Can Theatres Thrive in Another Dimension?
One startup is betting that digital 3-D can rejuvenate the ailing box office.
by Rob Levine

(Business 2.0) - With domestic movie-ticket sales off 5 percent in 2005 and theater attendance down 13 percent since 2002, maybe it's just a matter of time before all films go straight to DVD. Still, one company, Beverly Hills-based Real D, believes that the local cineplex isn't so much dead as in need of some depth.

Last year Real D installed its three-dimensional projection systems in 96 theaters, nearly all of them in the United States. Unlike 3-D of the past, Real D's system requires only one projector, and viewers say the lightweight plastic glasses don't cause headaches.

Despite the sorry state of the theater business, Real D shows real promise: Disney's Chicken Little, the first movie released in Real D format, grossed $25,000 per screen during its opening weekend last fall in theaters where it was shown in 3-D--more than double the take at standard screenings. And star director James Cameron has said that he will only make films in 3-D format from now on.

Besides Disney (Research), Columbia Pictures has also signed up to release new animated films in Real D format. Real D, meanwhile, hopes to sell its projection systems--priced at about $250,000 each--to more than 1,000 theaters by 2007.

The Experts Sound Off

Terrell Falk Vice president for marketing, Cinemark, the third-largest U.S. theater chain

We're very intrigued. Right now [the equipment] is expensive, but either the cost will come down or people will pay more for a ticket. They pay more for an Imax experience, so they might be willing to do that for 3-D. This is the third year of dropping attendance, but we're a cyclical business, and this could help.

Edward Jay Epstein Author, The Big Picture

No technology will get the audience back. There were 90 million moviegoers per week on average in 1948, and 30 million today. There's an alternative now, and it's called home. Movies are made for teenagers, and the studios are successful at luring them into theaters. For Real D to work with adults, it would have to be more attractive than the living room.

Sam Mayer 8-year-old who saw Chicken Little twice, once in Real D

I liked it better in 3-D because things jumped out at you and it felt like you were really getting into the movie. The alien ship, like a UFO--that looked really cool in 3-D. And the aliens looked hairy in 3-D. When they shot a stop sign and the top came off and flew at you, that was really cool.

What Do You Think?

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.