Who'll pay for 3-D glasses?

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Exhibitors, studios squabble over who should foot the bill

By Carl DiOrio

May 12, 2009, 09:21 PM ET

More than a dozen 3-D films will hit multiplexes this year as a rollout of thousands of additional digital 3-D systems continues amid fervid public approval of the fledgling technology.

Now if they could only figure out how to pay for the 3-D glasses.

Complicated virtual-print-fee agreements are in place to fund the rollout of digital hardware, allowing exhibitors to add the 3-D systems. But until reusable 3-D glasses come into greater use or the $1-per-pair cost for disposables is cut substantially, squabbling will continue over millions of dollars in costs tied to the extra-dimensional eyewear.

With an installed base of fewer than 1,400 domestic 3-D screens, distribution has been sufficiently limited to keep costs of outfitting customers in the low- to mid-single-digits -- so far. The glasses expense is expected quickly to swell to $10 million or more per release, once 3-D movies start playing in 2,000 or more theaters.

Such outlays come on top of about $15 million per pic in extra production costs tied to 3-D, as well as multimillion-dollar VPF payments. Fox execs quietly spread the word a couple months ago they intended to rein in their payments on glasses, but details of a new arrangement have yet to emerge.

"There is no way any studio can continue to pick up the entire cost of glasses," said a top distribution exec at another studio. "There has to be some equitable way of figuring out how to work things out. One thing we might want to look at is using re-useable glasses."

Dolby is the chief proponent of re-useable glasses among 3-D operators, with the more prolific vendor RealD testing re-useables but for now sticking with disposable eyewear. At upward of $25 a pair, upfront costs are vastly greater with re-useables -- and generally fall to the exhibitor -- so there is no consensus on the matter.

"If you could get the cost of disposables down to, say, 35 cents or even 45 cents a pair, then it wouldn't be a big deal," another top distribution exec suggested.

Exhibitors suggest that distributors were quick to push theater operators to accept digital and 3-D projection and thus must accept certain related costs. One top industryite noted the cost of glasses is much lower than the $5,000-$15,000 per 3-D system exhibitors pay to install their hardware.

"Exhibitors have invested rather significantly in 3-D technology and have not asked the distributors to fund that," the theater circuit boss said. "The digital stuff, yes, but not the 3-D."

Studio execs stress that exhibitors are just as likely to benefit from 3-D as distributors.

Even 3-D vendors have been drawn into the fray, as a settlement is key to the successful bow of Disney's May 29 opener 'Up" and Fox's July 1-slotted "Ice Age: Dawn of the Dinosaurs." One possibility would be to come up with a stopgap arrangement to carry the industry through the summer, while continuing to hash out a more permanent arrangement with exhibitors and vendors.

"We all have to find a way to control the costs of 3-D, but everyone who can make money from it should also share in those costs," a top distribution exec said. "All of the majors are looking for the proper way to work with exhibition on this."

Certainly theatrical customers -- already paying an average $4 premium on 3-D movie tickets -- are unlikely to embrace an additional charge for glasses. But the theater operators aren't volunteering any near-term help to studios.

"We have not had any discussions at a formal level with Fox with regard to 3-D glasses," Carmike chairman David Passman said Tuesday. "I'm assuming the discussions with others pre-empted the need."

With 500 screens in operation, Carmike is the nation's biggest 3-D exhibitor.

Mused a distribution president with a resigned sigh: "Once you pay for something, you will always have that cost. That's just the way it is."