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Best Buy's 3D TV Debut Falls Flat


Analysts don't see the big picture in 3D television.

Champions of 3D TV claim the technology will revolutionize the home-theater experience. Firsthand accounts in conventions and trade shows are largely positive. Studios are betting that the enormous success of big-screen 3D can easily be translated to the living room.

Analysts, however, aren't too positive about the prospect of 3D in the home.

Yesterday, Best Buy (BBY) held a press event to honor the very first sale of Panasonic's (PC) 50-inch 3D Viera TV. Upper West Side couple Brad and Ashley were the premiere customers for Best Buy's complete 3D TV package, which included the set, a 3D-capable Blu-ray player by Panasonic, and a single pair of 3D glasses. Presumably, they'll take turns.

Price: A little under three grand -- a pretty steep cost for families still hampered by budgets and limited spending. For $1,000, Brad and Ashely could've fetched a regular HD set of the same size and, with no glasses necessary, they could've both enjoyed it simultaneously.

DirecTV (DTV) and Fox Home Entertainment (NWS) joined in on the festivities, both of which are also betting heavy on the 3D TV trend. They, along with ESPN (DIS), Discovery Communications (DISCA), Sony (SNE), and IMAX (IMAX) are investing billions in the idea that consumers are just itching to watch glasses-required, seat-specific, headache-inducing TV. (See Why 3D TV Will Flop.)

While cameras were rolling on the couple, analysts from BB&T Capital Markets, Goldman Sachs, and Credit Suisse were expressing their doubt that 3D TVs will take the world by storm in 2010. Each spoke with Reuters and gave his own version of the same gloomy outlook:

"3D TV is nice to have. Certainly not a must-have. To me, it is kind of like a cherry on a sundae," said BB&T's Anthony Chukumba, giving one of the more chipper responses. But he added, "The impact is going to be muted."

"I don't think 3D TV will be decisive for margins," bemoaned Goldman Sachs' Matthew Fassler. "It is not reasonable to expect consumers to pay a premium for technology without sufficient associated content."

Gary Balter at Credit Suisse even put a number to the ominous clouds. "Is it going to be 10 percent of sales? No way!"

As the analysts are well aware, Best Buy is up against a variety of issues that could prevent the adoption of 3D TV.

Along with the exorbitant price, the retailer and potential customers must contend with a lack of content. Fox admitted that only one movie Ice Age: Dawn of the Dinosaurs will be available in April, and come June, DirecTV will have three -- count 'em, three -- 3D channels ready for viewers. And as John R. Quain of PC World explains, not every TV has the necessary software to decode the channels because they're based on a different 3D format.

Speaking of compatibility issues, each $150 pair of 3D glasses for Panasonic sets won't work with other TV brands, like Samsung and Vizio. Hopefully, every 3D enthusiast's group of friends shares the same brand loyalty.

While Panasonic projected sales of two million sets in the first year, Best Buy president Michael Vitelli was reluctant to give an actual figure to the press. Vitelli has no "specific expectations" for Best Buy's line of 3D TVs.

Not exactly the vote of confidence typical to a huge product launch.

The retailer hopes that yesterday marked the beginning of a gradual push to 3D TV -- a sentiment shared with dozens of studios and manufacturers. But based on glaring limitations, an uncoordinated launch, and an utter lack of preparation, "gradual" is the kindest of terms for the length of time 3D TV will need to ever catch on.
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