The Report: The Year That Was Saved by 3D

20th Century Fox

Extra revenue from 22 3D movies last year offset a grim 5.2% attendance drop.

When history is written, 2010 will go down as the year that 3D saved Hollywood.

Although attendance was down a troubling 5.2 percent domestically — the second-biggest dip of the past decade — revenue came in only a tad lower than last year’s record take of $10.6 billion because of the higher prices for 3D movies.

Some blame the attendance drop on a stiff price hike in May; the average ticket cost $7.95 midyear, a 6.6 percent jump from $7.46 in 2009. By the end of 2010, the average dropped to $7.85.

Overseas, where 3D is wildly popular, the six major studios collected $12.7 billion in grosses, a 20 percent leap compared with 2009. Business was good across the board for studio titles, but it was 3D fare that provided an extra kick.

Still, it’s a cautionary tale. In the U.S., studios are having to work harder to convince moviegoers, and especially families, that they should shell out an extra $2-$4 to see a 3D pic.

“There is a high bar now,” says Paramount vice chair Rob Moore, whose studio enjoyed great success with DreamWorks Animation’s trio of 3D titles in 2010. “You have to show that the movie will be a better experience and be more entertaining in 3D. Movies like Avatar and Alice in Wonderland had both.”

As they ring in 2011, studio toppers are reveling in the statistics 3D has wrought, but there’s little time to rest on their laurels. There are more than 30 major 3D releases coming this year, up from about 22 in 2010.

Only seven films have grossed $1 billion worldwide. Three of those did so last year with the aid of 3D: Fox’s Avatar, which earned the bulk of its $2.8 billion cume in 2010; Disney/Pixar’s Toy Story 3 ($1.06 billion); and Disney’s Alice in Wonderland ($1.02 billion).

Another telling factoid: Of the top 20 films at the domestic box office, 11 were 3D titles (out of a total of 22 major 3D releases). Why the fat grosses? On average, a 3D title can expect to make 30 percent more because of the 30 percent upcharge for a 3D ticket. Ask Sony. The studio’s No. 2 picture of the year after The Karate Kid wasn’t Salt or Grown Ups; it was the 3D title Resident Evil: Afterlife.

Afterlife — the fourth installment in the zombie-fighting franchise — grossed an amazing $234 million overseas, well beyond its $60.1 million domestic take, for a total of $294.1 million. The previous film in the series, the 2D Resident Evil: Extinction, grossed only $97 million overseas in 2007 and $50.6 million domestically.

Booming international 3D markets include the U.K., China, Russia, Japan, France, Germany and Mexico. China and Russia in particular have seen a surge in digital-theater installations. Mexico is a huge family market, so 3D has upped the ante for kids’ movies. And, as an added bonus, 3D also helps combat international piracy.

“It’s very interesting,” Universal marketing president Eddie Egan says. “The 3D business can be much more consistent overseas. You hear it all the time.” Universal hit the jackpot internationally and domestically with Despicable Me. The film grossed $250.8 million domestically and $289.4 million internationally for a global total of $540.2 million, putting it at  No. 8 for the year. Its surprisingly strong run helped to soothe Universal’s wounds over an otherwise tough year.

Meanwhile, two other animated features made the worldwide top 10: Shrek Forever After ($739.8 million) and How to Train Your Dragon ($494.9 million), both Paramount releases from DWA.

But Egan and other studio execs are adamant that 3D, in and of itself, won’t make made a bad film work.

At the beginning of 2010, amid Avatar fever, there was a gold-rush mentality. Studios scrambled to convert titles in hope of squeezing more money out of the box office.

For some films, such as Warner Bros.’ Clash of the Titans and Paramount’s The Last Airbender, it worked. Titans grossed $493.2 million worldwide, and Airbender collected $318.9 million. Even though critics carped, marketing denizens say Warners and Paramount did a great job of telling moviegoers why the two pics were visual experiences that should be seen in 3D.

Other conversions did little to whip up interest, resulting in such box-office disappointments as Warners’ Cats & Dogs: The Revenge of Kitty Galore and Fox’s Gulliver’s Travels.

Fox and Walden Media also decided after the fact to convert The Chronicles of Narnia: The Voyage of the Dawn Treader. The Christmas title has been soft domestically but has done a bit better overseas.

In a bold move, Warners decided at the eleventh hour to stop conversion work on Harry Potter and the Deathly Hallows Part 1, determining that there wasn’t enough time to do it properly. It’s almost certain that Deathly Hallows would have jumped the $1 billion mark worldwide had it been released in 3D, but Warners didn’t want to tarnish the franchise. As it was, it came in No. 3 for year, grossing $890.2 million worldwide.

Warners proved itself as the 2D king of 2010, with Inception coming in at No. 4 for the year, grossing $825.4 million worldwide.

Other live-action tentpoles making the worldwide top 10 list were Summit’s Twilight sequel Eclipse ($693.5 million) and Paramount/ Marvel Studios’ Iron Man 2 ($621.8 million).

More than any other studio, Fox was saved by 3D in 2010, especially domestically. Had it not been for the revenue from Avatar, the studio’s showing would have been lackluster.

Outside of its 3D event pics, Disney also struggled. Its year-end entry Tron: Legacy is doing great in its 3D runs but hasn’t become a breakout hit. Imax theaters have contributed nearly 25 percent of the grosses in a sign that fanboys are turning out en masse.

Imax has been a huge beneficiary of 3D, in part because the tickets cost $4-$5 more. The exhibitor predicts its domestic box office for 2010 will be about $544 million — double the $270 million it earned in 2009.

“When 3D works, it works better than anything,” says Greg Foster, Imax chairman and president of filmed entertainment. “Conversely, when it doesn’t work, the downside is more exaggerated because of the associated costs.”

It continues to cost an additional $20 million to shoot a film in 3D, and at least $12 million to convert one.

The year proved that all sorts of 3D films can work. One of Paramount’s biggest financial scores was Jackass 3D, which grossed $117 million domestically and $52.7 million overseas, clearly buoyed by 3D grosses.

Go ahead, bray.              

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