NCAA in 3-D will reshape TV business
Just as HDTV created a wave of consumer spending to keep up with technology, 3-D sports will boost revenue for these select stocks.
And in the wake of the runaway success of 3-D sci-fi film "Avatar," put out by News Corp. (NWS), which has topped $1 billion at the box office worldwide, there’s a good chance this move with 3-D NCAA basketball could make a killing at the box office, too.
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But more importantly, it could forever change the landscape of how sports are broadcast to Americans -- and how top Wall Street companies cash in on the events.
Consider the HDTV revolution and how it forever changed the revenue model of professional football. For years, franchises have relied on stadium-based cash to pad their profits. But with massive television screens that offer lifelike detail yet cost less than some season-ticket packages, NFL execs have had to adjust their strategies.
Take Dallas Cowboys owner Jerry Jones, whose monstrous HDTV at the Cowboys' new stadium is the largest in the world -- 160 feet long and weighing 600 tons. Jones has stated that just 7% of National Football League fans have ever set foot in an NFL stadium -- and the high-def Jumbotron is clearly a way to make sure fans don’t abandon the live experience altogether.
There’s a lot of buzz right now about the prospect of 3-D television technology, despite the fact that there is almost no programming out there yet for these sets.
For instance, Best Buy (BBY) just announced this week that it will start carrying a 3-D TV line from Panasonic (PC). The big-box electronics retailer doesn’t expect the televisions to be a dramatic source of revenue, but it wants to make sure it is ready to cash in once 3-D becomes widely available on cable providers like Comcast (CMCSA) and Time Warner Cable (TWC).
Nobody can say just yet how or when 3-D TV will become a practical reality for most Americans. But it’s becoming increasingly clear that sports programming provides perhaps the most natural form for 3-D content -- and the business of sport could see the biggest bump in its bottom line as a result.
Satellite television provider DirecTV (DTV) says it will have an exclusive 3-D channel available this spring, and sports giant ESPN and its owners at Disney (DIS) said they will have a 3-D channel available in June. Neither has made clear commitments for what exactly the programming will be, but sports games are the most likely candidate for several reasons:
First, 3-D technology can’t just be scaled on top of existing cameras (at least not yet). That’s not a problem for sports games, however, where multiple cameras are the norm.
CBS is actually using an entirely different broadcast team for its 3-D Final Four experiment, with announcers Dave Ryan and Steve Lappas on the call instead of Greg Gumbel and Clark Kellogg, who will appear on the regular broadcast. That type of versatility will be hard to duplicate for taped dramas or sitcoms, not to mention feature-length productions.
Secondly, sports fans are the largest advocates of modern broadcast technology. From using DVRs for their own instant replays to the purchase of the biggest HDTVs possible in pursuit of a full game experience, sports fans have proved they will open up their wallet when it comes to watching their team in the most realistic way possible.
Electronics retailers run sales promotions around the Super Bowl for good reason -- both Target (TGT) and Wal-Mart (WMT) do brisk business before the big game, and frequently engage in price wars to woo customers for big-ticket items.
Lastly, the action-packed excitement of sporting events lends itself to an immersive experience. One reason News Corp. made a killing with "Avatar" is because 3-D added to the experience. It wasn’t a gimmick. On the other hand, it’s hard to believe that "Friends" or "Sex in the City" would be vastly improved in 3-D.
This technology is still a few years away from widespread availability, and it will probably take even longer for widespread adoption. But retailers got out ahead of the HDTV craze with good reason even though cable companies weren’t up to the task. It may be smart to do the same this time with 3-D TV technology -- especially if these retailers target sports fans.
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