Hollywood may face cost of 3D, Internet in 2012

New estimates compiled by Hollywood.com point to the movie industry facing a rare decline. Assuming the last week of the year reflects trends, movie theaters will have made $10.1 billion in 2011, or 4.5 percent less than in 2010. AllThingsD didn't glean explanations from the research.

The drop may have been a virtue of a lackluster movie season. While there were well-received movies, the season didn't encounter runaway successes as in past years, such as 2009's Avatar.

However, the slump might also have been affected by digital movies and the attitude towards 3D movies. Most 3D movies almost always carry a premium in theater over their 2D versions and have typically been promoted first, making a trip to the theater either more expensive or undesirable. Prices occasionally get close to the cost of buying a movie on DVD, iTunes, or even Blu-ray copies, increasing the incentive to wait for the home release.

Internet video is currently led by Netflix, where major movies usually come late. Much lower prices on Netflix, as well as access to new releases on services like iTunes and Vudu, has reduced the need to see a movie in theaters first.

Other forms of entertainment, also digital, might be dampening theater expectations. Games like Modern Warfare 3 beat Hollywood records, earning $400 million in one day and beating Avatar to $1 billion by one day, reaching the figure in 16 days. They're helped by much higher asking prices but also have much longer lifespans.

It remains too soon to tell if the movie industry fill follow the path of music, where a reluctance to encourage legitimate digital sources early on and clinging to the traditional promotion model have commonly been attributed to Internet music growing more slowly than CDs have declined. Theaters provide a very different business model, and studios have been more willing to adopt Internet sources early on.

By Electronista Staff

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