Economic crisis slowing theatrical 3D transition

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The economic downturn means 3D films will take a little longer getting to your local multiplex. Or so says DreamWorks Animation Chairman Jeffrey Katzenberg.

Katzenberg promised in March that all future DreamWorks cartoons would be in 3D. But when Dreamwork's Monsters vs. Aliens comes out in March, it will be in fewer 3D theaters than they had hoped for.

Outside of Imax, today's 3D systems require digital projection -- which means an expensive upgrade for theater owners. It costs about $70,000 to add 3D-compatible digital projection to a single auditorium. With banks reluctant to loan out money, that's a difficult investment for theaters to make, especially if cash-strapped customers are reluctant to buy movie tickets.

Hollywood studios have been pushing digital projection for years, but theaters have been reluctant to jump on the bandwagon. They have good reason. It's a big investment with questionable financial gain. The studios, on the other hand, save a bundle distributing a movie on a hard drive rather than thousands of feet of 35mm film. The studios hope that 3D, by adding something special to the theatrical experience, will move theaters to make the transition.

As a rule, 3D adds about $5 to the price of a ticket, explains Katzenberg. DreamWorks Chief Financial Officer Lew Coleman estimates that that premium would have added $80 million in profits to last year's Shrek the Third, had that been made in 3D. And that's factoring in an additional $15 million in production costs the process would have required. "It suddenly changes the economics of the movie business," said Katzenberg.

The next Shrek movie, due out in 2010, will be in 3D. In addition to Monsters vs. Aliens, at least six 2009 releases will or may be released in 3D, including James Cameron's Avatar, a Robert Zemeckis version of A Christmas Carol, and a re-release of The Nightmare Before Christmas.

Images: nlnnet and DreamWorks Animation

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