Steering a troubled ship is nothing new to James Cameron. To make Titanic, the director had to overcome scepticism from the studios about the wisdom of making what was then the costliest movie ever, and of industry watchers who thought a three-hour romantic epic would sink on screen. But despite an initially watery reception from critics, Titanic became the highest- grossing movie of all time. Twelve years on, Cameron pulled off a similar feat with sci-fiparable Avatar and in doing so, he not only beat his own box-office records, he breathed new life into an entire industry: 3D movie-making.

But even for Cameron, Avatar was a colossal risk. Its original production budget of $100m is believed to have soared to half a billion dollars and its backer, 20th Century Fox, was aware that previous attempts to revive 3D had not been standout commercial successes. It certainly could not simply recoup its additional costs from IMAX screens. To avert commercial disaster, many cinemagoers would have to be willing to pay a premium to see it in 3D. Fox’s marketing machine played a smart game, running 15-minute previews in 3D while generating hype online for a cinema “revolution” . The strategy paid off: Avatar took $2.8bn worldwide, amply repaying its backers’ faith in both its director and 3D technology.

The risks Avatar’s producers placed on the film could, though, be just the tip of the iceberg when set against the amount the movie, TV and electronics industries together are betting on 3D. One industry report estimates that the market for 3D hardware – such as TV sets and Blu-Ray disc players, as well as cameras and games consoles – could be worth $100bn by 2015.

That does not include the outlay on movie or TV programme production, or the equipment that goes with it. The eight highest-grossing 3D films released in 2009 and 2010, including Avatar, cost between them just short of $1.5bn to make. Even though by no means all of these costs can be attributed to 3D, it is a substantial sum. There are around a dozen large Hollywood movies in 3D production currently, with another batch, including the original Star Wars and Titanic, slated for conversion to 3D for release in cinemas and on Blu-ray.

Cameron himself used the recent National Association of Broadcasters (NAB) conference in Las Vegas to launch a new 3D business with cinematographer Vince Pace. The Cameron-Pace Group will “banish all the perceived and actual barriers to entry that are currently holding back producers, studios and networks from embracing their 3D future”, according to the director. “We are still in the early days of 3D,” he said. “It is well established in theatrical cinema, but it not well established in broadcast, cable or mobile. It will be over the next few years”.

Cameron claims that 3D is the last barrier to a truly immersive movie experience and the technology, this time, is ready to deliver. “We see colour, we see in 3D, we hear stereophonically. First [cinema] was black and white, then sound came. Then colour came, then widescreen to fill more of our peripheral vision, and movies and broadcast media came closer to the way our human sensory system operates.”

The problem for the industry, however, is that by no means every film is an Avatar. A number of 3D films have flopped, and viewers, especially in the US, are railing against the premium they are being asked to pay to see poor-quality films.

Leading movie industry figures such Jeffrey Katzenberg, CEO of DreamWorks Animation, whose films include the Madagascar and Shrek series, and Star Wars director George Lucas, have warned of the dangers posed by poor-quality 3D productions and conversions. Both argue that these will hamper the growth of the market, a point that even the usually bullish Cameron concedes.

And, although cinemas report a revenue boost from showing 3D films – partly because of those higher admission charges – and 30% of cinema takings in the US last year were from 3D movies, success at the cinema alone is not enough. Movie studios now rely heavily on revenues from DVD or Blu-ray rentals and sales, transmission on cable, satellite and terrestrial TV and, increasingly, movie downloads.

Of all the ways audiences can choose to view a movie today, only cinemas provide easy access to 3D. Although the number of 3D-capable TV channels is growing rapidly – there are 11 in North America, according to the Futuresource consultancy – they have few viewers. British broadcaster Sky, a big investor in 3D, is understood to have only 70,000-80,000 3D viewers. And recently it was forced to investigate the side effects of prolonged viewing following claims by subscribers that 3D TV made them feel sick. A recent futurePROOF study of UK consumers, carried out by Kantar Media, found that just 1% of the population has a 3D TV, although as many again plan to buy one in the next six months.

Despite this, the TV and entertainment industries maintain that 3D is the future. According to the Consumer Electronics Association (CEA), an industry body, consumers in the US bought 1.1 million 3D TV sets in 2010. That figure, according to the CEA’s director of industry analysis, Steve Koenig, is expected to rise by 67% this year to 1.9 million units, and to reach 9.1 million by 2013. Korea and Japan are the next largest markets, with analysts saying sales of 3D TVs to Japanese consumers are currently doubling each year. Others go further: Parks Associates, a firm that researches the consumer electronics industry, expects as many as 80% of TVs sold in the US to be 3D by 2014.

Nor will cinemas be the only place to watch 3D, if the consumer electronics industry has its way. Already, all but the lowest-end Blu-ray players can play 3D discs, as can the Sony Playstation. Then there are portable devices, such as the Nintendo 3DS games player, and LG’s upcoming Optimus 3D phone, which can not only play 3D video but record it too. For home-movie buffs, Panasonic has a 3D camcorder and rivals JVC and Sony will release their own 3D models this summer.

And, despite weak sales of 3D TV sets and even 3D movies (1% of retail Blu-ray sales in the US last year, says Futuresource) the industry remains confident. Set against a tough economic climate, sales of sets and players have done well, 3D’s promoters argue. And, with the switchover to digital gathering momentum in the US and Europe, there has never been a better time to upgrade the TV. Manufacturers argue that 3D provides the incentive we need to spend again.

For TV and home entertainment, though, 3D is far from a complete product. “3D cinema is now a mature-ish experience but 3D TV will take longer to establish itself,” cautions Paul Lee, global director for research in telecoms, media and technology at Deloitte. The take-up is being hampered by competing standards (see box), which are oddly reminiscent of the wars between Betamax and VHS for video, and by the fact that audiences for the next few years can only watch 3D by wearing special glasses. Then there is the lack of content, which in turn reflects the higher costs associated with producing 3D. Unless there is more content, sales of 3D sets and players will not take off. But producing content is held back, in turn, by 3D’s higher costs.

While IHS Screen Digest, which monitors sales in the entertainment industries, believes consumers will buy 41 million Blu-ray discs by 2014, sales are being driven by a relatively small number of titles. This year is likely to see just 65 3D titles on sale in the US (3D movies will not work on conventional DVD players), set against thousands on 2D Blu-ray and DVD. Most retail stores do not even have separate sections for 3D titles, and finding the ones they do stock can be a challenge.

Even this, though, does not deter the ever-optimistic entertainment industry. “Titles that resonate with consumers will see more than 30% of their sales in the 3D version,” says Victor Matsuda, chairman of the Blu-ray Disc Association’s global promotions committee. But even he concedes there are obstacles: “Not all titles have 3D versions, and some titles are more attractive to the consumer who is interested in 3D.”

The consensus seems to be that science-fiction and animated titles work best in 3D, but with most of Hollywood’s 3D movies so far falling into one of those two genres, it is hard to judge whether a period drama or an action movie would work. Movies such as the upcoming 3D version of Titanic will test the wider public’s interest in 3D, both at the cinema and for home viewing.

But already, directors including Cameron and Lucas have warned of the dangers of low-quality 3D ‘remakes’, especially for the Blu-ray market. “I’m concerned about things that erode the market. Bad 3D is one of them,” Cameron has said. He believes that only around 20 films merit conversion into 3D. He has argued publicly that the studios should convert fewer films to 3D, and make a better job of reformatting those that it does choose.

“One of the poor approaches is where 3D is added in post-production, or there is just enough 3D content for it to qualify as a 3D release,” says Deloitte’s Lee.

Doing 3D well, though, costs. Pietro Macchiarella, an analyst at Parks Associates, says: “There is talk, in TV productions, of costs doubling, as you might need an extra crew for 3D. Then there is the cost of distribution. In movies, there are all sorts of figures, with costs ranging from 30-50% more. One problem is there is no standard equipment for 3D and very often movie directors have had to come up with their own workarounds.”

Cameron agrees. “You can’t have a separate 2D and 3D production. It is costing you double,” he told NAB. And although the movie-makers grab the headlines, it is TV that will drive 3D into the mainstream. “The industry will always make reference to movie production but the rapid growth will be in broadcast,” Cameron said.

The arrival of lower-cost, ready-to-use 3D production equipment from companies such as Sony and Panasonic, as well as 3D solutions for high-end digital cinema cameras from firms including Red and ARRI, is helping. So is better support for 3D in editing and special-effects software, both for TV and for computer-games production. The relative ease of adding 3D functions to software is one reason 3D games are developing more quickly than movies or broadcast TV. “Most games already run on a 3D engine,” says Macchiarella.

TV, though, remains both the biggest prize and the greatest hurdle. “The key issue, and the issue that is not always focused on, is access to content and the scarcity of good-quality content in 3D,” cautions Stewart Clarke, editor of Television Business International. It is partly for this reason that broadcasters across Europe, Asia and the US are transmitting or trialling 3D. Among the earliest adopters are sports channels such as Sky Sports in the UK, Orange in France and ESPN in the US.

Channels such as Sky and ESPN have made real progress in creating a more realistic 3D image for sports, especially by learning which camera angles work best with the technology; in Europe, 3D broadcasting of football is relatively tried and tested. This year, some Wimbledon matches will be filmed in 3D (see box, p75); according to David Bush, European marketing director for Sony Professional, tennis is one of the easier sports to transfer. Despite the inherent appeal – and potential demand – of broadcasting Formula 1, motor racing is beyond the reach of today’s technology.

Then of course, there’s porn. When the Hong Kong-made 3D Sex and Zen: Extreme Ecstasy opened on its home turf on 14 April, it took $360,000 (€240,000) in 24 hours, beating the territory’s previous opening-day box- office record (set by Avatar) by $20,000. By early May, the $3.5m erotic comedy had earned $6.7m in Hong Kong, Taiwan and Australia, with further premieres planned. A Blu-ray release now seems inevitable.

Other, less racy material is also making its way to 3D screens. Sky, for example, will be broadcasting the Isle of Wight and Bestival music festivals from the UK this summer. The Berliner Philharmoniker has recorded concerts conducted by Sir Simon Rattle for cinema release. And, as Sony’s Bush suggests, stage plays could also work. “There are starting to be experiments with other genres. Opera, ballet and staged productions can add value, as do rock concerts,” he says. Other, more general formats such as drama are likely to be tested this year. And, critically for commercial channels, some advertisers are starting to commission their spots in 3D.

But the enthusiasm for 3D is being tempered by weak consumer spending. In April one of Europe’s first TV-makers, Philips, announced it was putting its TV business into a 70%-30% joint venture with Hong Kong-based monitor-maker TPV. TPV has the option to buy out Philips’ remaining shares.

Even manufacturers that are committed to 3D concede that the technology in its current form adds little value to a set under 32in, and with consumers reluctant to pay a premium for new technologies, margins are under pressure. And the premium for 3D is much more obvious to a buyer of a small set than for a home-cinema enthusiast.

Then there is the issue of standards. The BBC, for example, is hedging its bets. It does not broadcast 3D, but plans to review this by the middle of next year. An internal report suggests its executives believe that by then, the technology will either be mainstream or will have failed. Either “a full BBC S3D [stereoscopic 3D] programme strategy will be developed or the current S3D standards fail to deliver/take off”, the report cautions.

But for directors such as James Cameron, the travails of the consumer electronics industry are bringing an unexpected bonus: a revival in cinema attendances. In the US, 17,000 cinemas can now show 3D films, and the number of screens in Europe is also growing. A third of cinema revenues in the US came from 3D films, and Cameron plans to release the sequel to Avatar in an even higher resolution than the first film.

“The low penetration of 3D in the home makes the cinema still the only way for most people to view 3D,” says Macchiarella. “In a way, there is still something exclusive about that.” Perhaps, instead of backing electronics, the smart money will be on popcorn.

GOGGLE-EYED

The spectacles for every spectacle

One obstacle to 3D viewing, at least in the home, is the need to wear special glasses. The technology has moved on from the early card-and-plastic film glasses, and today’s headsets support high resolutions and much-improved stereo depth of field.

But glasses for 3D TVs are also fairly bulky, can be relatively expensive and some need electrical power to work.

Active – or active shutter – glasses are the more expensive option, but enthusiasts say they produce the best image because they capture the full resolution of a high-definition transmission or Blu-ray disc, as well as the full colour range. The technology is based around a liquid-crystal shutter in the glasses and a wireless connection to the TV set

However, the shutter system needs power, adding to the bulk and cost. And, if the glasses’ batteries are flat, the 3D technology doesn’t work.

Passive 3D technology for TVs relies on glasses that will be familiar to anyone who has been to a 3D cinema screening. Using FPR (film-patterned retarder) LCD technology, manufacturers favouring passive glasses claim that, aside from being cheaper and needing no power, their images have less flicker and are literally easier on the eye.

The industry’s real goal, though, is glasses-free or autostereoscopic 3D. Philips was slated to release a glasses-free TV this year, until the project was cancelled. Rival manufacturers claim that 3D TV without glasses will still come, but it will take between five and seven years to overcome manufacturing and practical issues, including the need for the viewer to sit at a precise viewing angle in order to achieve the 3D effect. Computers are likely to see autostereoscopic 3D before TVs do.

WIMBLEDON 3D

The first colour images broadcast on the BBC were of the Wimbledon tennis championships in 1967.

This summer, the championships will be broadcast live in 3D. Under a deal between the All England Lawn Tennis Club, Sony, and the BBC, the women’s singles finals and the men’s singles semi-finals and finals will be available to broadcasters to transmit.

Although 3D sports broadcasting is most often associated with football, tennis in 3D has been tried before, at last year’s French Open. At Wimbledon, Sony will use five camera positions, each equipped with two cameras.

The company is also looking at whether it can use the Hawk-Eye ball tracking technology to help with the 3D programme. Sony bought Hawk-Eye, which is used to judge line calls, in March this year. As Hawk-Eye can be used to generate effects for video, such as ball positions in action replays, it could provide a useful add-on to 3D.

“You can get the viewer right in there and concentrate on the three dimensions of the game,” explains Mark Grinyer, 3D sports solutions business head at Sony Professional. “And tennis is quite a linear and diagonal game so by cleverly positioning our cameras we can give a very good experience of 3D, with the ball coming towards you as if you are standing behind the player.”

Although other broadcasters will be able to televise Wimbledon in 3D, the BBC will not be doing so. UK fans will, however, be able to watch the games in cinemas.