Nikki Finke reports on the dilemma facing distributors with regards to the new technology and ticket pricing:

The Top 5 Grossing Movies of 2010 in North America were Toy Story 3 (3D – Disney/Pixar), Alice In Wonderland (3D – Disney), Iron Man 2 (2D – Disney/Marvel distributed by Paramount), The Twilight Saga: Eclipse (2D – Summit Entertainment), and Inception (2D – Warner Bros/Legendary Pictures). Interesting how not all were 3D despite the higher ticket prices, which has prompted one prominent media analyst this week to call on the movie industry to scale back on the number of 3D movies it has planned because demand for them is lessening and 3D is “not the panacea which Hollywood studios hoped it would be”, says Rich Greenfield.

He notes that total movie industry box office is down over $152M or 30% year-over-year. And 4th quarter-to-date, box office is now down over 8% and could easily end the quarter down 9% given how poorly newly opened films are performing. In turn, attendance for Q4 2010 will likely be down around 12% – “a staggering number for an industry that expected 3D technology to motivate people to get out of their houses and go to the movies,” he says. ”The U.S. consumer is becoming increasingly less interested in 3D movies. While the horror and gross-out comedy genres may benefit from 3D (think Saw 3D or Jackass 3D), the vast majority of 3D movies this year have been disappointing at best (the exceptions being Alice in WonderlandToy Story 3, and Despicable Me).”

Greenfield calls this “A Recipe for Disaster: Hollywood is combining substantial price increases ($3.25 3D upcharge is the average in the US on a $7.00-$7.25 average 2D ticket), with annoying glasses that substantially dim the light of a movie and which young children spend more time playing with than wearing, with sub-par content (not to mention the fact that 3D gives some people headaches and others cannot see 3D imagery at all). While you may think of us as the ‘3D Grinch’, we fundamentally believe content and story are the key factors to success and that technology alone is not a long-term path to success or profits. The movie industry should reduce the number of 3D movies it has planned or at least substantially scale back the upcharge as they are simply charging way too much for poor content. Did a Jack Black comedy, Gulliver’s Travels really need to be in 3D? We suspect even if the movie was bad, lowering pricing (to 2D levels) would have ended up selling more tickets.”

Although others’ projections for 2011 and 2012 box office are upbeat, Greenfield maintains that weak box office is likely to accelerate studio plans for early release premium Video-On-Demand. “While the exhibitors continue to focus on the risks to cutting into their 4-month release window, we suspect the weakness in exhibition attendance trends is likely to provoke Hollywood to accelerate their plans to release movies earlier in the home. Studios need to find new revenue streams to bolster movie profits in 2011 and beyond. We continue to expect multiple studios to begin trialing early-release, premium-priced VOD by late Q1 2011/early Q2 2011.”

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