Hollywood studios and movie theaters are seeing double over a new dispute that could determine how quickly consumers will be able to enjoy the fast-growing number of 3D films in all their multidimensional glory.
At issue: Who will pay for millions of disposable 3D glasses? Thus far, studios have picked up the tab in theaters that use technology from RealD, which has about 90% of the 3D market.
But Fox NWS wants to shift that charge to exhibitors for its first 3D release, Ice Age: Dawn of the Dinosaurs, which opens on July 1 — prompting a strong protest from Regal Entertainment, the largest theater owner.
"Other studios are watching this very intently to see whether Fox prevails," says Research Associates analyst Marla Backer. If it does, "Then other studios will say, 'We also want to have the exhibitor pay.' This is going to be an interesting test."
There's a lot at stake. The glasses cost as much as $1 apiece. That can amount to about 20% of a theater's take from a $10 movie ticket.
To stop Fox's idea from spreading, Regal said it might just show Ice Age in conventional 2D — forgoing the opportunity that 3D offers to tack an additional $3 or so on to the ticket price.
"Our primary goal is to maintain the established business model that has worked for the previous 14 3D releases," says Dick Westerling, Regal's senior vice president for marketing and advertising.
Fox's president of distribution, Bruce Snyder, won't say how he might respond but characterizes the dispute as part of a normal negotiation.
"We're babes in the woods with 3D," Snyder says. "We're just trying to get it as right as we can for all parties."
He has a strong hand to play. Theaters are eager to see the third go-around for Ice Age, the highly successful computer-animated franchise that features the voices of Ray Romano, John Leguizamo, Denis Leary and Queen Latifah.
Along with ticket sales, theaters salivate over profits from popcorn and other concessions.
If exhibitors break ranks, Regal could lose business to theaters offering Ice Age in 3D.
Yet Hollywood studios have strong incentives to stand tough. Their big investments in 3D productions may not pay off as theaters, grappling with frozen credit markets, delay plans to install digital projectors and other equipment needed for 3D.
"The slower-than-anticipated rollout of digital has clearly made both the studios and exhibitors focus on the financial returns in the short run," says Imax co-CEO Richard Gelfond.
Could that lead to higher ticket prices?
"Maybe," Backer says. But in this economy, "The ultimate solution may be a whole bunch of compromises where studios, RealD and exhibitors share the cost. This also may force exhibitors to rethink the disposable model."
3D systems from Imax and Dolby require moviegoers to hand in glasses for cleaning and reuse.