3D: You Can Build It, but Consumers May Not Come

Last Updated Aug 25, 2010 12:04 PM EDT

Ever since the movie Avatar showed how much money a group of doe-eyed giant blue aliens could extract from consumers, the entertainment industry has been mad over 3D. The latest rumor is that Toshiba will introduce its own glasses-free 3D TV models by the end of the year.

The big news is the lack of spectacles, often considered a barrier to selling 3D systems. You think? Just because people will see themselves as looking like the folks who don't get past the velvet ropes at a science fiction convention? (The fact that they add $100 to $200 in price doesn't help.) Maybe this will be the magic step for everyone to immerse themselves while remaining in their living rooms. But I think it's too early for strategic huzzahs. There are some significant issues that 3D must confront, including two of the biggest: the business of fads, and the difference between purchase and adoption.

Goggles or not, vendors have lined up to prepare their market entries. Early this year there was already a list of manufacturers either readying their 3D plans or already in production, including Mitsubishi, Samsung, Sony (SNE), Panasonic, and LG. Companies have looked at 3D displays for smartphones, and Sharp's upcoming e-reader may eventually have 3D and the company already has a 3D tablet prototype in the lab. Viewsonic is going gaga over 3D, jumping in with both feet, a camera, camcorder, photo frame, and portable TV.

It's easy to understand fascination that borders on desperation. If people become enamored of 3D, they will need all new displays. That potentially means new televisions, smartphones, tablets, computers, e-readers, cameras, video recorders â€"- any consumer electronics device with that either displays or captures images. Even if only part of the public embraces the technology, it would mean a huge boost to sales for years.

There are hurdles to literal consumer buy-in. Some people get headaches from watching 3D because the technology forces your eyes to work differently than usual. Perhaps modern approaches have improved the issue since the days of the 1950s 3D monster movies, but the entire industry must also deal with the fad component.

To some degree -- it's impossible to say how much, at this point -- 3D is a gimmick and fad. People line up for it, but then they did the same for hula hoops, pet rocks, disco, leisure suits, Nehru jackets, 80s big hair, and Furbies. Even 3D movies were a fad 60 years ago.

It may be that, from the consumer's view, there is more lasting value in 3D. Certainly color movies and TV eventually supplanted black and white, although the latter can often provide an artistic aesthetic and depth of visual experience that the former can't achieve.

I don't suggest that 3D as a bankable technology is bunk. Experimentation makes sense, but I've seen companies (and worked for CEOs) that made the most ridiculous decisions based on wishful thinking about how quickly pervasive something new would become.

Hardware vendors can push 3D devices with little economic danger, because so long as people are willing to buy the integrated capabilities, the companies don't care whether people actually use them or not. It's the rest of the industry, the companies creating entertainment or software that depends on 3D, that can be caught. And that is because of the difference between purchase and adoption. Buying a capability built into equipment doesn't mean that consumers actually use it.

Look at Ethernet connections on televisions. How many people actually network their TVs? Granted, the capacity must be there if the market is ever to move in that direction, but just because you build it doesn't mean that anyone will use it. What percentage of the average software package's features does a consumer use? Maybe 10 percent? There might be a business in marketing to a small slice of the people that use a more obscure part, but that invariably invokes higher prices as development and production costs are spread over far fewer units.

And yet, consumer entertainment, software, computing, and other related businesses need volume. For example, filming something in 3D is far more expensive than conventional 2D. A television production company must know not that consumers buy 3D technology bundled into TV sets, but that they actively use it when programming is available. It's the difference between purchase or adoption -- or, put another way, between having something sitting around the house and actually making use of it.

Companies considering the jump should consider the drawback of glasses. Yes, there is glasses-free technology on the way -- not just from Toshiba, but also Microsoft (MSFT), Sharp, Nintendo (NTDOY), Fujifilm (FUJIY), and also Intel (INTC). But that approach will have to be the one to dominate the market. Until multiple device manufacturers all have moved to non-glasses technology, so consumers have some choice in what and where they buy, 3D will remain chancy at best for those who provide the content.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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