With the success of James Cameron’s "Avatar," the flood of new HDTVs and Blu-ray players, and cable and satellite services rushing to create new content and channels, 3D is one of the biggest trends in the entertainment industry right now.

Fantasm 3D, a new Ann Arbor-based company, hopes to capitalize on the wave of popularity by providing 3D services, including original content creation and conversion of older material from two-dimensional to three-dimensional format.

The company, so new that it’s offices are found at the Holiday Inn on Plymouth Road, is developing a new software-based technology to do things that in the past required expensive hardware.

It’s the owners' hope that this will make 3D available to independent filmmakers at a time when the major studios are the only players that can afford the high-end technology required to create the immersive 3D experiences audiences have come to expect.

CEO Ralph Watson, who like many members of his team has spent much of his life in the Ann Arbor area, has years of experience in music and film production.

Watson’s 3D journey started with a trip to Atlanta in February 2009 at the request of a client with whom he was working on a music project .

“The client called me and, because they were so happy with what we were providing them already, wanted to show me some new 3D technology that they had seen,” Watson said. “From the moment I saw what they had to show, I was thinking about all the things I could do with it.”

Now a year later, Watson and team are working on their first piece of original content, a music video that they’re planning to shoot around Ann Arbor and hope to screen before feature films in theaters this summer.

There’s no doubt 3D is hot right now. The Consumer Electronics Association expects more than 1 million 3D HDTVs to be shipped in 2010. At the box office, 2009 ticket sales grew 8 percent and reached $10 billion for the first time in history, aided by several 3D films. Of the top-10 grossing films last year, half featured at least some 3D content.

Fantasm believes it can create better 3D experiences, whether filming with traditional 3D cameras, standard 2D cameras, or converting 2D material. A key difference is the process, which is more software-based than existing technologies.

“We think we can correct some of the issues with the current 3D landscape,” Watson said, referring to things like 3D headaches and the need to be in the “sweet spot” in a theater for the best experience.

The technology corrects some of the depth-of-field issues that occur in current 3D, allowing the brain to interpret the image in a completely different way. Watson also says their process creates a “first-person perspective” that takes away the need to race into a theater to get the best seat.

Another arm of Fantasm’s business is creating what it calls destination 3D theaters for places like aquariums or museums. Watson points out that in a down economy out-of-home entertainment struggles, except theaters, and his point is backed up by the 2009 box office receipts. “We think we can partner with places like zoos to create new attractions.”

Despite the company’s youth and lack of offices, Watson said it is in Michigan to stay. Watson has been a part of several Ann Arbor-based community projects, such as the Neutral Zone and Youth Owned Records. The tax incentives offered to companies filming in Michigan don’t hurt either.

“We had opportunities to leave,” Watson said. “We had offers in Atlanta and Los Angeles. But the bottom line is this is our home. There’s some cool stuff here in Michigan and just in Ann Arbor. We like what the area has to offer and we want to give back.”