A Battle in the Third Dimension: Studios vs. Theater Owners

Monsters Vs. Aliens Hurtles to $58.2M Debut

These should be ebullient times for those in the movie business.

Patrons are flocking to theaters in numbers not seen since the advent of television. Ticket sales are on pace to hit $10 billion this year, an all-time high. And with a recession that shows no sign of slowing, theater owners, along with fast-food chains and discount retailers, find themselves in boom times they could not have predicted a year ago.

But a rift is growing between the people who make movies and the people who show them, a dispute that could grow as heated as when exhibitors weighed featuring "talkies" nine decades ago.

At the center of the debate: the cheap plastic glasses that render films in three dimensions.

They would seem a throwaway item, if not a throwaway issue. Last year saw fewer than a dozen 3-D films, and several made little impact on the box office. This year's anticipated "Jonas Brothers: 3D Concert Experience" was one of the few flops in an otherwise stellar year.

But as the ShoWest convention of theater owners showed, it's clear that Hollywood's most powerful brokers are growing more impatient with multiplex owners slow to spend the millions on 3-D technology, digital equipment and other improvements.

The revolution in image and sound is coming, they say, and movie houses that aren't on board will go the way of the eight-track.

Some theater owners argue their profit margins don't come close to those of major studios. They wonder whether audiences will see 3-D as a fad similar to the "Sensurround" effects of shaking floors and blaring speakers for films such as "Earthquake" in the mid-1970s. Studios and theaters are even feuding over who should pay for the glasses.

At stake is millions, perhaps billions, in revenues for studios, filmmakers and theater owners. Some exhibitors, though, worry that the gamble could cost them their multiplexes if it fails.

"We've been waiting for 30 years for an opportunity like this," says Jeffrey Katzenberg, head of DreamWorks Animation, which just had a monster hit in the animated film "Monsters vs. Aliens." "We're seeing business pick up in a way it isn't even for Wal-Mart or McDonald's. The time to move is now."

It isn't that simple, says Robert Kern, owner of the four-screen Sayville Theaters in Long Island.

"Us doing better business isn't exactly the same as them doing better business," Kern says. "Business is up lately. But we're not just rolling in money."

The 3-D revolution got its early push from a Tom Hanks animated Christmas film.

In 2004, Katzenberg went to see The Polar Express in part for entertainment, in part to check out the competition. He says he came out a changed man.

"I remember walking out of that thinking, 'This is the future of movies,' " Katzenberg says. "I haven't thought twice about it since."

He helped raise $165 million for Monsters vs. Aliens, which he saw as a lab experiment for America's appetite for 3-D.

"There aren't 10 movies made in Hollywood a year for that kind of money," he says with some pride. "We were going to do this right, tell the best possible story, and see how people liked it."

They turned out in droves. The film, playing in both 2-D and 3-D, took in $59.3 million — almost $10 million more than most analysts had projected.

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