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Would Screening Room Hurt or Help the Movie Business?

on May 16, 2016, 12:00pm

Napster. It’s a word that strikes fear in many people. When you apply the term Napster to almost any business, it can spell disaster, because everyone immediately thinks of the world suddenly stealing your product. Napster of course played a big hand in destroying the music business, and Hollywood’s greatest fear is there could one day be an equivalent to Napster that could wipe movies off the face of the earth.

So this March, when Napster co-founder Sean Parker announced his new innovation, a VOD service called Screening Room, one can only imagine the levels of fear and paranoia it raised in a town where everything is treated like the end of the world.

For those unfamiliar with Parker’s latest plans, Screening Room, unlike Napster, would not be a free-for-all. Screening Room would be a service where you could watch a first-run movie in your home on opening day. It would cost $150 to set up the Screening Room service in your home, and it would cost you a $50 rental fee to watch whatever big blockbuster is coming out on Friday. (You would have to watch the movie within 48 hours of purchase.)

According to The Wrap, theater exhibitors would get $20 of the $50 fee, and $10 of that would kick back to Parker and company.  Variety reported that Screening Room customers who pay $50 to see a movie at home could also get two free tickets to see a movie at their favorite theater.

Once Parker’s plans were announced, Hollywood was immediately polarized. According to a report on Deadline, the directors who are for Screening Room include such Hollywood heavyweights as Steven Spielberg, Peter Jackson, Martin Scorsese, Frank Marshall (producer of Raiders of the Lost Ark and The Force Awakens), J.J. Abrams, and Ron Howard. (Howard and his producing partner Brian Grazer are advisors to Screening Room.)

Directors who are opposed to Screening Room include James Cameron, who has been publicly vehement on the subject, Christopher Nolan, and Brett Ratner, among others. (Ratner told Variety he’s not thrilled about the prospect of a movie being available in your home on opening day, but he did say he was impressed with the technology of Screening Room.)

James Cameron especially went on a tear against Screening Room at Cinema Con. “It’s essential for movies to be offered exclusively in theaters on their initial release,” Cameron said. He saw Screening Room as a threat, but the business “always answered that threat in the same way … by creating something in a movie theater that you can’t get anywhere else.”

And indeed, one of the biggest threats of Screening Room is how it could upset the Hollywood ecosystem, especially the release windows that give the theater owners and the studios several months before a movie is available for home viewing.

Cameron’s longtime producing partner Jon Landau told Deadline, “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. To us, the in-theater experience is the wellspring that drives our entire business … No one is against playing in the home, but there is a sequencing of events that leads to it. The in-theater communal experience is very special … As an industry, we have a responsibility to support all the theaters, not only the big chains in big cities, but all theaters – in small towns and small chains, too.”

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On the other hand, J.J. Abrams told the Hollywood Reporter, “We are in a moment of disruption. I love nothing more than going to the movies. That’s the way it has to be. I also know I’m the father of three kids, and I haven’t been at a theater on opening night [with them] in probably 12 years.”

Both Abrams and Frank Marshall urged Hollywood to have an open mind, with Marshall telling Variety, “I think Sean Parker is a very smart guy, and I am open to see what he is thinking.”

Yet when trying to go deeper than what’s already been reported in the press, the silence is deafening. A number of directors and producers approached for this article declined or ignored interview requests, some politely, some not. In several instances, publicists made potential interview subjects conveniently unavailable, and several sources approached by Consequence of Sound for interviews that are normally very press friendly surprisingly turned down the opportunity to speak their minds on the subject.

One A-List director politely declined my request for an interview in an e-mail, stating, “I don’t have an opinion on the issue. I haven’t done my research or thought it through, and I generally TRY to keep my mouth shut when I don’t know what I’m talking about. Except when I’m directing of course … then it can’t be avoided.” An A-list screenwriter also declined to speak on the subject, except to say he felt the service was “a non-starter.”

One voice who wasn’t afraid to speak out is veteran film executive Bill Mechanic, the former chairman and CEO of Fox. (Mechanic oversaw the making of Independence Day, Titanic, and Fight Club, among other major films, during his reign.)

Previously, Mechanic told the L.A. Times, “I think it’s an anathema and extremely destructive to the business. Creatively, movies are meant to be shared with an audience in a darkened environment on giant screens.”

We asked Mechanic if there was a danger of Screening Room single-handedly hurting the business, like Napster decimated the music biz, and he told us, “I don’t think by itself it would, but I think it’s a slippery slope. Any idea that deconstructs the current movie business and makes it into an in-home system is long-term destructive to the overall industry … You start going on a slippery slope, by the time you wake up, which is what happened to the music business, you’re sliding and you can’t stop.”

Whatever side of the Screening Room debate you’re on, what many in the business agree with is they don’t want any outsiders coming in and rearranging how the business operates. When ideas like Screening Room come about, “a lot of the people that are doing them don’t have any interest in the industry that they’re interfering with, or that they’re participating in,” Mechanic says. “It’s all from a singular point of view. I’ve spent a lot of time in the studios, and if I were on the studio side (right now), I would not be looking for anyone to be a gatekeeper for a movie. If I were a studio, the last thing I’d want is another middle man.” (And indeed, the head of Warner Brothers, Kevin Tsujihara, also said at Cinema Con, “We are not going to let a third party or middleman come between us.”)

One of the biggest concerns with Screening Room is how it will affect theatrical windows. For those who remember the early days of home video and cable, the windows for when a movie was out of theaters were much longer. It could take years for a movie to finally play on regular television (Jaws, which was released in 1975, didn’t make its TV debut until 1979), same with home video and cable.

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Now the windows are about 90 days, and the theater owners don’t want them to go shorter, which is one of the biggest issues with Screening Room, that it can disrupt the natural order of a movie’s life and afterlife. As Mechanic says, when home video and cable came along, “You weren’t trying to kill the guy in front of you. As long as it was positioned properly, the window behind you didn’t destroy the window in front of you. All the new windows learned to co-exist for the betterment of the economic structure of the movies.”

There were several previous attempts in the past to let people view first-run movies at home, and in both instances, the theater owners revolted. The first time was with the big-screen adaptation of The Pirates of Penzance in 1983. On the film’s opening night, you could order the film and watch it at home through two early cable networks, ONTV and SelecTV. According to the film’s Wikipedia page, the theater owners went crazy, then punished Universal by giving it only 91 play dates in theaters. The movie subsequently tanked, making less than a million dollars in its theatrical run.

Then in 2011, Universal tried to offer the Brett Ratner comedy Tower Heist for home viewing three weeks after its release date for $59.99. Again, the theater owners revolted, and the president of Galaxy Theaters told the L.A. Times, “We just feel it’s time to draw a line in the sand. We’re standing on principal that it’s best to preserve the theatrical window.”

At the time, Universal president and COO Ron Meyer told Movieline, “If someone’s going to get our movies two weeks after they’re released, then they have to pay a premium for that. We still think that’s a valid model. Obviously, the theater owners didn’t want us to do it … I think eventually we will get it to work in conjunction with theater owners. I think there are people that would be willing to pay that price to not have to leave their house and be able to watch that first-run movie while it’s still in theaters.”

Then we saw history repeat itself yet again earlier this year when many theater chains refused to play the sequel to Crouching Tiger, Hidden Dragon because you could download it from Netflix on opening day.

While Mechanic can’t see where Screening Room could be helpful to the business, Peter Jackson certainly disagrees. Jackson recently told Deadline at first he thought it was “a really dumb idea,” but he eventually came around. “Of all the cinema seats available on any day in the year in America, from the first to last screenings, 82% of those seats go unsold and are empty,” Jackson said. “So the question becomes, how do we sell more cinema seats…”

For a lot of people raising families, “Most of them were frequent moviegoers when they were younger, but not now, because they cannot get out,” he added.

Then when polling the target audience that Screening Room is going for, 25-39-year-olds, 70% of them would spend the $50 to have the service in their homes. Jackson speculates that the target audience would use it 12 times a year. “If we can get Screening Room into 20 million households, and they rent 12 movies a year, then the exhibitors and the studios will get over $8.5 billion dollars a year.”

Even with so many unwilling to talk about Screening Room, there was a wild card that actually volunteered to speak out about it, and not in a completely negative way. And it makes sense, especially considering this comes from someone outside of Hollywood who doesn’t have to worry about reprisals.

On April 25, The Wrap published an editorial from Fredric Rosen, the former CEO of Ticketmaster, where he weighed in on the Screening Room controversy. In the article, Rosen’s point of view was that the approach of Screening Room is wrong, but a service like this could be beneficial if Hollywood develops it in-house and controls it.

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Rosen’s editorial was titled, “Sean’s Parker’s Screening Room Plan to Home-Stream New Movies for $50 is Absurd.” (He originally thought of calling it “From the People Who Helped Ruin the Music Business.”)

“The plan is controversial for all the obvious reasons,” Rosen wrote. “It would upset the balance of exhibitors, distributors and filmmakers. That’s a perfect trifecta whereby each constituency loses.”

At the same time, Rosen continued, “Home viewing of first-run movies is an idea whose time has come … It’s the approach that’s the problem. The movie business is ripe for this type of change, just not the one proposed by the partners at Screening Room.”

Rosen feels that used the right way, a service like this could bring in more money for movies, but it should be a “Tiffany” product that’s in millions of homes, not tens of millions. He also feels that bigger blockbuster movies should be priced higher than an independent film. As he told us, “When you can show a first-run movie in your house on the day it opens, there’s value in that. This is not a Macy’s product, it’s a Tiffany product, and the marketplace will determine what it is. The point of day and date is to increase the marketplace, not lessen it. The point of day and date is to find people who don’t want to deal with crowds and deal with the onrush of the first day of the show. And the price of $50 shows me that they have zero respect for the content that’s been created.”

Rosen feels the major studios should do their own version of Screening Room and keep it out of the hands of outsiders. “The person leading that company has to be somebody that the community trusts and respects, not somebody who damaged another industry. Hollywood’s gotta own the distribution system. It’s gotta own the company. You can’t put this in the hands of a third party. The major studios should own the company. I wouldn’t work with Screening Room at all. Why would you trust somebody who’s already shown his disdain for content?” (Jackson told Deadline that Screening Room has to be done by a third party, not the studios and theaters, because of the anti-trust laws.)

It’s still too early to tell whether Screening Room could be a true threat to the business or a short-lived trend that comes and goes. In a story I wrote earlier this year about the demise of the rock movie, a lot of people would rather see a concert film at home these days, especially with today’s advances in sound technology. But when it comes to a big movie everyone wants to see on opening weekend, very few people have the kind of state-of-the-art home screening room that could rival your local theater, and even then, there’s still great fun to be had in enjoying a movie together with an audience, just like people still want to see live bands or make the trek to the Superbowl when they could easily watch it on television.

“Essentially movies are created for audiences,” Mechanic says. “Even in wealthy homes with screening rooms, the sound may be great, the screen might be bigger, but it’s in a living room of some sort, where there’s telephones and constant interruptions. It’s not an ideal facility, and you’ll never get as good of a reaction of watching a movie as you would get with an audience.”