In consumer electronics, 3-D television has been the next big thing for ages. Take the May 16, 1954 Los Angles Times interview with David Sarnoff, then chairman of Radio Corp. of America. The title says it all: "Sarnoff Sees 3-D TV within Five Years."
Now the hype has surfaced again with Panasonic Corp. , Samsung Electronics Co., LG Electronics Inc. and Sony Corp. all rolling out 3-D TV sets during the first half of 2010. Is it any different this time around?
At least not for now, says Carmi Levy, a London Ont.-based technology and media analyst. "Buyers who have seen and heard it all before are … simply ignoring the hype outright. That seems to be happening in my immediate circle of friends and colleagues."
For one thing, current cable and satellite-based distribution systems "can't support the bandwidth required by a 3-D broadcast," declares Mr. Levi. This will change someday but for now the best a viewer can hope for is a half-resolution 3-D signal.
The only true 3-D content available currently is the movies viewable on Blu-ray players plugged into 3-D TV sets. And for them, there are only a handful of discs, with titles like My Bloody Valentine 3-D and selling for about $35 in Canada.
Then there is the cost of the TV sets. At the moment, Samsung is asking close to $3,000 for its 46-inch screen, a Blu-ray player and two pairs of 3-D glasses (additional glasses cost $250 each). "That seems rich," says Mr. Levy.
"Most consumers have just completed the transition to HDTV flat panels," he adds. "They don't necessarily relish the prospect of doing it all again, and will wait until things settle down and the future path of 3-D TV is more known."
So, is there nothing for investors to get excited about? Not necessarily. "It's only a matter of time before the various factors converge to the point that 3-D becomes feasible on a mass scale," says Mr. Levy.
"We'll all eventually be watching some form of 3-D television at home. For now, look at 3-D television as a technology of tomorrow that still needs a few years of baking before it's fully ready for mass consumption."
Consumers can indeed look forward to enhancements. One is being able, in a few years, to watch 3-D TV without the battery-operated glasses that now are needed to give the illusion of depth.
Lots more 3-D content is coming, too. In June, ESPN Inc. is launching a 3-D channel with a minimum of 85 live sportscasts in 2010, including FIFA World Cup soccer matches this summer. Also by June, DirecTV subscribers will have access to three 3-D channels.
In 2011, Discovery Communications plans to launch, with Sony and IMAX Corp., the first dedicated 3-D TV network in the U.S. It will run natural history, space, engineering, science and technology programming, as well as movies and children's shows.
Spurred on by the success of 3-D movies such as Avatar , Hollywood studios are allocating more resources to 3-D entertainment. Of note, Disney and DreamWorks have announced that all future animated titles will be available in 3-D.
"There is no significant hurdle for mass distribution of 3-D content," concludes a report titled 3D TV is here to stay, prepared by an investment research team with UBS Securities. The pieces of the 3-D ecosystem are coming together - albeit in stages.
Prices will come down further. "3-D TV sets will be sold at the same price as their 2-D equivalent; the only extra cost for the consumer would be the 3-D view glasses," forecasts UBS. "Dual 2-D/3-D TV will eventually replace 2-D during the normal replacement cycle."
"By 2013, most TV sets sold in advanced markets should be 3-D ready," adds the UBS team. Accordingly, research firm DisplaySearch predicts global sales for 3-D TVs will likely reach 15.6 million units in 2013, up from about 1.2 million units this year.
Well-positioned firms
Judging from the amount resources invested in 3-D, Sony may emerge as one of the leaders. They are betting big on this new technology, not only on the hardware but also in content distribution and the equipment required for producing 3-D entertainment.
Its dominance in console games should help. PlayStation sets, which are slated tohave the capability to play games and movies in 3-D by mid-year, will give avid gamers a reason to buy Sony sets in 2010. This should help with establishing early mover status in 3-D technology.
Other publicly traded companies likely to benefit include: Walt Disney Co. (ESPN and animated 3-D features), IMAX (Discovery channel and other exposures), and pay-TV providers such as DirecTV Group Inc.
Special note could be taken of DirecTV's prospects. "The pay-TV industry would be the main beneficiary, boosting video ARPUs [average revenue per user]" observes the UBS investment research team in its report.
DirecTV had a strong fourth quarter. The satellite-television operator reported a 13-per-cent increase in revenue to $5.98-billion (U.S.). Excluding a one-time charge, the company beat the consensus estimate with a profit of $454-million. Free cash flow grew 40 per cent to $2.4-billion.
There's also a big name behind DirecTV. The company is chaired by cable veteran John Malone. It was split off from Liberty Media Corp. last year and merged with Liberty Entertainment to create a larger company that includes several cable networks and has rapidly growing Latin American operations.
News service Reuters reports: "The creation of a newly independent DirecTV has fuelled speculation that a big phone company, like AT&T Corp. or Verizon Communications Inc., could buy the satellite-television provider."
But Citigroup analyst Jason Bazinet reduced his rating on DirecTV from "buy" to "hold" earlier this month. The downgrade came as a result of concerns over valuation. He maintains a price target of $38 (U.S.), still above the current price of $34.