Exclusive deals make 3D TV audience even smaller

NEW YORK--Just having the latest and greatest 3D-enabled TV won't guarantee you a virtual court-side seat this weekend when CBS Sports broadcasts the U.S. Open tennis tournament in 3D. You'll also have to subscribe to DirecTV's satellite TV service.

Avid sports fans can now feel like they're part of the action in their own living rooms thanks to 3D TV broadcasts of live sporting events, such as the U.S. Open. But exclusive distribution deals limit who gets to see what.

On Wednesday, the U.S. Tennis Association, which hosts the U.S. Open and CBS Sports, which has broadcasting rights to the tournament on the two main weekends the tournament is happening, announced they'd be broadcasting the event in 3D on one of DirecTV's dedicated 3D channels. [CBS is the parent company of CNET.]

The U.S. Open is the latest sporting event that is being shot using 3D cameras and broadcast in 3D. Other events, such as the Masters golf tournament, the NCAA Final Four college basketball tournament, Major League Baseball's Home Run Derby and All-Star game, and the Beijing and Vancouver Olympics, along with a few other events, have also been broadcast in 3D.

Though the 3D experience can be viewed only on a 3D-enabled TV and while wearing 3D glasses, the audience has been limited even further by the fact that these events have been available only on certain TV services. For example, the Masters Golf Tournament was available in 3D on Comcast's network along with a few other cable operators, but it was not offered on any satellite or telco TV services. The U.S. Open tournament will be available only on DirecTV. And an upcoming NFL preseason game between the New York Giants and the New England Patriots will be viewed in 3D on only Verizon's Fios network.

Because broadcast rights vary for each major event, rights holders are able to negotiate individual deals with paid TV services, such as cable, satellite, or telco TV. What this means for the average TV viewer is that simply buying a 3D TV and the $150 glasses that must be worn while watching aren't enough to get you access to all the sports that is being broadcast in 3D.

For viewers who want to experience 3D TV today, DirecTV offers the most content. This summer, it launched three dedicated channels of 3D TV content. One channel features pay-per-view content, another features live sports, movies, and other events, such as concerts. And the third channel offers video-on-demand content in 3D.

DirecTV has also been working with technology partners, such as Panasonic, to create its own 3D video content to fill these channels. On Wednesday, Panasonic announced both a new professional 3D camera and the first-ever consumer 3D camcorder. The company also has plans to open a new 3D TV development center in the U.S. to help push the technology forward. The companies have teamed up to produce documentaries and to produce live events, like music concerts in 3D. The idea is to populate the DirecTV channels with as much 3D video as possible.

"We learned when we rolled out high-definition TVs that we needed the content to sell TVs," said Peter Fannon, vice president of corporate and government affairs for Panasonic. "We chose DirecTV as a partner because they have a nationwide footprint."

Other TV service providers, such as Comcast, AT&T U-verse, and Verizon Fios, are offering more-limited 3D-viewing opportunities. But each provider says it plans to add more 3D content to its lineup. Terry Denson, vice president of content strategy and acquisition for Verizon, said at a recent event in New Jersey showing off the Fios 3D TV service that more 3D content will be offered on Fios TV service starting in the fourth quarter of 2010 and in early 2011.

"We are in the process of identifying unique content that we think will help us offer a sustainable channel," he said.

For DirecTV, already having its dedicated 3D channels plus having the exclusive rights to broadcast major sporting events, such as the U.S. Open, are differentiators that put it ahead of competitors.

"Sports content has always been exclusive as a way for us to differentiate our service," said Steven Roberts, senior vice president of new media and business development for DirecTV.

Indeed, this has been an industry practice for years. DirecTV is the only paid TV service offering the NFL Sunday Ticket, a premium package that offers DirecTV viewers access to all major football games regardless of which market they're in. DirecTV also offers other exclusive content, such as early broadcasts of the TV show Friday Night Lights. And cable companies, Comcast and Cablevision, which own rights to broadcast certain local sports content, have also used their exclusive broadcast rights to combat competitors.

But there is no doubt that the exclusive distribution of 3D sports broadcasts is further limiting an already small pool of potential viewers of these 3D events. According to iSuppli, only 1.8 million out of a total of 46.5 million TVs shipped to retailers in the first quarter of 2010 were 3D-enabled--about 4 percent. That number is expected to grow substantially during the next 18 months, but it won't be huge. iSuppli predicts that by the end of 2011, manufacturers will ship about 12 million 3D-capable TVs for the whole year.

For now, starting with a smaller audience may be fine, since most consumers aren't buying new TVs primarily for 3D.

"It's not like the beginning of HD TV when TVs were thousands of dollars more than regular TVs," Roberts said. "3D only adds a couple of hundred dollars to the price of the TV so if you are in the market for a new TV anyway, why not future-proof the purchase with a 3D TV?"

Roberts said that during the next couple of years the same sporting events will be available in 3D on multiple TV services. ESPN is already moving in this direction. It is offering its ESPN 3D network, which launched this summer, on DirecTV, Comcast, and AT&T U-Verse. So far the 3D programming is limited to special events. ESPN 3D broadcast the World Cup soccer tournament in 3D, and this fall it will carry 13 college football games in 3D.

As other sports broadcasters, such as CBS Sports, add more 3D coverage, distribution deals will likely expand to multiple TV services.

"You'll see this open up more and more," Roberts said. "But for the near future, the important events will be exclusive. It's really all about the broadcasting rights."

Panasonic's Fannon agrees that the same 3D sports broadcasts will increasingly become available on more services to reach the maximum number of 3D consumers.

"Other distributors will get access to the same sports content sooner rather than later," he said.

And once TV manufacturers and broadcasters overcome the hurdles of getting wider TV service distribution, then they'll have to work on overcoming the next big obstacle to 3D adoption: those $150 glasses. Current 3D TV technology requires people wear a set of "active" technology glasses that permit the eyes to view images in 3D. Critics wonder if the glasses alone will turn off some consumers. But Fannon said a glasses-less 3D TV viewing experience is still years away.

"Right now the technology that would allow people to watch 3D TV without glasses costs so much, it's just not feasible for consumer products," he said. "So we are years away from not having to wear those glasses."

Correction at 11:55 a.m. PDT:An earlier version of this story misstated on which TV services the 3D version of the Masters golf tournament was available. It was available on Comcast's service as well as a few other cable operators.