3D printing companies and toy manufacturers share a common problem: the digital blueprints used by 3D printers that let anyone “print” a copy of an object on the cheap, on demand, at home. Printer manufacturers are waiting for 3D printing to take off … but in order for that to happen, there need to be more of these digital designs available.
For toy manufacturers, 3D printing and freely traded digital blueprints look ominously like Napster-era music file sharing did just before CD sales started to tank. A deal signed by Hasbro (HAS) and 3D printing marketplace Shapeways is exactly the kind of agreement that benefits 3D printing companies, consumers, artists and the companies whose products are being reproduced.
This all started with My Little Pony. Really.
First, let’s do a little background. I wrote a piece last year pointing out that lawsuits had started to arise as copyright holders began to sue websites hosting digital blueprints of their products. As an example of that ongoing battle, Wired’s Nathan Hurst points out a highly anticipated Game of Thrones 3D model that was nixed with all descriptions of the model removed, thanks to a cease and desist order from HBO.
This is exactly the kind of thing 3D printing companies don’t want to see.
The average consumer needs to be convinced that shelling out $1,000 or more for a 3D printer like the 3D Systems (DDD) Cube — reviewed here — is worth it. Consumers want to print stuff they recognize, and that means having digital blueprints available. Copyright holders suing to stop distribution of the files means very little worthwhile to print (trust me, you can only make so many intricate plastic bracelets and chess pieces before the thrill wears off), and that’s preventing 3D printing from taking off the way it was expected to.
3D printing companies managed to get their products on retailer shelves nationally over the past year. Having Staples (SPLS) carry your printer and accessories is a big step to widespread adoption. But having so little to print has been a drag on sales.
Mediocre performance by some 3D printing company stocks has more than a little to do with this lack of consumer interest. 3D Systems was trading in the $35 range at the end of 2012, spiking at over $96 this January as the Consumer Electronics Show once again piqued interest in 3D printers. But with consumers continuing to sit on their hands, DDD is back under $52.
That brings us back to My Little Pony.
Shapeways is a self-described 3D printing marketplace. It works with independent artists who upload their 3D designs. Shapeways physically prints them and sells on demand to consumers.
It’s not a 3D blueprint source, but bear with me.
Shapeways inked a deal with Hasbro that would let artists design their own My Little Pony models and sell them to the public. According to Gigaom’s Signe Brewster, the revenue splitting on a $30 model is as follows: $20 to Shapeways, $6.50 to the artist and $3.50 to Hasbro. The pilot program went so well that the range of Hasbro properties covered was expanded to include Transformers, Monopoly and others — this at a time when a Transformers movie was in theaters and official toys are still all over store shelves.
The Shapeways/Hasbro deal doesn’t directly involve 3D printing companies, but it proves two things: One, that consumers are willing to pay for models produced by 3D printing (rather than official versions produced by toy companies) and two, copyright holders are willing to charge a reasonable split for using their properties in 3D printing.
Take Shapeways out of the equation (or have it simply facilitating digital file distribution instead of 3D printing the models) and suddenly professional-quality 3D blueprints are available at a reasonable cost, with everyone being compensated. The manufacturers could provide the files themselves, if they wanted to take artistic license out of the equation.
This would be like moving straight to a model that’s more like Apple’s (AAPL) iTunes than the free-for-all of file swapping — where quality can be dubious, malware abounds and no one gets paid.
3D printing companies like Stratasys (SYSS) would benefit as consumers gain access to legitimate 3D blueprints, giving them more reason to actually buy a printer. And copyright holders would get paid a royalty, despite the fact that they incurred no production or marketing costs.
Of course, there are risks in this model. Current 3D printing technology can’t match the detail and colors of many commercially manufactured toys, so consumers may still pass until 3D printing companies come up with more advanced hardware. In some cases, 3D printed models may reduce demand for the official versions, impacting sales. What’s to stop someone from paying for a digital blueprint and 3D printing dozens of copies of a toy for their friends? And once that digital file is out there, it’s going to be copied and shared, no matter how well it’s protected.
Still, with more of these revenue sharing agreements in place, the stage may finally be set for consumer 3D printer sales to take off. At the same time, copyright holders would be compensated — at least most of the time. Waiting for the inevitable pirated versions and trying to sue file distributors into oblivion didn’t work for the music and movie industries, and it’s only going to stall the inevitable with 3D printing.
The Hasbro/Shapeways deal sounds like a win-win situation, good news for the 3D printing industry in general and a blueprint the 3D printing companies should encourage to spur the long-awaited growth in their consumer customer base.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.