YouTube 3D Could Be a Game-Changer

Wide availability of 3D content could finally spur consumer interest

   

Google (NASDAQ:GOOG) formally rolled out wide-scale 3D video playback on its YouTube site last week, marking another milestone in the format’s extended struggle for consumer acceptance.

While the streaming video-sharing (and rental) site had been experimenting with 3D video in beta for more than a year, it rolled out the feature in prime time last week — and 3D videos available for viewing already number in the hundreds of thousands.

3D playback is available for high-definition short clips in a wide range of 3D viewing options to support the various stereoscopic and interleaved 3D glasses formats currently in circulation. Any YouTube users who upload short-format 1080p video clips can have their videos automatically converted with the click of a button.

It’s been an uphill battle to raise consumer interest in 3D, illustrated by the latest super-hyped 3D movie to stumble on release. James Cameron’s Titanic held the title of highest-grossing film of all time for a full 12 years before being dethroned by another Cameron film, Avatar  — the movie that arguably kick-started the current obsession with 3D. Yet the 3D re-release of Titanic last weekend took in only $17.4 million in North American ticket sales.

If consumers haven’t exactly been clamoring for 3D content, who stands to gain from YouTube’s move? I have a few theories on that.

Google

First, there’s the obvious potential for increased traffic on YouTube. If nothing else, 3D content is considered a novelty and should result in at least a temporary boost in visitors checking in to see what the fuss is about. This generates more ad revenue.

What’s more interesting, though, is the fact that YouTube is using Google’s cloud-computing technology for the heavy lifting of converting the 2D source material into 3D. Converting video to 3D — especially high-definition video — is time- and computer-intensive. According to Extremetech, James Cameron spent $18 million to have 450 technicians work for a year to convert Titanic to 3D.

High-definition video has less data to sling around than 35mm film, and YouTube is converting only short films at the moment, not feature-length movies. And any automated process is going to have a less visually polished appearance than one that’s fine-tuned by hand, but still, the technology is impressive. So it’s a compelling advertisement for the capabilities of Google’s cloud architecture.

Movie Studios

Studios have invested a fortune in 3D in recent years, and they still see the premium prices they charge for 3D showings as a key way to increase their revenues even as movie attendance declines. They also need to keep 3D films coming in order to placate theater owners who may have invested $50,000 per screen for the required projection technology.

One way to keep up interest in 3D is novelty, but we’re past that point now. The other way is to make it as commonplace as possible so that 3D isn’t seen as being special so much as 2D content is considered to be lacking. Having 3D available on YouTube greatly increases the content for consumers and might raise their expectations that everything should be 3D.

If YouTube were to apply the process to the commercial movies it offers as streaming rentals, that would be even better. Paramount just inked a deal to bring 500 of its movies to YouTube for rental, reports The Wall Street Journal. And Paramount is the studio that just released the Titanic 3D remake, so it has faith that the format has legs.

TV Manufacturers

At first, TV makers were charging consumers a significant premium for 3D capability, but now they’ve been reduced to giving the technology away. Sony (NYSE:SNE), whose TV division has been bleeding for eight straight years, includes 3D on more than half of the models it currently sells.

The problem is that 3D content has been lacking. But if you combine 3D capability with the current push for smart TVs (with WiFi connections), 3D content on YouTube ties those two features together nicely.

At this point, 3D and smart-TV technology are tough sells as premium features, but Sony, Samsung (PINK:SSNLF) and other TV manufacturers are hoping they’ll be desirable enough to restart the upgrade cycle that stalled after many consumers bought their first big flat-screen TVs.

Will YouTube’s new feature put an end to the “death of 3D” stories that have become increasingly common? Maybe. Commercial 3D movie releases may stall given their expense. But having a bunch of content available — with more coming every day — from amateurs, along with the possibility of applying the technique after the fact to commercial features that are then streamed, might just be what’s needed to spark consumer interest in 3D on the home front.

While “interest” isn’t quite as good as “demand,” it sure beats “indifference,” which seems to be 3D’s current status in consumers’ minds.

As of this writing, Brad Moon did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/04/youtube-3d-could-be-a-game-changer/.

©2014 InvestorPlace Media, LLC

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