Another Dimension

Three years ago, Jeffrey Katzenberg, one of the most powerful men in Hollywood, had a "Eureka!" moment while watching Robert Zemeckis's "The Polar Express." The adventure-filled Christmas story, starring Tom Hanks, used performance-capture technology to incorporate the movements of live actors into animated characters, a novelty at the time. But what made the viewing truly memorable for Katzenberg was that he was watching it in 3-D in an IMAX theater. For the CEO of DreamWorks Animation, who has overseen such hits as the "Shrek" franchise and the recently released "Madagascar 2," the experience was a revelation. As soon as he got back in his car, he called his team: "I've seen the future of cinema, and it is 3-D," he said. "We've got to go and figure this out because it's a tidal wave of opportunity, and whoever gets on it at the beginning and rides it is going to profit the most."

He's not talking about the 3-D of the Eisenhower era. Back in the 1950s, the film industry, threatened by the rise of television, developed a crude form of three-dimensional projection. Two cameras captured two separate images and then superimposed them to create an illusion of depth. But this stereoscopic imaging often strained viewers' eyes, causing headaches and nausea, and it never really took off. The rise of digital technology has changed all that; a digital projector can now create a three-dimensional picture by sending two images—one for the left eye and one for the right—eliminating eyestrain as well as the blurred lines that marred many earlier 3-D experiences. Instead of goofy cardboard red-and-blue glasses, viewers wear sleek, fashionably tinted specs to keep their focus. "It's unfortunate it's still called 3-D because it has nothing to do with the 3-D of the past," said Steve Schklair, CEO of the California-based 3-D technology company 3ality Digital Systems, during the inaugural 3D Film & Entertainment Technology Festival in Singapore in November.

Ever since his "Polar Express" epiphany, Katzenberg has become one of the most vocal proponents of 3-D movies, believing the improved technology could be the third revolution for his industry, akin to the introduction of sound in the 1920s and color in the 1930s. "The first two were about bringing a better film experience to the audience," he says. "This one is about bringing audiences into the film experience itself." Indeed, DreamWorks Animation has announced that all future films will be shot in 3-D, beginning with "Monsters vs. Aliens," a spoof of a 1950s science-fiction movie scheduled for release in March—making history by being the first animated work designed from start to finish in 3-D.

It will have plenty of competition. An onslaught of new releases is expected to open audiences' eyes to what the technology can do in the hands of such master craftsmen as Zemeckis—whose 3-D "A Christmas Carol" starring Jim Carrey as Scrooge is expected in November—and James Cameron, who is directing the much anticipated $220 million live-action 3-D film "Avatar." Other Hollywood luminaries are also working on 3-D films; Steven Spielberg is planning to turn "Ghost in the Shell" into a 3-D action film and is working with Peter Jackson on a "Tintin" series in 3-D, and George Lucas plans to release all six "Star Wars" movies in 3-D. Meanwhile, Disney's first full effort, "Up," about two unlikely explorers in a lost world, will be released this summer. In addition to "A Christmas Carol," the studio has another 16 3-D films in development, including Tim Burton's "Alice in Wonderland," with Johnny Depp in the role of the Mad Hatter, and Jerry Bruckheimer's live-action "G-Force," a spy comedy starring animals. Fox will release the animated 3-D "Ice Age 3" this summer.

At a time when the movie industry is trying to meet growing audience demand for fresh experiences and new media, many Hollywood bigwigs believe 3-D films could bring back some magic to the silver screen, re-energizing moviegoers and increasing profits. "The key to a good film has always been story, story, story; but in today's environment, it's story, story, story and 'Blow me away,' " Walt Disney Studios Motion Pictures Group president Mark Zoradi told the audience at the Singapore festival during the world premiere of Disney's 3-D film "Bolt."

The technology also offers a solution to one of the industry's biggest problems: piracy. About 90 percent of pirated movies come from a camera brought in to a movie theater, and no camera can yet capture a 3-D film. But it doesn't come cheap; the additional average cost of making a 3-D movie will range from 15 to 20 percent of the overall budget, says Jim Gianopulos, chairman and CEO of Fox Filmed Entertainment. So far, audiences have shown they are willing to pay a 20 percent premium for the experience; a 3-D theater showing the same film as a 2-D theater sells 3.5 times as many tickets. But that means higher ticket prices; Katzenberg has been suggesting theaters charge an additional $5 per ticket for a 3-D movie—roughly 60 percent more than the current North American average of $7.