CBS Corp. (CBS) announced this week that it will provide 3D coverage of the NCAA Final Four to 100 movie theaters nationwide in a move to bring this new form of sports broadcast to the masses. And in the wake of the runaway success of 3D sci-fi film Avatar put out by News Corp. (NWS), which earned $27 million on its opening day and $77 million over its opening weekend in December, there’s a good chance this move with 3D NCAA basketball could make a killing at the box office, too.
But more importantly, it could forever change the landscape of how sports are broadcast to Americans — and how top Wall Street companies cash in on the events.
Consider the HDTV revolution and how it forever changed the revenue model of professional football. For years, franchises have relied on stadium-based cash to pad their profits. But with massive television screens that offer life-like detail yet cost less than some season ticket packages, NFL execs have had to adjust their strategies. Take Dallas Cowboys owner Jerry Jones, whose monstrous 1080p HDTV is the largest in the world at 160ft in length and weighing in at 600 tons. Jones himself has stated that just 7% of National Football League fans have ever set foot in an NFL stadium — and the high-def Jumbotron is clearly a way to make sure fans don’t abandon the live experience altogether.
There’s a lot of buzz right now about the prospect of 3D television technology, despite the fact that there is almost no programming out there yet for these sets. For instance, Best Buy (BBY) just announced this week that it will start carrying a 3DTV line from Panasonic (PC).The big box electronics retailer doesn’t expect the televisions to be a dramatic source of revenue, but it wants to make sure it is ready to cash in once 3D becomes widely available.
Nobody can say just yet how or when 3DTV will become a practical reality for most Americans. But it’s becoming increasingly clear that sports programming provides perhaps the most natural form for 3D content — and could the business of sport could see the biggest bump in its bottom line as a result.
Satellite television provider DirecTV (DTV) says it will have an exclusive 3D channel available this spring, and sports giant ESPN and its owners at Disney (DIS) said it will have a 3D channel available in June. Neither has made clear commitments for what exactly the programming will be, but sports games are the most likely candidate for several reasons:
First, 3D technology can’t just be scaled on top of existing cameras (at least not yet). That’s not a problem for sports games, however, where multiple cameras are the norm. CBS is actually using an entirely different broadcast team for its 3D Final Four experiment, with announcers Dave Ryan and Steve Lappas on the call instead of Greg Gumbel and Clark Kellogg who will appear on the regular broadcast. That type of versatility will be hard to duplicate for taped dramas or sitcoms, not to mention feature-length productions.
Secondly, sports fans are the largest advocates of modern broadcast technology. From using DVRs for their own instant replays to the purchase of the biggest HDTV’s possible in pursuit of a full game experience, sports fans have proven they will open up their wallet when it comes to watching their team in the most realistic way possible. Electronics retailers run sales promotions around the Super Bowl for good reason — both Target (TGT) and Walmart (WMT) both do brisk business before the big game, and frequently engage in price wars to woo customers for big-ticket items.
Lastly, the action-packed excitement of sporting events lends itself to an immersive experience. The reason News Corp. (NWS) made a killing with Avatar is because 3D added to the experience. It wasn’t a gimmick. On the other hand, it’s hard to believe that Friends or Sex in the City would be a vastly improved experience in 3D.
3D television is still a few years away from widespread availability, and it will probably take even longer for widespread adoption. But retailers got out ahead of the HDTV craze with good reason even though cable companies weren’t up to the task. It may be smart to do the same this time with 3DTV technology — especially if these retailers target sports fans.
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