3-D Cinema: A Three-Way Format War

Implications: 1.    Real D, Dolby and NuVision battle it out over ease of use, technology and business model      2.    The number of 3-D Cinema installations is tiny compared to the total number of screens worldwide… there is an extensive market waiting to be exploited.

Analysis:  3-D Cinema has become the killer application driving digital cinema adoption in many theaters.  The three main contenders are Real D, the recognized industry leader; Dolby, the new 3-D entrant with well-established theater owner relationships; and NuVision, the start-up with a toehold in Europe. Each company uses its own technological approach, and each company has its own business model.

Most experts, including Director/Producer James Cameron as well as 3-D pioneer Vince Pace see little difference between these systems when it comes to video quality.   So the real difference is in business model, costs and ease of use.

Real D has moved ahead with a revenue-sharing model. Real D licenses their technology and includes installation, upgrades and maintenance. The most prominent licensing scheme is revenue-sharing with a typical royalty of around 50¢ per ticket.  Glasses for the Real D system are disposable, inexpensive and provided free. However, the polarized light for the Real D system requires an expensive silver screen in each auditorium. Some exhibitors refuse to use a silver screen for 2-D projection sighting a central hot spot and darkness around the edge. Most exhibitors will not convert all auditoriums, making it impossible to move a 3-D film from theater to theater.

Dolby entered the 3-D market recently. The Dolby implementation utilizes a spinning color wheel inside the projector activated by an uncomplicated controller. Dolby’s glasses dissect the visible spectrum into six color bands, each eye receiving half the spectrum. The glasses are multiuse, cost about $35 apiece, and require cleansing between uses. To project a standard 2-D movie, the operator easily retracts the color wheel by toggling a switch on the controller.  Furthermore, Dolby does not charge a royalty and operates with a standard screen.

Upstart NuVision utilizes shuttered glasses that lighten and darken on alternate eyes many times a second, in sync with the frames on the screen. Like Dolby, this system works on a standard matte white screen.  The NuVison system is said to be the easiest to move between projectors.

Prior to Cinema Expo, Real D captured 97% of existing U.S. 3-D orders and claimed more than 90% of existing orders worldwide.  In light that the number of 3-D installations is tiny compared to the total number of screens worldwide, there is an extensive market waiting to be exploited.