Slate conducts a 3D autopsy

Reel Blog   

A year ago, Daniel Engber in Slate asked “Is 3D Dead in the Water”. This week he returns to the subject and concludes 3D is dead

To reach this conclusion, he uses the same tool to analyze the success or failure of 3D – the average gross per screen in 3D compared to the average gross per screen in 2D. He shows, quite convincingly, that the average gross per screen for 3D versions of movies is declining relative to the 2D gross. But is this comparison the right one to use? In my September column for Boxoffice magazine arguing against another popular flawed metric – percentage of box office in 3D – I suggest that a far simpler and more illuminating measure is whether movies are making more money in 3D than they were before:

Opening weekend 3D percentage of the gross (movies chosen by Greenfield to illustrate his point and listed in chronological order)

How to Train Your Dragon – 68%

Shrek Forever After – 61%

Thor – 60%

Pirates of the Caribbean 4 – 46%

Kung Fu Panda 2 – 45%

Green Lantern – 45%

Cars 2 – 40%

Transformers 3 – 59%

Harry Potter 7.2 – 43%

Noting the Harry Potter percentage in an investors note, Greenfield flatly states, “3D has collapsed in the United States.” Has it?

Opening weekend 3D gross

How to Train Your Dragon – $29.7 mil

Shrek Forever After – $43.3 mil

Thor – $39.6 mil

Pirates of the Caribbean 4 – $42.6 mil

Kung Fu Panda 2 – $30.6 mil

Green Lantern – $23.7 mil

Cars 2 – $27.1 mil

Transformers 3 – $57.6 mil

Harry Potter 7.2 – $72.67 mil

Clearly, the percentage of a movie’s gross coming from 3D does not tell us anything useful about whether or not there is “weakening demand” for 3D movies. The seven point slide from How to Train Your Dragon to Shrek Forever After might seem alarming; the 16 point dip from Transformers 3 to Harry Potter 7.2 even more so—audiences are losing interest in 3D! Yet Shrek’s 3D box office was 45 percent higher than Dragon’s; Potter’s was 26 percent higher than Transformers’ and 144 percent higher than Dragon’s. Also note that Potter and Transformers opened on roughly the same number of 3D screens (4,250 and 4,146, respectively). Twenty-six percent more people going to a 3D movie on only 2.5 percent more screens seems to me to be a pretty strong indicator of increasing demand.

The per screen averages for 3D are also un-illuminating. We do not know, for instance, what size auditoriums were playing in 3D or 2D for any particular movie – in other words, a $15,000 weekend gross in a 350-seat auditorium is a different thing than the same gross in a 100-seater or a 700-seater.

We are also in a completely different environment than we were in a year ago. In August of 2010, there were 6,286 3D screens in North America at 2,558 locations; a year later, there were 12,738 3D screens at 3,015 locations. The number of locations offering 3D increased by 17.1% and the number of screens increased a staggering 102.6%. So what’s going on?

 A year and more ago, if you were interested in seeing a movie in 3D, you had to see it in a limited number of places, with a limited number of screens devoted to 3D. Consequently, those screens were far more likely to sell out. Today, there are far more screens available to watch a 3D movie – and there might even be more than one 3D movie available for you to watch. What you are seeing, in other words, is the logic of the multiplex.

There are a lot more screens available to show a 3D movie – most of them in locations that already had at least one 3D screen a year ago. What does this accomplish? The same thing that offering multiple auditoriums in a complex with multiple showtimes does with 2D movies – choice to consumers and the possibility of maximizing revenues by making that choice available.

The modern multiplex offers a range of sizes of auditorium, which allows theater owners greater flexibility and the opportunity to maximize each available seat. Consider a single screen with 1,000 seats. That auditorium can offer, say, 4 showings a night (for the sake of argument, 5:00, 7:30, 10:00 and 12:30) for a possible 4,000 ticket sales. In a multiplex, say, with 14 screens, the same movie might be scheduled in four auditoriums with seating 375, 275, 200 and 150, respectively (again, 1,000 seats). With staggered start times, those screens can show the movie sixteen times while offering the same 4,000 possible tickets. This increases the likelihood of selling the maximum number of tickets, because you are offering customers a broader range of choices that matches more precisely their scheduling needs. But you have a lower per screen average.

And that’s what’s happening in 3D.