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The 3-D Bundle Dilemma

I’m just going to say it: The roll-out of 3-D Blu-ray this year has been an unmitigated disaster. The technology is there and ready (and by all accounts is very impressive), but the unfocused marketing and paltry selection of titles available have curtailed most consumers’ interest in the product. Chief among the major screw-ups has been the limiting of desirable titles to brand-exclusive bundle packages. You want to watch ‘Monsters vs. Aliens‘ in 3-D? Buy a Samsung 3-D starter kit for $350. How about ‘Ice Age: Dawn of the Dinosaurs’ or ‘Coraline’? Oh, sorry; those are only available with the Panasonic 3-D kit (also $350). Can you use the Samsung glasses with a Panasonic TV or vice versa? Of course not. And now we’re being told that the most-wanted 3-D title of all will be locked into an exclusivity deal for another year? It’s like someone is purposefully trying to kill 3-D Blu-ray before it can possibly gain any traction.

Ever since ‘Avatar‘ in 3-D was released as a Panasonic exclusive title at the beginning of this month, Panasonic owners who’ve obtained the disc have been auctioning it off on eBay for astronomical prices. Meanwhile, behind the scenes, rumors in the industry claimed that the exclusivity deal for this title would be extremely short-lived, perhaps only a couple of months – just enough to get Panasonic through the holiday sales season. But that all changed this week when new rumors started circulating that in fact the disc will be locked up with Panasonic through February 2012.

From a purely business perspective, I can understand why hardware manufacturers have found these exclusivity deals appealing. The thought is that consumers who are eager for a specific title (like ‘Avatar’) can be swayed to purchase the TV brand and corresponding 3-D hardware that offers that title as an exclusive. “If you want ‘Avatar’, and we know you do, you’re going to have to get yourself a new Panasonic TV today!”

The flaw in this thinking is that consumers are rarely stupid enough to base their entire TV purchasing decisions (especially for sets that cost thousands of dollars) on getting a movie or two thrown in. People will buy the TV brands and models that fit their needs best, not the ones that come with the nicest swag. By locking these major titles into exclusivity deals, all the studios and hardware manufacturers have done is upset consumers who’ve bought (or decided to buy) different brands.

What happens if you actually purchase a Panasonic TV just to get ‘Avatar’, and then your kids beg you to watch ‘Monsters vs. Aliens’ in 3-D next? Or vice versa: You bought a Samsung set to get ‘Monsters vs. Aliens’ and now want to watch ‘Avatar’? In either case, you’re screwed; that’s what it amounts to. This is a game that the consumer cannot win. And it’s infuriating enough to convince many potential buyers to just sit out this product launch entirely, to wait until the mess is straightened out and they can buy the titles they want without artificial restrictions. What point is there in buying a 3-D TV if there’s little to no worthwhile 3-D content to watch on it?

Randy Fry, the President and co-founder of Fry’s Electronics, recently gave an interview where he talked about the dangers of exclusive product deals. Fry said:

Our consumers fully expect that manufacturers roll out their new product introductions to all retailers (partners) simultaneously. Exclusive product roll outs simply ignore the consumer’s needs by destroying their loyalty to the retailer they depend on. Manufacturers must make their marketing decisions in favor of what is best for the long-term health of their brand and our industry. Not for the misguided purpose of reducing competition.

He’s clearly talking about retailer-exclusive products there, not the brand exclusives we’re dealing with, but the basic principle is very much the same. These exclusivity deals are short-sighted and harmful to the long-term growth of the format, and may just kill its chances of ever catching on with consumers.

16 comments

  1. Truthfully, there is part of me wondering if the Avatar rumor is true. Would the studios really be THAT stupid to sign an exclusive bundling agreement for that long? I honestly think the “rumor” stems from a typo, and should read February 2011.

    On the plus side, a bit of feedback. I bought my first 3D Blu-Ray movie a couple of weeks ago, and am happy to report that it plays just fine on my PS3 and my 2D set. This means that I can start buying 3D stuff now, and have a collection when I finally take the plunge, but I can still watch my content now. This works great for IMAX stuff where movies are like $15-$20, but I hope the major studios will stop price-gouging 3D discs.

    Its a pitty – 3D is a big enough leap that it could have been Blu-Rays’s “killer app” so to speak – you would have no more of that crap “I just can’t see the difference”. However, this bundeling crap, as you have said, is pretty much killing the format before it even gets started.

    • Josh Zyber
      Author

      FYI, not all 3-D Blu-ray are backwards compatible with 2-D. That feature has to be specifically authored onto the disc. Some releases are backwards compatible, some come with a separate 2-D disc in a “Combo” package, and some offer no 2-D at all. You have to check the packaging and reviews to be sure.

  2. Keith

    Honestly, I’d like to see the state of blu-ray improve before we get yet another mass adopted variant of it. The playback issues of new releases on every major manufacturer’s machines is absolutely inexcuseable. Blu-ray has been on the market for what 4 years now? Absolutely unacceptable for there to still be playback issues.

    I refuse to buy into this 3d gimmick until regular plain old 2d blu-ray plays perfectly every time on every blu-ray player.

  3. Timed exclusives are one of the most frustrating things in videogames, and they happen all the time. It’s awful to do to a fanbase who generally only owns one system.

    This is worse.

    It also doesn’t make sense. I mean, if companies want 3D to take off, I would think they’d make ‘Avatar’ free with every 3D item purchase.

    That’s the movie everyone wants, right? I didn’t even like ‘Avatar’ and I’d wantit if I had a 3D setup. What better disc to show off with?

  4. Maybe the hardware companies have realised that 3D Blu Rays and TVs have garnered so little interest from the public so far, that they may as well just try and milk what they can from the few individuals interested enough, and with enough money not to care about the limited situation?

    Let’s face it, even a lot of early adopters are reticent to jump into 3D tv yet. They’ve tried too push too much, too soon, and shot themselves in the foot.

    • Josh Zyber
      Author

      This is a classic Catch-22 situation. Consumers aren’t buying 3-D because there isn’t enough content to watch, and studios are holding back or limiting content because people aren’t buying.

      The only way this can be resolved is if the studios and hardware manufacturers start thinking about long-term strategies, not just short-term publicity advantages.

      • Alex

        Oddly enough, there’s a similar problem with Blu-ray in general, there’s simply not nearly as much content at this stage in the product’s life-cycle as there was for DVD. While Blu-ray is certainly here to stay (Inception, 65% market share, FTW!), the general adoption rate would have been so much higher if more titles had simply been released. It seems that the studios who had handled DVD so well, lost their nerve with Blu-ray, and lost it even further with 3D. They just don’t seem to learn.

      • 3D BD

        What people don’t understand is that the only reason there is 3D available on Blu-ray right now is because of the hardware manufacturers. They are the ones pushing the format, and paying for the development of the tools that allow for these 3D movies to be authored. People have no idea how much money has been spent just trying to figure out how to place subtitles in 3D space…among other things.

        As a result, if Panasonic is going to front the majority of the cost of the development, then it only makes sense that the disc would be exclusive to them. It sucks, and I definitely agree that it’s destroying the format in the consumers eyes…But right now, it’s a necessary evil. We just have to sit tight, and be happy that there are highly intelligent people working their asses off to even make this possible.

        These are demo discs, plain and simple…and that’s how people should look at them…

  5. Despite the ‘big drive’ I do wonder how committed the hardware manufacturers are. It makes me think that perhaps they’ve been pushed into this early, somewhat, by the studios releasing all these ‘spectacular 3D’ films, especially since the big juggernaut of Avatar, and the fear of other firms cashing in first.

    Their business-sense must be tingling with the warning of: “The vast majority are only just settling into HD and Blu Ray – Do they really want the next thing pushed at them already, for so much extra cash? Not only that, but something that has little new/current content to encourage them.” (and that’s before you get into any of the issues of how much people want to sit at home wearing glasses just to watch a film).

    I think perhaps the hardware manufacturers (except where they’re merged with film-making like sony, but even they may have dissenting division heads), are probably not willing to take the big plunge (In the way they have with other new products) of developing and selling and marketing a new product that they’re not confident in.

    They probably figure on keeping the technology ticking over like it is now, and waiting for that possible ‘critical mass’ point to arrive on its own, rather than trying to bring it forward since they’re not confident in it.

  6. Rolltide1017

    I’ll keep saying what I’ve said from the start, 3D is too expensive. Most people have just bought their first HDTV in the last year or two and they are not interested in re-buying a $1000, $2000, $3000 TV this soon. Plus having to buy a new BD player and possibly even needing a new AVR. Plus the added cost of extra glasses if you have a family of more than 2 people, not to mention if you want enough for friends that may visit. What about the stupid up charge for standalone 3D BD themselves. Most people view BDs as still being a little too expensive and then the 3D one cost even more.

    The general public is not going to invest that much money just to watch a handful of 3D movies.

  7. Jane Morgan

    Think about the launch of HDTV. That took years to build momentum. Remember all the milestones. 1996, 1998, 2000, 2003, 2005. And how few channels there were in the beginning years.

    3D is even harder to launch because you can’t just take all your old content and convert it. It will take a decade or two to build up a library of 3D movies and shows and games.

    Plus, when HDTV did launch, I don’t remember all the early adopters going around shouting ‘HD Sucks’ the way all the haters are hating on 3D today. Most people will wait ten years for the glasses-free TVs. It could be twenty years before 3D is as mainstream as HDTV is today.

    Having timed exclusives of movies sucks, but FOX’s only goal is to maximize short-term profits, not to drive the adoption of the format.

  8. Javier Aleman

    I just bought my parents a new Samsung 3D tv and bluray player that was part of a bundle at Best Buy. It came with the Shrek movies which I know they don’t care for. Avatar would have been way better but the Panasonic bundle wasn’t that great so I went with Samsung. A little side note, the first Shrek movie wouldnt load at all. I tried updating the firmware but it still didn’t work.

  9. AlexWS

    The question is though: Who exactly is this hurting? All the TV manufacturers using exclusive deals gets boosted sales. The content deliverers (Fox, Sony Pictures) get to sell millions of copies (Panasonic bought 2 million Avatars). And right now, much of the content get way more PR than it otherwise would. Panasonic has plastered info about the deal everywhere, creating a general interest in the technology. And I think casual buyers (ie the majority) could easily choose TV based on what movie comes with it. And truth be told, only three or four movies remain exclusive today (Coraline is slated for a wide release), with new 3D titles being released every week. And as 3D technology is very cheap to add 3D readiness to a TV (software for supporting the signals, and an IR emitter is all you need), I think sales of 3D tvs will be decided by their availability and price, both of which are getting better all the time. I would guess that 50% of all tvs sold in 2012 come with 3D functionality, whether people want it or not. By then, all that is needed is to make content available, which it will probably be by that time.

    While I think that this solution will impact sales of the technology to the most enthusiastic early adopters (us), I doubt it will do much damage to the format itself.

  10. Well I for one am holding out for Avatar 3D to be a Panasonic exclusive for the forseeable future, considering I bought a Panasonic VT-25 this week.

    Ice Age 3 and Coraline were packed in but I have to wait a few weeks for Avatar 3D as in my country at least it has to be redeemed via the manufacturer.

    So Avatar and the shitty-looking Panasonic HTIB I also get will both be going straight to eBay.

    SRP of the HTIB is more than half of what I paid for the TV, but even if I barely get half of that I’ll still be happy.

    Pretty good time to be in the market if you ask me.

  11. that1guypictures

    I actually think the roll out of 3D blu-ray was way more successful than the launch of Blu-ray itself. There is no competing 3D format, there are over 20 titles available for purchase by the end of this year. The bundled exclusives all expire within the next 3 months (except for Avatar, which comes bundled with the highest rated 2-D & 3-D set of the year) and the PIcture quality of the available titles has been excellent.

    I think the problem with 3D Blu-ray growth will be selection of titles that are 3D native in general. We are just at the end of the formats first year, and a good 1/4th of all 3D theatrical titles have already been released! Once all the native films are out in about 2 years (except new day-and-date titles) the studios will have to turn to conversions to supply the demand for 3D content.

    If anyone is to blame for the exclusives, I say Jeffrey Katzenberg and Samsung are the major culprits. The entire Dreamworks animated catalog was exclusive this year. Monsters Vs Aliens, How to Train Your Dragon, the four Shrek films….and if you bought the Samsung TV you got 1-3 films for free, but you had to buy more kits to get the other films! I basically just ordered the Shrek Trilogy and Bolt from the UK, and then bought the Coraline/Ice Age bundle for my Panasonic which also came with Avatar for free. Basically I’m only missing Dragon which I’ll buy off eBay.

  12. Patrick A Crone

    It feels good not to have a horse in this race. I haven’t been able to properly see 3D for years now so I could care less. In any case, the tech is coming around at the worst time. A majority of people are spending as little as possible on a new set(720p Plasma outselling LCD/LED 1080p). At this point finding a broad range of people who will pay $1500 to $3000 for a new set is laughable. Tack on the cost of each extra pair of glasses and it’s the least attractive purchase in home video.