Parks Associates Blog

Wednesday, March 10, 2010

Perspectives on 3DTV

This week has turned out to be 3DTV launch week, with major announcements from Panasonic and Best Buy, Samsung, Sony, LG, and others. With that, I've fielded some questions from the press that I thought I'd also post here. Here are some of the common questions we're getting, along with our analysis.

What should we expect in terms of 3DTV displays as a percentage of all HDTV displays?
In this article, Samsung notes that 3-4 million of the expected 35 million TVs sold in North America will be 3D, whereas Sony hopes for 10% in its next fiscal year.

We've been pretty cautious about 3DTV (and you'll hear why in the next comments), and even the Consumer Electronics Association, which had originally projected four million sales in 2010 has backed off that and is now projecting about one million units.

In a few years, I do think that 3DTV capabilities will be integrated into TV sets, much as we expect Web connectivity to be a part of most displays. If you want to compare the potential growth path for 3DTV to Web-connected TVs, in 2010, we forecast that 24% of HDTV sales will be Web-capable, and this will grow to 80% by 2014. So, I do think that you’ll see the 3DTV integration occur. Perhaps it won’t be quite as strong as 80% in five years, but it could be significant. I heard other CE manufacturers at CES indicate that 30-40% of their displays may be 3D capable in five years, so they’re being more conservative.

Is there an immediate interest in customers to buy 3D TVs, or will it take a while to trickle into living rooms? How long?
First, awareness of 3DTVs is low. Only about 10% of consumers are highly aware of a 3DTV, compared to 19% highly familiar with the concept of a Web-connected TV. I do think that it will take awhile to trickle into living rooms, as consumers who just went on a huge spree in the last 4-5 years to put the HDTV in the living room are going to be hesitant to quickly replace that set.

What challenges may face 3D TVs getting to living rooms? (Premium pricing, lack of content?)
There are questions about how expensive the glasses will be (we don’t see the quality in auto-stereoscopic sets improving to the point of seeing them in living rooms in the next few years), whether the glasses themselves will be proprietary to each manufacturer, pricing, and lack of content as key inhibitors at this point.

3D has seen some ups and downs before it made an impact on movie screens? Will it face as many of the same challenges as it trickles down to TVs?
I think content is going to fuel the growth, so getting lots of high-quality 3D programming is going to be key. I don’t think that re-rendering 2D to 3D is going to cut it. I saw the demos at CES, and I wasn’t all that impressed. Nearly 40% of consumers indicate that they would be interested in seeing movies in 3D in their living room, so Hollywood is going to have to be putting out lots of good content. About a quarter of consumers indicate that they would enjoy sports in 3D. That presents the challenge of producing live sports in a 3D format. You’re going to need new cameras, new production equipment, and producers will have to re-think how to shoot sports to make this compelling. So, there are definitely some production challenges.

I think one thing to keep in mind is that it took HDTVs about 10 years to get to where we are now (more than 50% penetration). I think 3DTV has even more potential pitfalls, so I would think pretty conservatively about how quickly we’re going to see this grow.

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