What Happened to the 3-D Dream?

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A year ago the buzz around everything 3-D was beginning to drown out the normal buzz around furry talking holiday toys. If you believed the manufacturers of TVs and the movie studios, it was only a matter of time before we would be watching everything in 3-D.

But this holiday season the tone has changed dramatically. Best Buy isn't running as many 3-D TV ads, ESPN isn't advertising their 3-D network, and even films in 3-D seem to be less prevalent. So what happened?

Too far too fast
A year ago, 3-D was exploding on extremely optimistic projections. RealD (NYS: RLD) was adding its technology to theaters by leaps and bounds, movie studios were thirsty for added 3-D revenue, and after the success of Avatar, it seemed as if 3-D was can't-miss.

But Panasonic (NYS: PC) , Sony (NYS: SNE) , and Samsung didn't sell as many 3-D TVs as expected, and ticket sales began to wane. RealD has been hit especially hard after seeing disappointing box office sales and having a partnership with Samsung fall apart. Even an all-3-D channel by Discovery Communications (NAS: DISCK) , Sony, and IMAX (NYS: IMAX) has been stuck in a rut.

Hope on the horizon
But disappointment early in a new technology's life doesn't spell doom. 3-D has a niche role in movies and maybe even television, but it doesn't belong everywhere. Studios are beginning to learn this and are using 3-D more prudently.

Costs are also falling for 3-D televisions, making the extra cost more palatable for consumers. 2011 may not be a big year for 3-D in the home, but 2012 could be. 3net Head of Acquisitions Mark Ringwald recently pointed to projections of 12 million 3-D TVs in the U.S. by the end of 2012 as a point of optimism. Remember that HD didn't take over standard television overnight. It was a long process.

At the time this article was published Fool contributorTravis Hoiumowns shares of IMAX. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw.The Motley Fool owns shares of Best Buy.Motley Fool newsletter serviceshave recommended buying shares of IMAX and Discovery Communications.Motley Fool newsletter serviceshave recommended writing covered calls in Best Buy. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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