Analysis: Manufacturers bet 3-D games can bring TV sales to life

By Liana B. Baker

NEW YORK (Reuters) – Raheem Patterson, a 35-year-old personal trainer, bought a new flat screen TV set just 18 months ago. But already he is considering an upgrade, only this time around he wants one with 3-D features.

Five times a week, Patterson plays Activision Blizzard’s (ATVI.O: Quote, Profile, Research) “Call of Duty: Black Ops,” a game he could play in 3-D if he were to invest about $500 to $5,000 in a new TV set.

“I would buy it for the better visuals,” he said.

Sony Corp (6758.T: Quote, Profile, Research)(SNE.N: Quote, Profile, Research), Mitsubishi Electric Corp (6503.T: Quote, Profile, Research) and Samsung Electronics Co (005930.KS: Quote, Profile, Research), among other manufacturers, are hoping Patterson is not alone. Sales of 3-D TV sets have yet to take off, and young, trendy gamers with money to spend on entertainment are critical to building the sort of buzz that can popularize a new product.

The $60.4 global billion video-game industry is also counting on 3-D. At a crossroads, video-game publishers are looking for ways to keep their products appealing as cheaper games for mobile devices and on Facebook are eating into profits.

In a bid to reverse their fortunes, both industries are betting that people will want to shoot virtual guns, drive race cars and boogie in 3-D video games.

“We’re all looking for the silver bullet for 3-D, and games are a form of content that just makes a lot of sense for 3-D, said Frank DeMartin, vice president of marketing at Mitsubishi Digital Electronic America. Every television made by Mitsubishi, which focuses on sets that are at least 73 inches, now features 3-D.

But perhaps no other company has more on the line with 3-D than Sony, which has been losing money in its TV division for six years and says it will record a loss again in March.

To help drive sales, it has invested in partnerships with Discovery and IMAX Corp to launch a 24-hour 3-D television channel [ID:nTOE70502U]. Of course, 3-D games can also be played on its PlayStation 3 gaming console.

“You’ll start to see mainstream adoption of 3-D happening in 2011,” said Sony spokesman Dan Race. He added that the goal is for “broader saturation” of 3-D entertainment by 2014.

Some investors doubt whether that is realistic.

“It’s ridiculous because there’s no way 3-D is going to be mainstream in 2011,” said Ted Pollak, who manages EE Fund Management, an investment fund focused on the video-game industry.

Along with others, Pollak points to the cost of the 3-D sets as a roadblock for both gamers and other consumers, saying “no one who invested in HD TVs a few years ago will be ripping them off the walls” in favor of pricey new sets.

A number of gamers also balk at wearing the glasses that make 3-D experience possible on most televisions. And those who are willing to buy the TV set and slip on the glasses may find there are not many 3-D video games to play,

Jesse Divnich, an analyst at EEDAR, a video game market research firm, said there are only a few 3-D games on Microsoft Corp’s (MSFT.O: Quote, Profile, Research) Xbox and about 20 for Sony’s PlayStation 3.

That could soon be changing though. Last autumn, the hit game, “Call of Duty: Black Ops” was released in 3-D for the first time, and by the end of 2011, Sony said 30 games would be available in 3-D.

GameStop (GME.N: Quote, Profile, Research), the largest games retailer, is ramping up efforts to promote 3-D gaming in its stores. Sony is training GameStop’s employees to be able to better explain 3-D features in games to customers.

The 3DS (7974.OS: Quote, Profile, Research), a handheld device that Nintendo is launching this weekend in the United States that features glasses-free 3-D technology, could also usher in wider acceptance of 3-D, said Tony Key, vice president of marketing at video game publisher Ubisoft (UBIP.PA: Quote, Profile, Research).

“Even though it’s a handheld device, people are going to have a good experience with it and are going to be searching out that 3-D content on the home console as well,” Key said.

(Editing by Paul Thomasch, Richard Chang and Maureen Bavdek)

Analysis: Manufacturers bet 3-D games can bring TV sales to life