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Avatar's Catalytic Impact on Future 3D TV and Film

Even more impressive than the $232 million global weekend premiere of Avatar is the catalytic impact the ground-breaking 3D film will have on mainstream film and television.

The two-and-a half hour Twentieth Century-Fox movie that cost about $300 million to produce and an additional $100 million to market breaks the creative barriers that have stymied 3D technology for decades. "(It) will set off a new wave of 3D film making in the years to come and is likely to accelerate consumer interest in in-home 3D," said Pali Capital analyst Richard Greenfield.

Piper Jaffray estimates the 3D market will grow from $5.5 billion this year to $25 billion by 2012 at a compound annual rate of 50 percent. It remains uncertain whether such 3D extravaganzas as Avatar will translate into lucrative 2D-only DVD and Blu-ray sales. There also are concerns about whether the recession has slowed necessary upgrades by studios and theater exhibitors to support accelerated 3D production.

A new PricewaterhouseCoopers report concludes that every industry sector must make adjustments over the coming 18 months to meet the creative and financing demands of such expensive, complex production. Similar challenges involving creative and tech-related compatibility also will confront game studios and game consoles, TV station operators and broadcast and cable TV networks, Internet companies and consumer electronics manufacturers.

"Among the other issues studios must find answers to are the integration of special effects in a 3D movie, whether continuing online piracy will jeopardize the investment in 3D and how quickly 3D can be integrated with Blu-ray technology, enhancing the appeal of each," the report observed.

The proliferation of 3D entertainment is expected to revitalize the movie theater experience as well as struggling broadcast TV stations and networks. The technology advances made by director James Cameron and widely adopted by the industry could become a particular draw for game consoles already 3D-enabled as a source of video-on-demand. The Avatar already is raising the bar on video game production values.

The growth of 3D films has contributed to a surprisingly strong $10 billion box office in 2009 even in a weak economy. Growth of mainstream consumer support -- beyond initial young moviegoers, early adopters of 3D TV and hardcore gamers -- will require the development of decoding standards and a string of commercial 3D successes, the PwC report contends.

Before Avatar, analysts estimate 3D films have generated $1.3 billion in revenues in 2009 (the same as Blu-ray films). That is up from about $300 million in the prior year, although 3D film tickets generally are $3 to $5 more than the standard movie price. RealD, a 3D tech company, says there are more than 50 films scheduled for 3D release over the next several years catering to some 440 Imax theaters worldwide (178 of which are domestic).

Avatar won't be alone for long in pursuing next-level 3D. Tim Burton's Alice in Wonderland for television and Steven Spielberg's live-action Tintin for the big screen will be matched by major 3D video game efforts involving iPod, PS4, Xbox 720, 3D Blu-ray and 3D blockbuster video games. Greenfield says that by this time next year, 3D could be more of a presence on television, although it is expected to gradually grow only to about 30 percent penetration over time.

Perhaps more important than the numbers is the wave of artistic innovation Avatar and Cameron, director of other hit films such as Titanic and Terminator 2, are already having on all forms of digital video in the new decade. "The honest truth is that nobody in the world has ever seen a movie like Avatar," Greenfield said.

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