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3DTV’s Flagging Fortunes

Yes, 3D screens are still on the market, but consumers aren't buying and content is relatively scarce


Okay, folks, everybody back to work, the 3D entertainment industry is going to be just fine. Nothing to worry about here! As expected, consumers finally warmed to 3D television sets. According to a new NPD report on the consumer electronics market over the holiday quarter, 3DTV sales were up 100% year-on-year, with $1 out of every $5 in television sales coming from those of the 3D variety. That sure is a relief, right? Now TV manufacturers, not to mention content providers in television and film like Comcast (NASDAQ:CMCSA) and Viacom (NASDAQ:VIA), can rest easy knowing their financial future is secure!

No, wait. Sorry about that. Looks like that very same NPD report said that television sales were down 4% overall during the holiday quarter. People aren’t spending much more on televisions these days and they’re not expected to in 2012. NPD expects global TV shipments to rise just 2%, to 254 million sets this year, and while almost all of those sets (225 million) will be LCD screen HDTVs, just 3% of them will be 3D.

Theaters won’t save the technology either. Every major movie studio pushed 3D as a standard feature in blockbuster, tent-pole movie releases, but audiences weren’t buying. Total ticket sales for 2011 in the U.S. are expected to be around $10 billion, $500 million less than during the previous year. 3D isn’t favored in other entertainment sectors either; the less said about Nintendo‘s (PINK:NTDOY) Nintendo 3DS handheld gaming device, the better.

The 3D revolution that entertainment businesses have been banking on after four years of marketing–four years of TV sales and trying to make another Avatar–still hasn’t come. The bump up in holiday sales was a result of more and more television makers just including 3D as a feature of its higher-end sets. Sony (NYSE:SNE), a one-time leader in TV sales, has significantly reduced the number of models in its line. Whereas the company debuted six new televisions for the U.S. in 2011, it is showing off just four new sets at the International Consumer Electronics Show this year; half of  those offerings include 3D. Other manufacturers continue to incorporate 3D into their flagship models, as Toshiba (PINK:TOSYY) did in its 55-inch 55ZL2.

Content continues to be a problem as well. Sets like Toshiba’s 55ZL2 don’t actually require people to wear glasses to see the 3D effect–eyewear is an oft-cited deterrent for prospective buyers–but still, there isn’t much to watch. Sports are the most common 3DTV programming offerings. DirecTV (NASDAQ:DTV) airs NBA matches in 3D for subscribers. Sony partnered with Disney‘s (NYSE:DIS) ESPN to air 3D Wimbledon finals in 2011, and they will continue to air 3D Grand Slam matches in 2012. Panasonic (NYSE:PC) and NBC announced on Tuesday that they’re partnering to air the London Olympics in 3D this summer. These events certainly attract viewers, but it’s telling that the single most-watched perennial television program, the NFL’s Super Bowl, still isn’t broadcast in 3D. Of course Super Bowl XLVI will have plenty of advertising for 3D content, with trailers for blockbusters like Disney’s The Avengers and News Corp.-owned (NASDAQ:NWSA) 20th Century Fox’s re-release of Titanic 3D.

With theater ticket sales down and only a small percentage of television broadcasts airing in 3D, it’s clear that the 3D entertainment industry just doesn’t have an audience. The people have voted and they voted no. It appears that the consumer electronics industry is learning a lesson, though. Even as 3D continues to be a feature in television sets and movies, it’s a feature being overwhelmed by Internet connectivity. Streaming media and Connected TVs may be the industry hero 3D hasn’t panned out to be.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


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