The movie-theater industry, like every other lumbering dinosaur in the entertainment business, has long been resistant to the change it knows is coming. Since it’s becoming easier and easier to replicate the cinema experience at home, ticket sales have continued to decline, with cineplexes propping up revenues by raising prices and up-charging for 3D and “premium” theaters. Efforts by streaming companies like Netflix to simultaneously release films in theaters and homes have been boycotted by every major theater chain. But streaming studios could be a relatively small threat compared to who’s on the horizon: the Napster creator Sean Parker.
Screening Room is a startup being pushed by Parker (the multi-billionaire who also served as the first president of Facebook) that aims to chart a middle ground between the theater experience and online piracy. Access to the service would cost something like $150; then, home viewers could pay $50 to watch a new film instead of going to their local theater. Film distributors would supposedly get a huge chunk of that revenue, as an incentive for partnership—Variety reports that several major studios, like Universal, Fox, and Sony, are interested. But after years of intransigence, studios might understandably be reluctant to allow such a drastic change to be put in the hands of a self-branded industry disruptor.
Parker has made some powerful allies in his campaign to launch Screening Room, and in a presentation at this year’s CinemaCon (a gathering of studios, exhibitors, and theater chains in Las Vegas), the director J.J. Abrams said the industry had to embrace change. “There’s nothing better than going to the movies, and there never will be. I’m open to all good ideas. In this age of piracy we must be thoughtful partners,” he said. “We must do that without fear.” He noted that, as a father of three, he rarely gets to go to the theater, and that Screening Room could tap into new sources of revenue for an industry that’s barely diversified in decades.
The Screening Room model—the idea of paying more than triple the cost of an average movie ticket—has surfaced before. At the dawn of the high-definition streaming era, Universal Pictures announced a plan to offer its new comedy Tower Heist on demand for $60 as part of a pilot program for future releases. Theater chains rebelled and threatened to pull the film (starring Ben Stiller and Eddie Murphy) from their screens, so Universal backed off. In the end, Tower Heist grossed an underwhelming $78 million at the domestic box office, about as much as it cost to produce, and Universal never got to see if the home-release model would have produced a different result.
Directors like Abrams, Peter Jackson, and Steven Spielberg have publicly endorsed Screening Room, but for them the risk is far lower—more people get to see their films while the threat of online piracy is hopefully bypassed. But producers and distributors are understandably wary. Theater revenues remain strong—they were around $11 billion last year—even as ticket sales, which represent the actual numbers of viewers attending movies, remain flat. (In recent years, theater chains have been making up for lost revenue by raising the cost of concessions, which generated almost $800 million in 2014—profit that Screening Room could also potentially hurt.)
On Tuesday at CinemaCon, John Fithian, the CEO of the National Association of Theater Owners, blasted Screening Room. He argued that the traditional “window” between theatrical and home releases was the biggest advantage theaters had, and that any sacrifice of that wasn’t worth the financial reward. That window “makes new movies into events,” he said at a CinemaCon conference. “Success there establishes value and bolsters revenue in downstream markets.” (Meaning DVD and on-demand services.)
The startup is more popular among international distributors, for whom the threat of online piracy is even greater. Paul Higginson, an executive vice president at 20th Century Fox, told Deadline that studios’ aversion to Screening Room stems from a “fear of the unknown.” But he added, “I think we need to have an open mind of what’s possible. Because we can’t be like King Canute or we’ll get drowned.” The tide of home viewing is indeed rising to threatening levels—but thus far, studios have remained intent on trying to turn it back.
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