A squabble between movies studios and theaters has already had an effect on the stock market, and may soon affect audiences as well. It started when Sony Pictures Entertainment sent out letters that said it would no longer pick up the cost of handing out 3D glasses after May 2012. The National Association of Theater Owners reacted the way anyone would expect, and on Thursday 3D technology company RealD Inc. ended the day with its shares closing at $10.42, down 15 percent.
After news of the letters leaked out Wednesday, NATO, which is the world’s largest exhibition trade organization, hit back almost immediately in a statement that concluded: “Sony would be well advised to revisit its decision.” In the reasoning that led up to that warning, NATO said “it has been understood” since 2005 that theater owners would pay for the technology and modifications needed to show digital 3D, and implying it was arrogant of Sony to make such a decision without consulting them first. Additionally, “NATO believes Sony’s suggestion is insensitive to our patrons, particularly in the midst of continuing economic distress,” it read.
Regal Entertainment Group issued a statement of its own, cautioning that any added expense could lead to fewer theaters willing to show 3D movies. “To the extent that Sony seeks to change the current model in a manner that shifts costs to exhibitors, we would be forced to evaluate this new economic model and program our screens accordingly,” said Regal chief executive Amy Miles. “We are amenable to alternative models for distributing 3D glasses as long as the economics remain the same for exhibitors and our customers.”
Sony Pictures replied with a statement denying there had ever been an agreement that the studios would pay, and that the letters definitely weren’t the first time NATO was made aware that Sony felt a new business model was necessary. “There are constructive ways to deal with the cost of 3D glasses that will not adversely impact consumers and can also help the environment,” the statement read, recommending that the interested parties get together to discuss what these ways might be.
According to the Hollywood Reporter, which broke the story, studios can spend $5 million to $10 million worldwide on 3D glasses for a major release — like Sony Pictures’ Men in Black III and The Amazing Spider-Man, which come out after the May 2012 cutoff mentioned in Sony’s letters.
RealD, the first to suffer in all this, is the market leader in digital 3D. It licenses its RealD Cinema Systems projection and viewing technology to motion picture exhibitors around the world. That’s relevant because 3D glasses are supplied free in the Americas, while patrons elsewhere must bring their own, buy them and keep them for future films, or pay a small fee to rent them. Dolby 3D, another major name in the industry, makes a point of not charging licensing or other ongoing costs to theaters. Its glasses are made to last for numerous screenings, and they are sold to the theaters outright.
Related links:
The Hollywood Reporter – http://tinyurl.com/3clqvaw
Los Angeles Times – http://tinyurl.com/3hs4gkf
Wall Street Journal – http://tinyurl.com/3frj4t6
Associated Press – http://tinyurl.com/6zn5k6p
Photo by flickr user Louie Baur, used under Creative Commons license
