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Higher-priced 3-D tickets mask fewer ticket buyers

If Hollywood learned anything at the box office in 2010, it's to be grateful for the higher price charged for 3-D movie tickets.

If Hollywood learned anything at the box office in 2010, it's to be grateful for the higher price charged for 3-D movie tickets.

Total ticket sales in the United States and Canada are projected to end the year slightly below last year's record of $10.6 billion.

Many in the movie industry consider that good news, given the tough economy and the way the industry's revenue can swing widely based on the popularity of its releases.

But from another angle, the picture is more troubling. Although box-office revenue is almost even, the number of movie tickets sold this year will drop between 4 percent and 6 percent from last year, analysts say.

The difference is the higher price on tickets for 3-D movies, which accounts for the entire gap between attendance and revenue changes this year.

A full 8 percent of this year's box-office revenue, or about $850 million, came from the additional $3 to $4 a ticket that moviegoers paid to see films such as Toy Story 3 and Clash of the Titans, with images that appear to pop out of the screen, according to research by Lazard Capital.

"3-D has driven up the box office, but it has also obfuscated the drop in moviegoers," said Vincent Bruzzese, president of the motion-picture group for research firm Ipsos OTX.

To many studio executives, persuading audience members to pay significantly more is as good as increasing the audience size.

"Focusing purely on head count is nice if you don't want to accept money," said Jeff Blake, vice chairman of Sony Pictures. "But if money goes up while bodies go down, I'm not sure it's necessarily a bad thing."

2010 was the year that 3-D went from an infrequent event to a regular occurrence. Twenty films released nationwide at more than 1,500 theaters were 3-D, double the number from 2009. That included every animated movie and most effects-laden event films. And the blockbuster Avatar, released last December, sold most of its tickets early this year.

Although 3-D made a significant difference to the bottom line of some movies, it did not live up to the early hype of its backers. In early 2009, DreamWorks Animation chief executive officer Jeffrey Katzenberg, whose studio produced all its films in 3-D, told the Wall Street Journal that the technology would make the box office "a growth industry for the first time in many years."

Nonetheless, returns on 3-D movies have been no more reliable than those on traditional ones.

Some, including Alice in Wonderland and How to Train Your Dragon, were hits; others, including My Soul to Take and Alpha and Omega, flopped. For some films, such as Resident Evil: Afterlife and Piranha 3D, the majority of receipts came from 3-D locations; for others, such as Despicable Me and Cats & Dogs: The Revenge of Kitty Galore, audiences opted for the traditional way.

Next year, at least 27 movies will be in 3-D, including a growing number of summer and holiday event films, which could help the industry's bottom line.

But eventually the number of 3-D releases will plateau, at which point box-office growth will again rest more firmly on whether the studios can produce movies that people want to watch.

Many in Hollywood are optimistic on that front because 2011 will bring many examples of the type of film that moviegoers say they hate but love to see: sequels.

Among the recent hits getting follow-ups next year are The Hangover, Cars, Kung Fu Panda, and the Fast and Furious, Pirates of the Caribbean, X-Men, Transformers, Harry Potter, Paranormal Activity, Twilight, and Alvin and the Chipmunks franchises.

"The business goes up and the business goes down, and it's mostly movie-sensitive," Summit Entertainment CEO Rob Friedman said. "In a year where we put out lots of accessible and exciting movies, the business will be up, and that's as it should be."