RealD has probably had too much news lately. It’s stock is at an all-time low. It’s CFO sold off the majority of his stock (for personal reasons). Its Chief Scientist, Matt Cowan, left. And at ShowEast, Joe Peixoto, its President of Cinema, announced his pending retirement. Most recently, RealD announced it would layoff 20% of staff. Could it be that RealD’s party is ending?
RealD promotes that it has two avenues of growth: cinema and consumer. In cinema technology, RealD is facing competition never before experienced. Its Z-Screen technology, an LCD polarizer, went off patent several years ago, and is now widely copied. Other 3D brands sell their version of the Z-Screen, including Leonis, MasterImage, Volfoni, and XpanD. RealD’s most distinguished and still patented technology has been the XL “light doubler”, the most efficient 3D system on the market. However, at ShowEast, MasterImage unveiled its version of a light doubler. And in China, Leonis has already been selling its doubler. The MasterImage concept appears to be unique and different to that of RealD, and with its own patents pending. Leonis has also filed patents for its design. Earlier this year, RealD introduced a new silver screen technology, based on a patented silver flake (aluminum, in truth). But even this isn’t without competition, as Severtson Screens also developed a screen with similar characteristics using a trade secret engineered flake.
If RealD is losing its edge in intellectual property for cinema, it has yet to establish any edge in the consumer market. There was once thought that consumers would sit at home wearing their RealD glasses, but that thought has long since disappeared. Auto stereoscopic displays are now the holy grail, and while RealD has several patents in this area, it hasn’t found a way to commercialize them. Instead, companies such as Dolby are demonstrating auto stereoscopic displays designed for several viewers at trade shows, and MasterImage has a patented auto stereoscopic display for a single viewer appearing in tablets and phones in certain markets.
If RealD remains dependent on cinema, then its problems will only grow. Its business model has been to offer unique technology that can only be licensed, not purchased. But with competing technology available for purchase, the appeal of its strategy will diminish. Knowing this, RealD has to offer substantial incentives to sign new licensees, eroding its business model. It’s difficult to imagine a new patentable 3D trick for cinema. Most lasers, for example, already emit polarized light. Even so, techniques in laser projectors for reducing speckle and metamerism tend to favor spectral 3D, such as Dolby 3D, or the similar spectral technique once employed by Panavision. As competitors offer comparable technologies, RealD’s high flying business model will eventually fall to earth. Investors won’t be happy. There’s still time to circumvent such an outcome, but it’ll take a significant play in consumer technology to do it. For cinema, the party won’t be the same for RealD. But how well ReaID as a company performs remains to be seen.