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RealD Shares Drop 15% After Sony Decides to Stop Paying for 3D Glasses

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Investors reacted to the controversial decision by selling shares of the glasses-maker, but one analyst says the move was inevitable.

Shares of RealD dropped 15 percent Wednesday after The Hollywood Reporter broke the news Tuesday that Sony plans to stop paying for the 3D glasses that moviegoers wear.

Sony's plan, effective May 1, effectively passes off the cost of 3D eyewear to the theater owners or their patrons. Investors reacted to the news by selling shares of glasses-maker RealD until its stock had shed $1.80 to $10.42.

EXCLUSIVE: Sony to Stop Paying for 3D Glasses in May 2012

RealD has said repeatedly that its intention with 3D glasses is to simply break even while it earns a profit from licensing its 3D technology for film exhibition, TV screens and the like. Nevertheless, revenue from the glasses has been an ongoing worry for investors and analysts.

In July, for example, the company said eyewear revenue fell dramatically because customers in international markets, where the glasses are sold like a concession, were reusing them instead of purchasing new ones. The stock fell 21 percent in a single day after that disclosure.

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The decision Sony revealed Tuesday will affect potential 3D blockbusters The Amazing Spider-Man and Men in Black III, both due in the summer, and theater owners aren’t happy.

“We are concerned that Sony’s attempt to change this business model would unilaterally upend long-standing industry practices,” the National Association of Theatre Owners said in a statement issued Wednesday. “Sony would be well advised to revisit its decision.”

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Studios have been subsidizing 3D glasses to the tune of about 50 cents per 3D attendee and the model is unsustainable, BTIG Research analyst Richard Greenfield told clients Wednesday.

“During a time of declining studio profitability, the studios have also been bearing the burden of 3D conversion and financing digital projectors,” Greenfield wrote. “It was only a matter of time before they got fed up and pushed back.”