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Why 3-D TV has been an epic failure

If ESPN can’t make 3-D TV work no one can. That’s why ESPN’s announcement that it would drop 3-D later this year is such a big deal. The company, which is owned by Disney (NYSE:DIS), was one of the first to invest in 3-D, and is one of the first to throw in the towel, as well.

High hopes gone awry

3-D televisions made a big splash at the 2010 CES show, and both manufacturers and investors had high hopes for the industry. About 3.2 million 3-D TVs were sold in 2010, and in early 2011, DisplaySearch projected that over 90 million 3-D TVs would be sold in 2014.

No doubt there are a lot of 3-D TVs in living rooms around the world, but customers don’t seem keen on paying for 3-D content to go along with them.

The interesting channel to watch now that ESPN is out of 3-D will be the fate of 3net, a partnership between IMAX, Sony, and Discovery. The channel was built to be focused on 3-D, and recently launched a production arm to create 3-D and 4K content. Presumably, the loss of ESPN will hurt demand for other 3-D channels like 3net, and it will be interesting to see what the fate of this venture is.

What does this mean for the big screen?

It’s not only the small screen where 3-D has struggled. The big screen saw an explosion of 3-D content after the success of Avatar in 2010, as IMAX and RealD (NYSE: RLD) expanded their offerings. But, since then, the industry has been more selective about how it uses 3-D. Batman director Christopher Nolan shunned 3-D, and hits like The Hunger Games and Skyfall weren’t made in 3-D, meaning just one of last year’s top four films were 3-D.

You can see below that the decline of 3-D has had a huge impact on RealD’s revenue and income.

RLD Revenue TTM Chart

RLD Revenue TTM data by YCharts

The company was counting on 3-D TV technology to grow revenue, as well, so the loss of ESPN is another blow for RealD.

Foolish bottom line

3-D won’t die completely, but it’s apparent that it’s hit a major wall right now. Consumers aren’t willing to pay for 3-D TV, and the format isn’t a huge success on the big screen right now, either. The huge projections people made about 3-D adoption appear to be completely wrong and, right now, this looks like an epic failure.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by Travis Hoium, CFA, originally appeared on fool.com.

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