile movies and sports events (such as the NFL Super Bowl, major football and rugby fixtures and PGA golf) already being broadcast in 3D may also help to increase awareness of the format and interest in it.
The outlook for 3DTV therefore looks promising but players should proceed cautiously. Whilst there will always be interest in the early adoption of new TV technologies, the mass market will adopt them only when considerable content is available and prices come down. Many consumers will be content to wait – potentially several years – for both technology and content to mature.
It is therefore essential that media players, such as content distributors and providers, and device manufacturers, learn from the development trends of previous TV generations and develop strategies accordingly. Rapidly producing desirable 3D content and increasing consumer awareness will be critical to these plans.
Analysys Mason works with players across the value chain in identifying appropriate strategies and implementing optimal solutions to maximise value in the future TV market. Our experience of working in mobile, PC and TV content creation, aggregation, and distribution has enabled our clients to realise maximum value from consumers in design and delivery of next generation content propositions and maximise returns to shareholders.
For more information, please contact Jed Wang at jed.wang@analysysmason.com.
1 http://www.allbusiness.com/electronics/consumer-household-electronics-high/7691754-1.html
2 http://newscenter.verizon.com/press-releases/verizon/2007/verizon-plans-fivefold.html
3 http://www.snl.com/SNL-Financial/Press_Releases/20090929.aspx