RealD CEO Michael Lewis expects “more and more people to pay the premium” for a bigger cinematic experience; addresses dip in share price.
RealD CEO Michael Lewis is “bullish” about consumer appetite for 3D, despite 3D box office languishing in the US and some international markets in 2011.
“Since last year, across our platform, the percentage of 3D viewing for films is between 40%-60%. In the international market we’ve been around 60%. I’m bullish about the outlook,” Lewis told Screen.
Last year, RealD’s share price was badly affected by a lack of investor confidence in the the 3D market, but after a successful buy back of $50m in stock, the company is today trading at $15 on the NYSE (it had hit a low of $8 last year after its opening share price offering of $16) and Lewis is confident that this month’s hike in the projector and eyewear specialist’s share price is evidence of returning investor confidence in the company and 3D:
“In the short term, stock prices fluctuate. Last year we had a good year, but our stock was trading as if we are going out of business. Investors are now realising that we generate a lot of cash, we’re a high margin licensing company, that 3D is not going away, that there is a business for offering a premium product and that there is opportunity for growth into other visual displays.”
“We used to hear a lot of scepticism about 3D working outside of animation films,” he continued. “But look at the number of dramas and live action films being made by some of the best filmmakers in the world using 3D. I think that’s what investors are realising and that’s why you have seen a run up in our stock in the last month.”
Lewis anticipates that consumer appetite for large format screens in the US and the international arena will boost revenues: “We had 100 large-format screens last year. This year we have 200. In the international market there is a lot of interest in the premium, large-format experience and that will only grow in the next few years. In the US recently, the 200 large screen format theatres accounted for 4% of The Avengers’ opening weekend box office. We see that trend growing significantly. I expect more and more people to pay the premium for a premium experience.”
RealD technology has yet to reach large format screens in Europe and Asia but Lewis said there were tests underway for screens in China, a significant growth market for RealD in the last 18 months: “Our goal worldwide is to get to 80% marketshare, which we have achieved in US. I expect in China, Russia and Latin America we’ll be able to do the same, it just takes time.”
Lewis also discussed technological innovations within RealD and the industry as a whole. The company recently showcased a new model of lighter 3D glasses at CineEurope last week in Barcelona: “We just released a new, lighter version of our eye wear, which will be rolling out this year. It’s more comfortable, with less material. It was well received in Barcelona”.
Lewis said that RealD was well placed to cope with directors such as Peter Jackson and James Cameron shooting in faster frame rates: “I think things like 48 frames per second and 60 frames per second are another move forward in making the image more real, and that is the overarching goal for us. RealD glasses won’t need to change, and most of the systems are equipped to handle 48fps or will be upgraded. We will be ready to go in time for The Hobbit.”
Despite RealD and Samsung last year missing out on an anticipated 3DTV partnership, Lewis is confident that 3DTV will fire public imagination and become a strong business growth area. It may just take a little time: “I’m bullish about the rollout of 3D TV, essentially. But it will be a few years before it’s a solid business. Last year there were 20 million TVs with 3D capability. This year there will be 50 million.
“But the eye wear has to improve,” he cautioned. “And there has to be more content. I believe that at some point all visual display devices will be 3D enabled. It’s probably a three to five year process. But glasses-free technology is still a number of years away. The good news for cinema is that it is the best 3D experience.”
Cinema auditoria could also undergo significant evolution in coming years, added Lewis, especially considering the boom in alternative content: “We have to rethink how we design theatres to take advantage of how human beings interact with the image,” he said, citing examples of people wanting to move around an auditorium while watching sports events.