Showbiz Sandbox 121: Why 3D Movie Tickets Are About To Get More Expensive

3 Responses to “Showbiz Sandbox 121: Why 3D Movie Tickets Are About To Get More Expensive”

1. Mgiltz on October 6th, 2011 10:50 pm
    

   I don’t mind when a movie is in 3-D. If that’s what a filmmmaker like James Cameron or Steven Spielberg wants to do, fine. I just resent having to pay a premium price for it. If 3-D movies charged the same price as 2-D (and hey, we don’t pay a premium for color or sound, do we?) there’d be a LOT fewer movies using it. Even the best ones still feel like a gimmick 99% percent of the time. Check out the rest of our podcast for a slew of Hollywood info and insight.

    
2. CJ Flynn on October 8th, 2011 5:31 pm
    

   Nice show guys. I want to make a point or two about the 3D glasses issue – generally, your exposition was perfect but it was impossible for you to come to a satisfying (or logical) closing scene because you left out a main ingredient.

   Teaser: No one buys the RealD system. No one ends up owning it after so many payments are made.

   As Sperling pointed out, in fact, none of the 3D equipment is made part of the Virtual Print Fee agreements. Neither are any of the new digital audio processors that most exhibitors need to buy, or the professional grade satellite equipment or cable boxes. (While many do use an el cheapo box to start, eventually they will have to upgrade to a 2 or $3,000 box with great security, QC and user interfaces that don’t show up on-screen when they fail.) The secure network IP gear and ultra-broadband connection are also expensive to buy and set up, and are not reimbursed. (OK, maybe some have snuck that into a VPF…but not most of the ancillary gear.)

   That most of the long list of extra items for digital presentation are not reimbursed is not the main point, but it is interesting to point out that they alone can easily cost more than the exhibition house would pay for a high end film projector 10 years ago – a projector with a 40-50 year life span.

   Sperling mentioned – but only in passing – that this issue of subsidized glasses involves only one company, RealD, not Dolby or XpanD. This simple fact belies some measure of the statements that NATO or the exhibitors make. And again the side point: a Dolby or XpanD system, when the glasses and washing system are added, cost the facility on the order of 30 grand – again, about what the exhibitor used to pay for the entire film chain!

   Though a side point, it is worth underlining and putting in bold; the studios do not subsidize 3D glasses in the US market. They subsidize RealD glasses. The reasons are convoluted, and when you look at RealD’s 10Q and see items like, “We record revenue net of motion picture exhibitor stock options…” and later (describing that), “Motion picture exhibitor stock options: In connection with some of our motion picture exhibitor license agreements, we issued to three motion picture exhibitors 10-year options to purchase an aggregate of 3,668,340 shares of our common stock at an exercise price of approximately $0.00667 per share. …”, you see how convoluted they can be.

   Point being, there are deep and hidden games here.

   Last point before getting back to the main point; RealD’s future doesn’t live or die with movies, but rather TV. Getting that little logo on millions of TVs, getting their circuit into the proper chipset…now that’s money. Staying relevant in the cinema market is interesting and I neither want to piss in the pool that I work in or bad-mouth the engineers who have done a lot of work to get to this point, but licensing on that scale is what people are investing in.

   Now, to the point. The cinema makes a deal with the studio and gets a movie and plays it. The studio commonly gets a piece of the gate. RealD has inserted themselves into that sacred little place that normally is never shared. They don’t sell their gear, they get a piece of the gate. The exhibitor generally marks up the movie so that they don’t have to absorb a very direct hit – a check sent to RealD. And when the ticket price goes up, the studios take increases because of their percentage, so RealD’s price kinda gets doubled – and that is the increase in the price of 3D. Amortizing equipment is one thing – a check cut from your gate is a complete other.

   Now, I’d rather talk about the Quality Control aspects that Michael started discussing. Because there are some aspects that are just horrid by nature. One can increase the light level, but doing so with a silver screen is not a long term answer. Huge discussion, not entirely off topic, but off point.

   But I should take issue with Sperling’s statement about two streams leaving the projection booth equals bad. I think the jury is out on that. Sony has a lot to answer for – and it is ironic that they are the studio holding the guidon for the glasses issue since their projectors are pretty universally only RealD when it comes to 3D systems – but using the two lens system doesn’t necessarily mean less light. If the 3D filter is down in front of those 2 lenses, then that is an unforgivable light-eating faux pas. But it could be argued that playing a 2K movie with 2 x 2K images might be OK on their system…just a different way of doing the same thing that they do with their single 4K lens system.

   Again, just a side issue on the great issue of post-installation compliance with the rules.

   An interesting on-point side-note is whether the studios expected the extra income from the 3D movies or whether this was just a bonus. From their perspective, the costs of 3D movie making is significant – but kinda just more CGI for the budget. In the unique world of movie finance, one would think that the cost of glasses is likewise just a production cost that is eaten by the production company, not the studio at all. But those things are way above my pay grade.

   Keep up the very informative good work.

   C J Flynn
   http://www.dcinematools.com

    
3. J. Sperling Reich on October 9th, 2011 10:36 pm
    

   CJ – Thanks for the great comments. You were truly able to flesh out some of the granular details we didn’t cover during the show. I wouldn’t be surprised if we’re reading some of your comments here on episode 122.