The Wall Street Journal is reporting the latest evidence that consumers are really interested in 3D. It says that the major movie theater chains are raising prices for seeing 3D films by about 10% for “conventional 3D and 15% for IMAX (regular movie prices are also rising, but by about 5%), starting this weekend. Prices vary from city to city, but in Manhattan you’ll have to pay up to $19.50 to see Alice in Wonderland or How to Train Your Dragon.
Then, there are the films themselves. According to Box Office Mojo, Avatar has grossed $2.7 billion worldwide, so far. Alice in Wonderland, despite so-so reviews, has taken in $573 million in about three weeks.
The driving force behind 3D among electronics companies is Sony, which supplies most of the specialized equipment to shoot and show 3D films. Sony, which tried to squeeze the last yen out of the CRT TVs and missed the better part of the flat panel generation as a result, is hoping to make a return to glory through leadership in what it hopes will be massive adoption of 3D in the home.
Nintendo is getting into the act as well. In an odd (in my opinion) announcement to the Tokyo Stock Exchange reported by the WSJ, the normally ultra-secretive company announced that it intends to launch a 3D version of its DS handheld game machine before the end of the current fiscal year (March 2011). It won’t require special glasses.
The stock has traded up about 15% since the release.
Nintendo has been involved in 3D for a decade or more, starting with the eminently forgettable Virtual Boy, a 3D machine that looked like a virtual reality headset and displayed (pathetic) software in red and black. Despite this failure (it’s about the only game machine not in the back of one of our closets–we even have one from NEC), the company has continued to work on 3D over the years. According to the WSJ article, Nintendo even secretly included a 3D feature in its previous-generation entry, Game Cube. It was never used.
Is there a good vehicle so far?
Let’s start with what I think are the easy ones.
A value investor might be attracted to Sony. I’m not. I think the company is a shadow of its former self, and is weaker financially than the consensus thinks. It has lost its position as a premier consumer electronics company to Samsung, LG and Apple. Does it have such a commanding technological lead over other TV makers that 3D can change this situation? I’m not sure. But the fact that I dismiss Sony so quickly is music to a value investor’s ears. And there’s a price for everything.
There are publicly traded movie theater chains. Assuming the higher prices for 3D stick, they are the obvious immediate beneficiaries. So they might be interesting to traders. This is a boom and bust industry, though, because there are no barriers to entry. Again, this is not my cup of tea.
This leaves Nintendo and the film studios. That’s where I’m going to start working.