Katzenberg to 3-D movie fans: Open your wallets

Ever since Jeffrey Katzenberg boasted this September that sometime soon "all movies are going to be made in 3-D," I've had a nagging feeling that there must be a catch to all this 3-D ballyhoo, since, let's face it, do you really want--or need--to see "Doubt" or "Milk" or most of the other Oscar contenders in 3-D anytime soon? (Though I am looking forward to the first ad that trumpets: " 'The Reader': See It Now As You've Never Seen Before--In 3-D!")

As I've said before, I am not a knee-jerk 3-D detractor. I've sampled most of the 3-D reels in recent months and can imagine a host of movies being great candidates for 3-D, including the next "Ice Age," Tim Burton's "Alice in Wonderland,"and "Iron Man 2." It's just that in an era of preplanned obsolescence, where I'm supposed to toss out all of the electronic equipment in my home (computers, TVs, cellphones, etc.) every 15 minutes, I've become a little suspicious when someone insists that even my happy movie theater-going is suddenly in dire need of being entirely reinvented, based on the vague promise that 3-D will provide a far more dazzling experience, which has been Katzenberg's sales pitch so far.

Thanks to Variety, which did a good job of covering a recent meeting between Katzenberg and a scrum of Wall Street analysts, I'm beginning to see why the DreamWorks Animation chief is really so eager to push us all into 3-D paradise. Surprise: He wants to improve his profit margins. It turns out that Katzenberg envisions us paying a $5 premium every time we see a 3-D movie, greatly enhancing both DreamWorks' and theater owners' profits. As Jeffrey's chief financial officer Lew Coleman put it: "Because the costs of 3-D are fixed, there is substantial leverage and most of the extra revenue falls to the bottom line."

That's a nice financial officer way of saying--we get to rake in more dough. According to Coleman, had "Shrek the Third" been released in 3-D, with moviegoers shelling out an extra $5 and DreamWorks only paying $15 million in extra production costs, the film "would have booked $80 million of additional profit." Katzenberg is hoping that his upcoming 3-D extravaganza, "Monsters vs. Aliens," will be on enough 3-D equipped screens next March to attract 40% of its ticket sales from the 3-D version of the film.

This is surely a good thing for DreamWorks, along with everyone else investing in 3-D technology. But is it good for moviegoers? 3-D technology is certainly a boost for theater owners, who are always looking for new ways to drag families away from their cozy home entertainment centers. But the movie genres that benefit the most from 3-D, digital-effect-filled summer action films and computer animation, are already the most successful commercial genres in the marketplace. The only thing Katzenberg is really saying is that if you want to see the most popular films in 3-D, you'll pay an extra $5 for the privilege. But the genre of films that's least likely to benefit from 3-D--adult-oriented dramas, now largely only released during awards season--will be viewed by theater owners as even more of a second-class citizen, since they don't lend themselves to any 3-D enhancement and--most important--to a higher, more lucrative ticket price.

So the movies serious filmmakers are most eager to make will have another strike against them in the marketplace, finding themselves increasingly ghettoized on the smaller screens in various multiplexes, while the new 3-D extravaganzas become bigger cash cows than ever. This is good news for Jeffrey, because he makes mass-appeal family animation. 3-D simply improves his profit margin. But is it good news for the rest of us, who are perennially starved for more challenging films? I don't think so.

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Photo of Jeffrey Katzenberg by Matthew Staver / Bloomberg News

Comments

[DWSchill]

This is the biggest load of nonsense I've ever read. Only a movie executive would think that the best way to bring more people to the theater is to raise prices. The film industry doesn't see itself as making product. If it did, we wouldn't see steady ticket price increases every year or two. The studios post "record" profits, but attendance has been steadily falling while piracy continues to thrive.

Studios always like to blame the internet or TV or video games for their problems at the box office. It's certainly a good way to scam the exhibitors, who can only sit back and hope we all buy more Junior Mints. While this is happening, studios are seeing more and more of their profit from home video, streaming, downloading, pay cable and OnDemand windows, etc. Guess who doesn't see a dime of that money? The exhibitors. No one dares ask "what if we are pricing people out of the theatrical experience by raising prices in the face of an economic downturn?" What if people aren't going to the theater because they...can't afford it? You can pay $15 to see "Milk" at the Arclight ONCE or you can save your money, buy it on DVD or Blu Ray for only 5 more dollars and see it as many times as you want. What are you going to choose if you're a middle class American who has to be careful with their money? I won't even mention rentals.

I don't if studios are purposefully driving customers away from the theater to their homes to cut exhibitors out or what, but regardless, this is only going to kill the theatrical window. General Motors isn't going to raise prices on their cars in the face of a glacial market. Why should the movies do it? 3D is a gimmick that the studios aren't paying for. It's the theater owners.

[Ed Meyer]

Patrick -

Have you not noticed that the entire targeted (profitable) US movie audience is 16 to 35 years of age, and is located in the Pacific West Coast, New England and South Florida. Marketing a feature to any other audience or area is a complete waste of time and funds. Katzenberg is marketing 3-D outside of this "age" box. If you look at the whole picture, Katzenberg is just extorting an extra $5.00 from parents of young children. OMG, that is the entire business plan of Disney!

[Dan]

I'm personally deeply skeptical that 3D is truly the future of all movies (I honestly don't see how "Iron Man" would have benefitted), and I'm also surprised that Mr. Katzenberg seems not to have noticed one of the key complaints about the movies is the cost of tickets.