3D TV - Technical marvel, Forecasting puzzle

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3D TVs were the big story at the CES show in January and now I’m starting to see them show up at Best Buy. While I tend to be in the early majority of the technology adoption curve, I don’t think I’ll be buying a 3D TV any time soon. So, am I representative of the population, or am I just receding to the technological late adopters side of the curve? Is my geekiness declining as my age advances? Or are others as apathetic about this as I am?

On the one hand, there is definitely a “gee whiz” factor that you simply can’t deny. It’s that coolness that have been drawing people into 3D movies since the 1950’s Classics like House of Wax and It Came from Outer Space drew people into the movie theatres despite having questionable plots and an excess of things flying out of the screen at you. Recent hits like Up , Avatar and Alice in Wonderland are fanning the flames of interest in 3D. Now you can have this experience in your home. On the other hand, there are several issues that could impact the adoption of 3D;

  • Glasses – Today’s TV and movie theatre technology requires you to where special glasses to view 3D. A CNET article points out that the 3D glasses are specific to a given set and cost as much as 150 per pair. This might not be prohibitive if you are just watching yourself, but if you have a family, you need a pair for each person. And what if you have friends or family over for a visit – do you need a pair for them as well? Besides...I have enough trouble keeping track of my remote control; who needs another thing to look for?
  • Content – Aside from a few movies, and some sporting events, there is not a whole lot of content currently available. Similar to the implementation of HD, there will be more and more content coming as devices become available and more common. It’s that traditional chicken and egg problem. From the consumer’s perspective; What is the point of spending thousands of dollars for a new TV if there is nothing to watch? From the content producers perspective; Why should I spend millions making 3D content when there are very few people with 3D sets?
  • Consumer fatigue – Many consumers have just upgraded their home theatre set-ups to allow them to consume high definition content; Large 1080p televisions, HD Tivos, new set-top boxes from the cable company or satellite provider and of course new upconverting DVD players or Blue-ray decks. Those who have just recently upgraded are not likely to want to go back and buy another new system. Those who haven’t yet gone HD will likely not go 3D when the time comes to replace their systems.
  • Technical issues – multiple formats, differences in perspective (kids see 3D differently than adults do because their eyes are closer together), all put the market in a high state of flux.

So the question then becomes if you are a TV manufacturer and are offering a 3D TV, how do you forecast future demand? Do you go bullish and forecast big sales? Or do you play conservative and risk stockouts and the loss of significant potential revenue? The big concern is that the technology is still in a state of flux and if you are holding significant inventory when the next advance hits, you could be stuck with a lot of obsolete inventory.

One example of potential game changing technology is the introduction of 3D televisions that don’t require special glasses. You don’t want to be sitting on a pile of old stock when that change hits. Traditional forecast accuracy mitigation issues can’t help in this case. Normally, you could use techniques like postponement strategies to limit inventory costs while improving responsiveness. With 3D TVs it is entirely likely that technology changes and that the majority of your strategically placed inventory would need to be replaced.

So what to do? Personally, I’d probably go conservative, but as I’ve already pointed out, I’m not that excited about 3D. Let’s hear from you... Are you excited about the upcoming “3D revolution”? If you were to forecast 3D TV sales, what factors would you consider? Comment back and let us know.

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