What Consumer Electronics Companies Must Do to Make 3D Profitable

Scott Peterson is a digital image market analyst for Gap Intelligence, a San Diego-based independent technology research firm with emphasis on helping product manufacturers and retailers understand current retail market trends in order to respond to customer demands as they occur. He can be reached at speterson@gapintelligence.com.

3D is emerging as one of the hottest trends in consumer electronics this year, especially in the digital camera and camcorder realm. Major brands including Sony, JVC and Panasonic all tout the technology that has finally reached a level of quality where it can be taken seriously. While 3D represents one of the most exciting enhancements to our entertainment experience, unit sales are still very low. Yes, even the earliest of adopters aren’t buying 3D TVs — yet.

The Problems

  • Manufacturers should recognize that demand for 3D is directly related to the amount of 3D content available. So far, there is far too little to make the purchase of an expensive new TV worthwhile. In the case of HD, as providers delivered more high definition content, television manufacturers followed suit by making more HD compatible products, which were then advertised more to the consumer. The consumer has to feel that he’s missing out on something before he’ll buy.
  • Many manufacturers are focusing on the “first to market” message with their new devices and not on the components and partnerships that are necessary to support the technology. Consumers will not buy into a single 3D device from any maker that lacks an entire ecosystem of supported products.
  • The perceived lack of device compatibility adds to customer hesitancy. People are already confused about which brands work with what. Historically, electronics manufacturers have been proprietary with devices, leading to “format wars” that take time to hash out. This ingrained feeling needs to be addressed, as it represents a large hurdle in the minds of consumers about where to start and what to buy.

The Solution

Signaling their desire to become one of the early pioneers of 3D technology, companies such as Panasonic have recognized the dynamic nature of the market and what is necessary to succeed. Panasonic’s 3D HDTV business is supported by a wide range of products and services that are designed to create a complete 3D ecosystem for consumers. Panasonic’s 3D portfolio includes TVs, Blu-ray players, dedicated 3D channels and –- most interestingly –- consumer level 3D camcorders. By offering affordable home capture solutions, Panasonic is one of the first companies to give customers the ability to create their own 3D content, thus developing a more diverse 3D library beyond copies of Avatar.

In addition to creating a user friendly and affordable 3D platform, other initiatives need to be addressed by the market before we see widespread 3D adoption:

  • Invest in 3D now. Building a following takes time, and any gadget maker’s absence from the maturing 3D market will be very conspicuous. Manufacturers and retailers should view their 3D lines not as a profitable venture for 2011, but as a solid investment for the next five years.
  • Plant the 3D seed with product placement. A consumer’s first experience with 3D might be an interactive display at a retailer like Costco. The curious will likely play around with the technology and say, “Wow, that’s cool,” only to leave, grab some free food samples, and buy paper towels. While displaying 3D might not initially lead to more sales, at least the placement has made the technology more “real” for American families.
  • Find partners to solve programming issues. Since its emergence, the 3D realm can be best described as “starved for content.” Manufacturers should be on the lookout for opportunities to partner with content creators and providers like sports broadcasters and movie channels.For example, Sony partnered with Imax and Discovery Communications to launch a 3D channel and was the technology partner for 3D broadcasts of the 2010 FIFA World Cup. Panasonic technology, meanwhile, was used to broadcast the 2010 French Open in 3D.The more 3D broadcasts with mass appeal, the more incentive there will be for consumers to take the leap on a new television.
  • Update current products for compatibility. Toshiba has addressed this issue by introducing “glasses free” 3D technology on its range of laptops and TVs in the hopes of creating a user friendly mindset for wider acceptance. Third-party manufacturers are also capitalizing on mass appeal with universally compatible,fashionable and reusable 3D glasses such as the Oakley Gascan.

While 3D has vastly improved since the days of cardboard glasses and B movie monsters, it still has a long way to go before consumers will feel like they’re missing out if they don’t have the latest tech. Now is the manufacturers’ chance to invest in 3D to get a foothold in the market, with the knowledge that 3D will likely be profitable in the future.