For once, James Cameron has been left looking off the pace with next week’s 3D rerelease of Terminator 2: Judgment Day. One thousand of LA’s finest have been at work for six months retroactively converting – a botch method Cameron has derided in the past – his 1991 action masterpiece to 3D. It feels like an odd throwback: the post-Avatar glow that he imparted on 21st-century 3D has long since faded. 3D box office in the US dropped by 8% last year, confirming that a dull tint has dropped over the audience’s enthusiasm for a technology revived only a decade ago.

Cameron isn’t ready to abandon 3D yet. “I think we have a long way to go before it reaches its full potential,” he told Wired this week. If anything, the Terminator 2 rerelease is a stop-gap before the flotilla of Avatar sequels starting in 2020; an interim reminder that Cameron, who hasn’t released a feature for almost a decade, remains Hollywood’s high admiral of tech-driven film-making. But 3D has clearly reached a difficult juncture. Not only has it not overcome the problem with dim image quality, but it’s still associated with shoddy cash-grab post-conversions that assault the eyes as much as the wallet. The brand is tarnished. All major TV manufacturers announced early this year that they were no longer making 3D televisions – further proof that the habit hadn’t taken at a cultural level.

The apparent fall of 3D is no surprise, given that the motive was so nakedly financial. Higher 3D ticket prices were seen as a tonic for the stagnant western box office in the mid-00s, especially with DVD revenues also on the slide. Avatar was the perfect fanfare for the technology: not only digitally cutting edge, but its story was a perfect fit for the “immersive” experience that cinematic 3D hoped would woo back younger audiences more inclined to videogaming. The arrival of the technology also coincided with a massive boom in cinema-building across the developing world. The majority of new screens in many countries were 3D-equipped, so the 00s overseas box-office explosion was significantly driven by the new medium.

Greed had predictable effects on the quality of 3D we’ve received. Single out the kind of half-baked, CGI-heavy, second-tier blockbusters that Hollywood relied on “emerging” markets to embrace and make solvent – the Clashes of the Titans and GI Joes and Terminator Genisyses – and chances are they were saddled with a cheap 3D post-conversion. Sustained interest in 3D as a tool for storytelling mostly fell by the wayside in this goldrush (though, granted, it has not been a strong period in Hollywood for storytelling). The sad thing is that a few pioneers did realise that integrating the tech dramatically could pay off: Avatar’s incredible circling shots in zero gravity on the troop carrier mirroring Jake Sully’s exhilaration in his new body; Martin Scorsese revivifying cinema’s birth chez Georges Méliès in Hugo; Werner Herzog using primitive perspective to sharpen our entrance into the Grotte Chauvet in Cave of Forgotten Dreams.

A series of Avatar sequels drop from 2020, following the success of 2009 film. Photograph: WETA/AP

These artistic successes have been too few to justify the 3D mania, its detractors would argue. Presumably they’re pleased now that it seems to have lost the battle for cinema’s soul. Imax recently announced a retreat from the stereoscopic version. True 3D is a rarity now, mostly left to animation where virtual-camera setups simplify shooting. Virtual reality has stolen 3D’s thunder on the immersion level, though it’s arguable that the newcomer faces even greater obstacles with regard to reshaping storytelling if it wants to supplant cinema.

3D’s importance in China, however – accounting for 78% of screens there, against 39% in North America – means it’s unlikely to disappear overnight. They are now the torchbearers for filming big-budget live action in 3D: Jean-Jacques Annaud’s state-backed spectacular Wolf Totem was shot that way, as well as last year’s big hit The Monkey King 2. It seems to be the medium in which, over the last decade, the country has experienced its fast-tracking to modern multiplexdom (in addition to the even more gimmicky 4DX, which goes fully down the old William Castle “environmental effects” route). Perhaps China are best placed to find compelling new uses and narratives for 3D. Judging by the RPG grenades flying out of the screen in current Chinese smash Wolf Warriors II, they’re not quite there yet. Fingers crossed – otherwise, at the speed James Cameron works, it could be adios, not hasta la vista, for the format.