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

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

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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