Analysis: Manufacturers bet 3-D games can bring TV sales to life
NEW YORK (Reuters) - Raheem Patterson, a 35-year-old personal trainer, bought a new flat screen TV set just 18 months ago. But already he is considering an upgrade, only this time around he wants one with 3-D features.
Five times a week, Patterson plays Activision Blizzard's (ATVI.O) "Call of Duty: Black Ops," a game he could play in 3-D if he were to invest about $500 to $5,000 in a new TV set.
"I would buy it for the better visuals," he said.
Sony Corp (6758.T)(SNE.N), Mitsubishi Electric Corp (6503.T) and Samsung Electronics Co (005930.KS), among other manufacturers, are hoping Patterson is not alone. Sales of 3-D TV sets have yet to take off, and young, trendy gamers with money to spend on entertainment are critical to building the sort of buzz that can popularize a new product.
The $60.4 global billion video-game industry is also counting on 3-D. At a crossroads, video-game publishers are looking for ways to keep their products appealing as cheaper games for mobile devices and on Facebook are eating into profits.
In a bid to reverse their fortunes, both industries are betting that people will want to shoot virtual guns, drive race cars and boogie in 3-D video games.
"We're all looking for the silver bullet for 3-D, and games are a form of content that just makes a lot of sense for 3-D, said Frank DeMartin, vice president of marketing at Mitsubishi Digital Electronic America. Every television made by Mitsubishi, which focuses on sets that are at least 73 inches, now features 3-D.
But perhaps no other company has more on the line with 3-D than Sony, which has been losing money in its TV division for six years and says it will record a loss again in March.
To help drive sales, it has invested in partnerships with Discovery and IMAX Corp to launch a 24-hour 3-D television channel [ID:nTOE70502U]. Of course, 3-D games can also be played on its PlayStation 3 gaming console.
"You'll start to see mainstream adoption of 3-D happening in 2011," said Sony spokesman Dan Race. He added that the goal is for "broader saturation" of 3-D entertainment by 2014.
Some investors doubt whether that is realistic.
"It's ridiculous because there's no way 3-D is going to be mainstream in 2011," said Ted Pollak, who manages EE Fund Management, an investment fund focused on the video-game industry.
Along with others, Pollak points to the cost of the 3-D sets as a roadblock for both gamers and other consumers, saying "no one who invested in HD TVs a few years ago will be ripping them off the walls" in favor of pricey new sets.
A number of gamers also balk at wearing the glasses that make 3-D experience possible on most televisions. And those who are willing to buy the TV set and slip on the glasses may find there are not many 3-D video games to play,
Jesse Divnich, an analyst at EEDAR, a video game market research firm, said there are only a few 3-D games on Microsoft Corp's (MSFT.O) Xbox and about 20 for Sony's PlayStation 3.
That could soon be changing though. Last autumn, the hit game, "Call of Duty: Black Ops" was released in 3-D for the first time, and by the end of 2011, Sony said 30 games would be available in 3-D.
GameStop (GME.N), the largest games retailer, is ramping up efforts to promote 3-D gaming in its stores. Sony is training GameStop's employees to be able to better explain 3-D features in games to customers.
The 3DS 7974.OS, a handheld device that Nintendo is launching this weekend in the United States that features glasses-free 3-D technology, could also usher in wider acceptance of 3-D, said Tony Key, vice president of marketing at video game publisher Ubisoft (UBIP.PA).
"Even though it's a handheld device, people are going to have a good experience with it and are going to be searching out that 3-D content on the home console as well," Key said.