A Genuine Tragedy: Jeffrey Katzenberg Calls 3D Box Office Dip "Heartbreaking"

by Edward Davis
June 10, 2011 10:50 AM
9 Comments
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Dear Zillionaire Jeffrey Katzenberg, let it be known before we begin our article that our heart bleeds for you and your stock holders. In December 2010 2009, just a few short weeks after James Cameron's latest opus had proven to be a runaway smash hit, 3D was heralded as the next the savior of cinema by the industry, many of whom had just received the best Christmas bonus ever. The technology, and more importantly, the resounding reception audiences met it with, had apparently revitalized, rejuvenated and revolutionized the film industry. In 2010, "Avatar" (which was released at the tail end of 2009) grossed $2.7 billion worldwide (highest grossing film of all time, worldwide), "Toy Story 3" nabbed $1.06 billion (4th highest of all time worldwide), "Alice In Wonderland" hauled in $1.02 billion (6th highest film of all time worldwide) and the the world was 3D's oyster.

Cut to about just over a year later and now the industry is apparently singing a very different tune as "3D fatigue" has apparently settled in with audiences. According to DreamWorks Animation chief Katzenberg, 3D is "right smack in the middle of its terrible twos." We smell a tantrum brewing.

"It's really heartbreaking to see what has been the single greatest opportunity that has happened to the film business in over a decade being harmed," Katzenberg said in an very recent interview with the Hollywood Reporter.

So wait, what's the problem? Well, 3D is only raking in mega-millions of dollars, instead of the billions of dollars that are needed to keep those expensive car seat warmers powered in the backseats of Hollywood VPs' limousines. For example, Disney's "Pirates of the Caribbean: On Stranger Tides" has only grossed a rather pitiful $812 million worldwide (oh, the horror) and DreamWorks' "Kung Fu Panda 2" has only taken in a rather small $260 million worldwide so far (though in all seriousness, 'KP2,' has greatly underperformed expectations). And according to THR, audiences chose to see both films in the less-expensive (gee, why??) 2D format, rather than the ugly, headache-inducing 3D version (a mystery surely worthy of Sherlock Holmes himself). But honestly, much of its woes are well covered in this recent New York Times piece titled, "3D Starts to Fizzle, and Hollywood Frets."

So what exactly is the frickin' problem with these moviegoers and 3D?? Well for one, costs are astronomical. According to the NYT article, 'Pirates 4' cost $400 million to make (that's likely including marketing and print and advertising costs too). 60% of theater business is generally made in 3D, but 'Stranger Tides' only did 47% of its business in the stereoscopic format.

"We have disappointed our audience multiple times now, and because of that I think there is genuine distrust -- whereas a year and a half ago, there was genuine excitement, enthusiasm and reward for the first group of 3D films that actually delivered a quality experience," Katzenberg said, not naming names, but suggesting there's been too many films shoddily thrown into the 3D format (*cough* "Clash of the Titans" *cough*). "Now that's been seriously undermined. It's not in any fashion, shape or form the demise of 3D, but until there are 3D experiences that exceed people's expectations, it's going to stay challenged. The audience has spoken, and they have spoken really loudly."

This, of course, is not the first time Katzenberg has warned against the perils of inferior 3D. You could even go as far to call him the godfather of such admonitions. "Poorly executed 3D is harmful, and it threatens its long-term success," he said way back in April of 2010. "Remember that 3D is a natural experience; it is how most of us see the world everyday. We must give consumers great 3D that looks natural and feels wonderful."

Of course in the same breath he had praised rival company Sony's "Resident Evil: Afterlife" because it utilized "James Cameron/Vincent Pace Fusion Camera System" (guys, if you wrap a turd in a bow, it's still a turd, sorry). The film grossed $60 million domestically.

He does have a a bit of a point when it comes to international grosses that seem backwards. "There is unprecedented growth going on. Here's a staggering statistic: We opened 'Kung Fu Panda 2' 'in 5,500 theaters, 4,000 of which were 3D. So in China, we had more 3D theaters than we had in North America. In international markets, 65 percent of the gross, or more, is coming from 3D screens." This is right on the money, look at 2010 international grosses and compare them to domestic grosses. Domestically there are six 3D films in the top 10 ('Alice,' 'TS3,' "Despicable Me," "Shrek Forever After," "How To Train Your Dragon," and "Tangled"; note spots #8 and #9 of that top 10 are DWA films). Internationally, those same six films are also in the top 10, but DreamWorks' "Shrek 4" is in the fifth position.

Then again, the population of the planet vs. the U.S. is significantly higher, and more people equals more theaters and more revenue; of course China's going to have more 3D, it has more everything. So do DreamWorks need to switch their game plan? "We're not the problem," he told THR. "We have made five films now in 3D and have built this amazing reservoir of knowledge and tools."

So what about those sky-high 3D prices? "Quite frankly, there's no industry in the world that doesn't attempt to move up the customer to a premium experience," he said. "I don't care whether you make shoes or wine or iced tea or cars, everybody tries to create multiple price points. So why shouldn't we be in the same business of offering our customers a premium experience at a premium price -- as long as we deliver them a premium value? If we cheat them, which is what has happened now too many times, then they'll walk away from it."

This is clearly a CEO talking. But in all seriousness, does Katzenberg make one point in this interview that you, the regular moviegoer can empathize with? What is he thinking? But from an industry perspective, Katzenberg may be correct. “Audiences are very smart,” Greg Foster, the president of IMAX Filmed Entertainment told the NYT last week. “When they smell something aspiring to be more than it is, they catch on very quickly.” There's plenty more to come in 3D as the year goes on, from "Green Lantern" next week to "Hugo Cabret" and "The Adventures of Tintin" at year's end, so the coming months will prove if audiences are really sick of it, and whether Katzenberg will spend Christmas crying into his solid gold pillow.

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9 Comments

  • Bash | June 13, 2011 12:16 PMReply

    As with others, the only 3D movie I've sought out has been Avatar.

    I do wonder, however, how 3D would have fared if we weren't in the midst of a recession - would movie goers still be so subjective as to whether they watched a movie in 2D or 3D?

  • Gary Meyer | June 13, 2011 12:10 PMReply

    I don;t know if Jeff's reference to "Real Life" is to our in the flesh experiences or Albert Brooks' movie but you should she the trailer if you have not before.
    www.youtube.com/watch?v=6KtAzt9LGsI

    And where is the "adult" (i.e. X rated film )industry. They should have jumped on the bandwagon again by now---at least with some hard R films.

  • garymeyer | June 13, 2011 12:07 PMReply

    That we would hit a downtown in the 3D cycle just as happened in the 1950s and 1970s should have been a foregone conclusion. As mediocre and bad movies are made in the format (just as they are in 2Dt), audiences do not want to be burned and many will wait until they feel a movie demands 3D and hear it is worth the extra charges.

    3D is here for a long time. I am told by a reliable source who has been involved in producing several highly successful animated 3D films that the additional cost to shoot in 3D is only about a million dollars (can anybody weigh in on this?). So even if the balance is shifting towards 2D, the number of 3D tickets sold is still huge when a film is a hit and therefore worth the extra cost. With international being late in installing 3D, they are still peaking.

    Katzenberg led the charge that resulted in many exhibitors spending their own money to install digital and 3D (so the studios can save billions of dollars on prints, shipping and storage). He focus is making #D an ongoing success. He is correct that a quality product is essential to keeping audiences interested. And that includes top presentation in theaters which isn't where it should be either.

  • dryer | June 11, 2011 12:59 PMReply

    Does anyone really for sorry for Katzenburg and his tale of woe ? Despite the over inflated box office success of ALICE and the other rubbish, AVATAR was and is the only true 3D film. It wasn't a gimmick but rather an enhancement of the picture, the story wasn't manipulated to fit the format. Katzenburg himself and his ilk killed the post AVATAR 3D movement due to greed with subpar films and unnecessary post format conversions. Frankly if not for Scorsese dabbling in the format I would never pay to see another 3D film until AVATAR 2.

  • Sous Chef Gerard | June 11, 2011 3:23 AMReply

    Would have been so much better if you started the article with the proper year for Avatar - 2009. Just couldn't get into the flow if you can't get the facts straight.

  • Jeff | June 11, 2011 3:21 AMReply

    Good riddance, 3-D. Best death since Bin Laden.

    Never could see the appeal in overpriced, headache-inducing, underlit cinema that you need clunky headgear to view.

    "Real life" is in 3-D. I think that I can handle watching simulacrums of it in two dimensions for a couple of hours.

  • Paul | June 11, 2011 2:12 AMReply

    I haven't paid to see a 3D film since AVATAR & I only intend to see one film in 3D this year- Martin Scorsese's HUGO CABRET.

    I'll view Tintin the normal way primarily because I have no desire to pay extra to see it & the trailers look pretty damn dark.

  • Andrew | June 10, 2011 11:44 AMReply

    That was a terrifically inspired comment.

  • CEO of Major Film Studio | June 10, 2011 11:07 AMReply

    Hey fuck you guys and your sardonic humor. YOU try explaining to your daughter she won't get her own private jet like her two sisters have.

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