Ticket prices will be going up at movie theaters across the country this weekend as the entertainment industry looks to cash in on growing demand for 3-D movies following the success of "Avatar" and "Alice in Wonderland."

Starting Friday, prices for adult admission to 3-D movies will increase an average 8.3% at box offices nationwide, according to market research conducted by investment firm BTIG. Ticket prices for IMAX movies are expected to jump 10%, while prices for regular 2-D movies will rise about 4% on average.

The price increases vary by region and will be in effect at theater chains operated by AMC Entertainment Inc., Regal Entertainment Group (RGC) and others.

At one AMC theater in New York, the price for a family of four to see a 3-D screening of Dreamworks Animation's "How to Train your Dragon" this Friday will be $63 before popcorn, soda or candy.

Adult ticket prices for 3-D movies will jump to $15.50 from $13.50 at one theater operated by AMC near Boston. At a Regal theater in Seattle, 3-D ticket prices will rise to $15 from $13.50 for adult admission.
Blockbuster is 'bleeding to death'

A spokesman from AMC declined to comment, and Regal did not immediately respond to a request for comment.

"These are major prices changes for an industry that has historically instituted gradual prices increases," said BTIG analyst Richard Greenfield.

Greenfield said the price hikes reflect a growing belief among theater owners that consumers are "hungry" for 3-D content and are willing to pay more for an enhanced movie-going experience.

Box office sales nationwide are up nearly 10% so far this year, due in part to the record-breaking success of 3-D blockbusters like "Avatar" and "Alice in Wonderland."

James Cameron's "Avatar" became the highest grossing movie ever, bringing in over $2.5 billion, after it concluded an extraordinary 3-month run in March. "Alice" brought in a record $116.3 million when it opened earlier this month.

With numbers like that, expectations are high for a host of other 3-D films due out this year, including Warner Brothers' "Clash of the Titans," which comes out next month. (Warner Bros. is owned by Time Warner (TWX, Fortune 500), the parent of CNNMoney.com).

However, some industry analysts warn that the price hikes could spark a backlash among consumers still struggling in the weak economy.

"They're probably over estimating the appeal of 3-D," said Brandon Gray, president of Box Office Mojo, a Web site that tracks ticket sales. "It's more of an industry push than an audience push, at least currently."

Gray warned that 3-D technology has come and gone in one form or another over the last five decades, and the current popularly could prove to be nothing more than another fad. Much of the success or failure of this year's 3-D fare will depend on the quality of the story, he added.

Still, the stakes for the industry are high and it's possible that 3-D could pay off if the films resonate with audiences.

"If consumers absorb the price increases without issue, we believe it bodes well for the pricing power of the movie exhibition industry, particularly their highest quality product," Greenfield said.

Gray warned that 3-D technology has come and gone in one form or another over the last five decades, and the current popularly could prove to be nothing more than another fad. Much of the success or failure of this year's 3-D fare will depend on the quality of the story, he added.

Although director Tim Burton recently released a 3D movie — Alice In Wonderland — himself, he predicts that there will be a lot of bad 3-D movies coming out of Hollywood in the future.

He said: “It’s true that 3-D is being hyped at the moment. It was different when we started working on ‘Alice in Wonderland’ a few years ago. I’m glad I started using it early on and wasn’t forced to shoot a film in 3-D at all costs, because everyone’s doing it now. We’re surely going to see a lot of bad 3-D films in the near future, because Hollywood cannibalizes every recipe for success. That’s how the industry works.”

Still, Burton feels 3D technology could be “a great thing when you use it as a technical tool and not as a wonder weapon.”

The chance to charge higher ticket prices has every Hollywood studio rushing to retrofit their 2D spectacles into 3D. Some directors are pushing back, concerned there's an imminent future of cheesy-looking 3D that will stunt the momentum created by Avatar.

“After Toy Story, there were 10 really bad CG movies because everybody thought the success of that film was CG and not great characters that were beautifully designed and heartwarming,” Avatar’s James Cameron told me recently. "Now, you’ve got people quickly converting movies from 2D to 3D, which is not what we did. They’re expecting the same result, when in fact they will probably work against the adoption of 3D because they’ll be putting out an inferior product.”

That certainly didn't happen with Alice in Wonderland, which is grossed huge and gave Disney leverage to shorten the window between theatrical and DVD. The next big test for retro-fit 3D comes with the April 2 opening of Clash of the Titans. The film is tracking well, but also building a buzz that it is an imperfect movie that will greatly benefit at the box office because of its last minute 3D conversion.james-cameron-talking

Hard conversion conversations are being had now at studios on films that include Pirates of the Caribbean: On Stranger Tides, The Chronicles of Narnia: Voyage of the Dawn Treader, Gulliver’s Travels and The Hobbit. Executives are weighing competitive issues and the potential benefits of higher ticket prices against the $100,000 per running time minute that is being used as a rule-of-thumb conversion cost.

Not every filmmaker is as high on the conversion process as studios like Warner Bros seem to be.

“I shoot complicated stuff, I put real elements into action scenes and honestly, I am not sold right now on the conversion process,” says Michael Bay. Paramount and DreamWorks are pressuring him to allow Transformers 3 to be dimensional-ized after the fact, because there simply isn’t enough time to shoot with 3D camera and post the film between now and its July 1, 2011 release date. Cameron took his time on Avatar, and will do the same with the elaborate Fantastic Voyage remake he’s producing for Fox. His longtime 3D documentary collaborator, Andrew Wight, did the same when he produced the underwater thriller Sanctum. Conversions, on the other hand, are rush jobs done right before release dates.

Bay investigated shooting at least some Transformers 3 footage with 3D cameras, but found them too heavy and cumbersome for the fast pace action scenes he shoots. Bay feels the process of sending out 2D film for 3D conversion is more problematic and pricey than studios are admitting. Too often, companies selling 3D retrofitting services arrive with a sharp demo reel, but leave with a deer-in-the-headlights look when Bay gives them his own footage to convert, on a tight deadline.

“I am trying to be sold, and some companies are still working on the shots I gave them,” Bay said. “Right now, it looks like fake 3D, with layers that are very apparent. You go to the screening room, you are hoping to be thrilled, and you’re thinking, huh, this kind of sucks. People can say whatever they want about my movies, but they are technically precise, and if this isn’t going to be excellent, I don’t want to do it. And it is my choice.”

Bay uses the same top-shelf crews and visual effects teams on all his films, and he bolstered the quality of his Transformers 3 cast with Frances McDormand and John Malkovich. He objects to the idea of handing over his finished film to an unproven process--and people who haven't had time to develop a level of trust with him--with a release date bearing down on him.

Said Bay: “I’m used to having the A-team working on my films, and I’m going to hand it over to the D-team, have it shipped to India and hope for the best? This conversion process is always going to be inferior to shooting in real 3D. Studios might be willing to sacrifice the look and use the gimmick to make $3 more a ticket, but I’m not. Avatar took four years. You can’t just [LIFTED] out a 3D movie. I’m saying, the jury is still out.”

Bay also disputes the $100,000 per minute conversation cost estimate. Try between $120,000 to $150,000 per minute, he said, with a top-shelf conversion of Transformers 3 costing $30 million.

In the end, Bay might have little choice but take the plunge if the film is to generate the highest possible global gross against competition like Pirates of the Caribbean, which is likely to go 3D. Fox is having the same discussions right now on The Voyage of the Dawn Treader and Gulliver’s Travels, and Warner Bros and New Line will start the debate on The Hobbit as soon as Guillermo del Toro, Peter Jackson and their co-writers turn in the script for the second installment within a month.

I’m told Fox is leaning toward conversions on both of its films, and who can blame them, even though the price tag could be more than $20 million? Narnia opens Dec. 10, sandwiched between 3D titles Harry Potter and the Deathly Hallows (November 19), Tron Legacy (December 17), and Yogi Bear (December 17). Gulliver’s Travels opens Dec. 22. Is it suicide to be the 2D holdout in a 3D family film holiday season?

The Warners discussions on The Hobbit are equally intriguing. Initially, del Toro favored a 2D shoot on film, insiders said. But Warners is sitting on a potential gold mine, looking at an extra theatrical and ancillary revenue cycle if the studio spends $60 million or so to convert the original Lord of the Rings trilogy. It will be an all or nothing decision on five LOTR films, because Warners will not convert LOTR then release a pair of 2D Hobbit films that look visually inferior.

Sanctum's Wight said the process of shooting with 3D cameras will become streamlined and the norm. He shot Sanctum in 3D, in underwater caves, on a $30 million budget, but then again, Wight helped Cameron road test the equipment on the deep sea documentaries they did together. Wight is concerned that inferior conversions will harm the market, but figures audiences will be savvy enough to smell stiffs using quick 3D conversions as crutches.

"Avatar proved people will pay a premium for value," Wight said. "It's like Heinz Ketchup. Once you've tasted it you'll go to as many markets as you need to find it when you run out. With Avatar, they tasted something really good, and they want more. People aren't going to say, well this movie looks like crap, but I'll go and hope the 3D is good. As a community, we need to do this right and have quality control, because the bad things out there diminish the value and the more good stuff out there, the more people will be inclined to go see these movies."

When I spoke to him during Oscar season, Cameron was also concerned about the 3D virgin directors who were thrust into big stereoscopic shoots, like (500) Days of Summer director Marc Webb on the 3D Spider-Man reboot. Cameron said he has volunteered himself to be a 3D crisis counselor to any director who asks, and he called for the DGA to organize seminars to help filmmakers understand the benefits and pitfalls of the technology. He could tell problems would abound when Avatar opened and the most effusive reactions came from studios moved more by higher ticket prices than artistry.

“This is another example of Hollywood getting it wrong,” Cameron said. “Sony says, we’re doing Spider-Man in 3D.’ The director doesn’t say, `Hey, I want to make the movie in 3D.’ The studio says, `You want to direct this movie? You’re doing it in 3D, [LIFTED]!' That’s not how it should be. I’ve tried for the last seven years to get filmmakers excited, and they all hung back while Pixar and DreamWorks did animation and me and a couple others did live action. We prove the point, and now filmmakers are being told to make their movies in 3D.”