Will Sean Parker's Screening Room hurt or help the film industry?

Sean Parker 2011

For five years, film exhibitors and studios have descended on Las Vegas each spring for CinemaCon, the annual industry gathering, where Hollywood touts its upcoming product.

This year however, it’s not a film that’s garnering the most attention, but a new venture – one likely to wedge a contentious divide between exhibitors and studios.

Screening Room, the new startup from Napster founder Sean Parker, is a streaming platform that aims to make new releases available at home on the same day they hit cinemas, via a set-top box that streams to televisions, similar to Apple TV and Roku.

It by no means marks the first attempt to bring the multiplex experience into people’s homes.

Video-on-demand has revolutionized the independent film arena, giving viewers at home the opportunity to rent many of the latest arthouse offerings on platforms such as iTunes and Amazon, the same day they open in select theaters. DirecTV often makes films available to stream before they even make it to theaters.

Meanwhile, a company called Prima Cinema Inc offers a service similar to Screening Room, allowing users to watch the latest big screen titles for $500 a pop – the device needed to use the platform costs another $35,000.

What sets Screening Room apart is the movies it plans to make available (big-budget studio fare, as well as smaller indie films), and its advertised price point (a 48-hour rental will cost you $50, while the set-top box will retail for around $150). The service could prove an attractive option for families seeking the latest releases without having to venture to the cinema. The cost of a rental retails for around the same price as four tickets plus concessions.

Major industry players were quick to weigh in following Parker’s initial announcement in early March. Steven Spielberg, Peter Jackson, Martin Scorsese and Ron Howard, who is an adviser to the company, were among the prominent film-makers to voice their support. “Screening Room is very carefully designed to capture an audience that does not currently go to the cinema,” Jackson told Variety, when explaining his stance.

On the other side are James Cameron, his producer partner Jon Landau and Christopher Nolan who claim the product would deny audiences the unique experience.

“Both Jim and I remain committed to the sanctity of the in-theater experience,” Landau told Variety. “For us, from both a creative and financial standpoint, it is essential for movies to be offered exclusively in theaters for their initial release. We don’t understand why the industry would want to provide audiences an incentive to skip the best form to experience the art that we work so hard to create.”

All the buzz up until now has been an “opening salvo”, said Indiewire’s editor-at-large Anne Thompson, who has been covering the business side of the industry for over 20 years in Los Angeles. “The people behind the Screening Room are basically launching a PR campaign,” she said. “They lined up big names like Spielberg and Jackson long ago as part of their onslaught in the publicity realm to try and sell something. Now they’re seeing what sticks. It’s not entirely real yet.”

Starting on Monday, Parker, along with Screening Room executive Prem Akkaraju, will be planted in Las Vegas to offer the first taste of their company’s system to industry professionals. For Screening Room, a platform with the intent to revolutionize the way we watch movies, the CinemaCon unveiling could serve as its make-or-break moment.

The chief obstacle that threatens to discredit the operation is the issue of piracy. Parker is after all the man largely responsible for pioneering the illegal downloading industry via Napster, the file-sharing music site that was eventually shut down by a court order. Screening Room vaguely purports to have “anti-piracy technology” in place. But not everyone is buying it.

“They feel they’ve solved the potential threat of piracy, but many people have felt they solved piracy in the past and they haven’t,” said Tim League, the founder of theater chain Alamo Drafthouse Cinema, popular for programming both arthouse and studio fare. “Even if it does launch, if Screening Room proves to be a piracy issue, it won’t last for long because studios won’t stand for that.”

Art House Convergence, a group of roughly 600 specialty theaters, concurs, saying the platform could inspire “a wildfire spread” of pirated content.

League believes Screening Room will ultimately live or die based on the support of major film studios. “They have the valve to turn on or turn off the content,” he said. For now, the companies aren’t talking, although Disney has been rumored to not be supportive of Screening Room. All declined to comment for this story.

Veteran producer, distributor and exhibitor Ira Deutchman said from a “purely business perspective”, Screening Room makes sense for studios, once the threat of piracy is quashed.

“Studios are probably going to retain a higher amount of the initial gross than they would from the traditional theatrical model,” he said. “[Screening Room] will also maximize the reach of their marketing dollars because they’re going to be reaching into the home at the same time that they’re reaching out to the theatrical world. Those things are pretty compelling when you look at it from the business perspective, assuming that we don’t care about the actual ways people are consuming this stuff.”

Deutchman believes it’s the potential for studios to make more revenue that led Spielberg, Jackson and Scorsese – film-makers normally wedded to the theatrical experience – to trumpet the movement.

“The truth is we’re living in an age where movies have to do $250m to break even – and some of the movies that these film-makers make are not hitting those numbers,” Deutchman said.

“Anything that changes the business model to potentially bring in more money is something that could support those film-makers. They’re just dealing with the realities of the actual economic model of a business.”

Thompson agreed. “I think Spielberg and co see the future,” she said. “They think, as business people, they can share the wealth with the exhibitors. They think this is the smartest way to adapt to a world where they know that the audience wants to be able to get what they want when they want it.”

Should studios rally behind Parker’s bold proposal, they face a challenge in convincing exhibitors.

The three major theater chains in the US (Regal, AMC and Cinemark), like the studios, have remained silent on the matter until now. Screening Room officials have told studio executives that they are close to finalizing a deal with AMC, according to Variety. But Regal has refused to screen any films whose backers do not agree to a standard exclusive theatrical run of roughly 90 days.

And in the end, it’s the cinemas that hold the power. When Universal made the move to experiment with video-on-demand for the 2011 release of Tower Heist by making the Ben Stiller comedy available in homes only three weeks after its debut in theaters, the major theater chains balked, resulting in a boycott that caused Universal to nix its plans.

To entice exhibitors, Screening Room has proposed cutting them in on a large portion of the revenue, as much as $20 of the rental fee. Screening Room also offers customers who rent a title, two “free” tickets to see the film at a theater of their choice, as a way to ensure that cinemas can still profit from concession sales.

This move shows that Screening Room is clearly attempting to smooth things over with the exhibitors, according to Deutchman. But both he and League think their proposed efforts need some refining to ultimately win them over.

No matter how Screening Room pans out, both Deutchman and Thompson believe the success of the venture, or a further iteration of it, is all but inevitable in today’s market. “It’s just a question of when,” Deutchman said.

Due to the immediacy of social media where the conversation about a movie can be over after the first weekend, plus the popularity of Netflix, which has moved into the business of producing original content (it will premiere more than 15 exclusive features this year), the film industry is being forced to adapt.

Does a platform like Screening Room therefore spell the end of the cinema-going experience? No, said League.

“Regardless of what happens, people will want to go out of the house and have a good time – a quality cinema experience,” he said. “It’s an affordable indulgence – and that’s why it’s been able to weather all sorts of potential threats throughout the years.”

“The communal experience is a sacred part of going to the cinema,” Deutchman said. “Look at when the VHS explosion happened. We’ve witnessed things like this before, and somehow the theatrical experience survives.”

Powered by Guardian.co.ukThis article was written by Nigel M Smith, for theguardian.com on Friday 8th April 2016 12.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010