Why the Latest Television Wars Are in 3D

In the consumer electronics business, winning or losing a hotly contested format war often turns on how much red ink a company spills before shareholders—or the threat of bankruptcy—force one side to call it quits. Samsung and LG Electronics are engaged in the latest tech industry version of Mortal Kombat, this time in the 3D flat-panel TV market. Each is counting on high-margin sales of 3D sets to help reverse uninspiring profits in their broader television businesses. The company with the winning 3D format will have an edge in creating a standard that the rest of the industry may need to follow to stay in the game, at least until the next big technology shift.

Even then, it's still far from certain that Samsung, LG, or anybody else can produce a 3D product compelling enough to persuade consumers to pay a premium. Set makers were disappointed last year when they tried to bring -like theater experiences with 3D into the living room. Some 248 million televisions were sold worldwide; only 3 million were 3D sets. Consumers were turned off by high prices—a 55-inch widescreen 3D set runs from $1,500 to $3,500—and warnings from manufacturers about nausea, cramps, dizziness, or eyestrain from hours of wearing expensive battery-powered glasses, according to surveys. UBS (UBS) Investment Research analyst Shinsuke Iwasa predicts LCD TV sales, the largest market, will grow 10 percent in 2011, the slowest pace since flat-panel technology became popular a decade ago.