Ordinarily, the prospect of Rupert Goold tackling CS Lewis's The Lion, the Witch and the Wardrobe, as he will do in Kensington Gardens this summer, would be a lip-smacking one. From the hellish industrial kitchen of his Macbeth to the tawdry glitz of his Las Vegas Merchant, the places Goold creates are always vivid, inventive and full of high-definition detail. So who better to create the grand landscapes of Narnia, Lewis's fantastical world within a wardrobe?

The thing is, Goold's production will take place in the same "state of the art" theatre tent that previously housed threesixty's Peter Pan and, in the process, sucked all the magic and character out of Never Land. That means the same "ground-breaking surround video" techniques, whereby computer-generated landscapes are beamed onto the circumference of the tent behind the actors. Call me a technophobe, but the thought makes me shudder.

It's not hard to see the appeal. Video projection is cheaper and more manageable than old-fashioned physical sets and, in theory at least, makes possible all manner of effects and impossible landscapes. It is hardly surprising that the recent adaptation of Howl's Moving Castle at the Southwark Playhouse relied on animation to convey the instant teleportation at the heart of Diana Wynne Jones's novel. But the end result just looked like three people over-acting in front of an oversized screensaver.

There is certainly a place for video projection in theatre and it has expanded theatre's vocabulary in all sorts of ways. One thing it can't do, however, is create credible settings for onstage action. Using video technology for settings is nothing but the 21st-century equivalent of the painted backdrop, only with none of the humility about its limitations.

Besides, like cinema's early attempts at green-screen technology, the disconnect between two layers – what's on stage and what's on screen – gets in the way. (The best exception, of course, is 1927's work, which plays on the flatness directly and so knowingly fails, though the line-drawn Luton in Nabokov's production of Bunny worked similarly.)

Actually, this weakness illustrates video-projection's strength. Its images exist on a different plane to stage action. Trying to synchronise the two is bound to fail, but projection makes possible additional layers of storytelling, meaning and information. It can do subjective, as in The Kreutzer Sonata at the Gate, which projects Pozdnyshev's guilty flashes of memory onto a gauze. It can do statistics, as in Greenland or DV8's To Be Straight With You, atmosphere and symbolism (Lovesong) or additional, alternative storytelling (War Horse).

With settings, however, it not only falls short, it seems entirely unnecessary and, worse, goes against the very essence of theatre: imagination. Theatre exists in the tension between its real elements and the fiction they create. Where the real element is an all-purpose screen, capable or representing anything, the game is entirely spoilt. Every effect in every production is basically the same; it's a product of technical wizardry rather than real artistry. I'd far rather a bottle for a rocket to Venus – to borrow Peter Brook's example – than a projected animation. That's what theatre is all about.