With more than 10 major motion pictures slated to be released in 3-D next year, theater owners are scrambling to covert as many as one-third of the 38,000 estimated screens across North America to digital cinema technology that can show the movies.
Since 3-D films can only be viewed at theaters through modified digital projectors, movie studios and theater owners are hoping that the slate of big-budget 3-D movies will get people back into the seats, pumping much needed revenue into anemic box-office numbers.
Beverly Hills-based Real D, a privately held company that has already captured more than 95 percent of the North American market, stands to gain significantly from the rush to digital 3-D movies.
Real D developed 3-D software and hardware technology that allows a 2-D digital projector to show 3-D movies. Once theater owners have converted from film to digital projection, Real D's conversion is an additional modification, involving software and hardware that make images jump off the screen when viewers wear special polarized glasses.
While several major studios are helping theater owners to defer the estimated $700 million cost to convert from film to digital projectors, Real D charges a royalty fee of 50 cents per ticket to cover its $20,000-per-screen conversion and maintenance costs. The royalty is negotiable depending on the amount of theaters the company will equip per deal.
Investment in Real D conversion is recovered from higher-priced tickets, which are typically 30 percent or more above the national $10 average.
"Not only can they charge and get more for 3-D movies but they can also show live events like concerts, adding an entirely new revenue stream to their business," said Michael Lewis, Real D's chief executive and founder.
In some cases, theater owners have even charged double than for most movie tickets.
When Walt Disney Co.'s "Hannah Montana & Miley Cyrus: Best of Both Worlds Concert" 3-D extravaganza recently hit theaters across North America, tickets sold for $15 at the box office, generating more than $30 million during its first week in release on just 683 screens. (For comparison, a typical studio film opens on 3,000 screens.) By its third week in release, the 3-D concert film had reached nearly $65 million in ticket sales on a fraction of the screens most other films would be shown.
"We were in virtually every 3-D screen available and we could have filled a lot more if they had existed," said Chuck Viane, president of distribution for Walt Disney Studios Motion Pictures.
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