Hollywood Starts to Worry as 3-D Fizzles in U.S.

Ripples of fear spread across Hollywood last week after “Pirates of the Caribbean: On Stranger Tides,” which cost Walt Disney Studios an estimated $400 million to make and market, did poor 3-D business in North America. While event movies have typically done 60 percent of their business in 3-D, “Stranger Tides” sold just 47 percent in 3-D. “The American consumer is rejecting 3-D,” Richard Greenfield, an analyst at the financial services company BTIG, wrote of the “Stranger Tides” results.

One movie does not make a trend, but the Memorial Day weekend did not give studio chiefs much comfort in the 3-D department. “Kung Fu Panda 2,” a Paramount Pictures release of a DreamWorks Animation film, sold $53.8 million in tickets from Thursday to Sunday, a soft total, and 3-D was 45 percent of the business, according to Paramount.

Consumer rebellion over high 3-D ticket prices plays a role, and the novelty of putting on the funny glasses is wearing off, analysts say. But there is also a deeper problem: 3-D has provided an enormous boost to the strongest films, including “Avatar” and “Alice in Wonderland,” but has actually undercut middling movies that are trying to milk the format for extra dollars.

“Audiences are very smart,” said Greg Foster, the president of Imax Filmed Entertainment. “When they smell something aspiring to be more than it is, they catch on very quickly.”

Muddying the picture is a contrast between the performance of 3-D movies in North America and overseas. If results are troubling domestically, they are the exact opposite internationally, where the genre is a far newer phenomenon. Indeed, 3-D screenings powered “Stranger Tides” to about $256 million on its first weekend abroad; Disney trumpeted the figure as the biggest international debut of all time.

With results like that at a time when movies make 70 percent of their total box office income outside North America, do tastes at home even matter?

After a disappointing first half of the year, Hollywood is counting on a parade of 3-D films to dig itself out of a hole. From May to September, the typical summer season, studios will unleash 16 movies in the format, more than double the number last year. Among the most anticipated releases are “Transformers: Dark of the Moon,” due from Paramount on July 1, and Part 2 of Part 7 of the “Harry Potter” series, arriving two weeks later from Warner Brothers.

The need is urgent. The box-office performance in the first six months of 2011 was soft — revenue fell about 9 percent compared with last year, while attendance was down 10 percent — and that comes amid decay in home-entertainment sales. In all formats, including paid streaming and DVDs, home entertainment revenue fell almost 10 percent, according to the Digital Entertainment Group.

The first part of the year held a near collapse in video store rentals, which fell 36 percent to about $440 million, offsetting gains from cut-price rental kiosks and subscriptions. In addition, the sale of packaged discs fell about 20 percent, to about $2.2 billion, while video-on-demand, though growing, delivered total sales of less than a quarter of that amount.

At the box office, animated films, which have recently been Hollywood’s most reliable genre, have fallen into a deep trough, as the category’s top three performers combined— “Rio,” from Fox; “Rango,” from Paramount; and “Hop,” from Universal — have had fewer ticket buyers than did “Shrek the Third,” from DreamWorks Animation, after its release in mid-May four years ago.

“Kung Fu Panda 2” appears poised to become the biggest animated hit of the year so far; but it would have to stretch well past its own predecessor to beat “Shrek Forever After,” another May release, which took in $238.7 million last year.

For the weekend, “The Hangover: Part II” sold $118 million from Thursday to Sunday, easily enough for No. 1. “Kung Fu Panda 2” was second. Disney’s “Pirates of the Caribbean: On Stranger Tides” was third with $39.3 million for a new total of $152.9 million. “Bridesmaids” (Universal Pictures) was fourth with $16.4 million for a new total of about $85 million. “Thor” (Marvel Studios) rounded out the top five with $9.4 million for a new total of $160 million.Studio chiefs acknowledge that the industry needs to sort out its 3-D strategy. Despite the soft results for “Kung Fu Panda 2,” animated releases have continued to perform well in the format, overcoming early problems with glasses that didn’t fit little faces. But general-audience movies like “Stranger Tides” may be better off the old-fashioned way.

“With a blockbuster-filled holiday weekend skewing heavily toward 2-D, and 3-D ticket sales dramatically underperforming relative to screen allocation, major studios will hopefully begin to rethink their 3-D rollout plans for the rest of the year and 2012,” Mr. Greenfield said on Friday.

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Yemeni Forces Battle Islamist Militants for Southern Town

SANA, Yemen — Islamist militants battled Yemeni security forces in the southern province of Abyan on Sunday even as the government struck a deal for a cease-fire in the capital, Sana, with its tribal rivals, bringing relative calm here after days of fierce fighting.

In Sana, Yemeni officials said President Ali Abdullah had agreed to a truce with his historic tribal rivals the Ahmar family. Violence broke out between the two sides last Monday after Mr. Saleh refused to follow through on his promise to sign an agreement leading to his resignation.

“There is a truce and it is still holding,” said Abdul Karim Aleryani, prominent governing party official and adviser to Mr. Saleh. However other officials described the truce as tenuous and far from set in stone.

Still, after more than 100 people were killed last week in fighting that provoked fears of civil war, there were tangible signs of a reduction in tensions. Tribesmen from the Hashid tribal confederation loyal to the Ahmar family began Sunday to hand over to authorities government buildings that they had occupied last week.

“We will hand over the other ministries one by one gradually,” said Hashem al-Ahmar, one of the 10 Ahmar brothers, told reporters on Sunday.

However, a spokesperson for Sheik Sadiq al-Ahmar, Abdulqawi Qaisi, told local reporters that the Ahmars will fully comply with a cease-fire only if the government removes its security forces from their posts in houses near the Ahmar compound in the Hasaba district in northern Sana.

Even if the cease-fire holds, the crisis in Yemen is far from resolved. Peaceful protests calling for Mr. Saleh’s ouster have drawn hundreds of thousands of people on the streets for months. Three times Mr. Saleh has agreed to sign an agreement setting up a transfer of power and three times he has renegged.

In Taiz, a central city and home of the country’s largest demonstration, security forces fired at protesters from a government building on Sunday, killing four, according to local doctor, Abdul Rahim al-Samie. He said he still heard gunshots coming from the building until the evening.

In Abyan, a volatile province in southern Yemen, Yemeni security forces started shelling the coastal city of Zinjibar after several hundred militants took over government institutions there on Friday, residents said. A security official, speaking on condition of anonymity because he was not authorized to speak to the news media, said that five soldiers had been killed in the fighting there since Friday.

The militants took over banks, government offices and security headquarters, the residents said. They also said that the militants had been driving around the city in cars with loudspeakers blaring, “We declare that Zinjibar fell in the hands of Mujahideen after it was liberated from the agents of the Americans.”

It was unclear whether the militants, who traveled from Jaar to Zinjibar, belong to Al Qaeda in the Arabian Peninsula, the local branch of the international terrorist network, however the area is filled with citizens who are sympathetic to Al Qaeda.

The terrorist organization has used the lack of rule of law in Abyan to raise its profile, and the fighting in Zinjibar was another example militants in outlying provinces exploiting the chaos in Yemen to advance their causes. Militants took over the nearby city of Jaar in March and in the north Houthi rebels established themselves as the rulers of Saada Province the same month after government officials fled the area.

However protesters and members of Yemen’s opposition blame the fighting in Zinjibar on Mr. Saleh, who they believe is orchestrating the chaos so that he will not have to leave office.

“Saleh instructed to handover Zinjibar to armed groups working for him to frighten others that if he is gone Yemen will become Somalia,” said former minister of defense Abdullah Ali Eliwa, in a televised press statement.

He was speaking on behalf of military leaders who support the protest movement. “Saleh is trying to wrongly portray the army as a failed institution,” he said.

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