Steven Spielberg, Peter Jackson Face Down Studios and Theater Owners Over Screening Room

Sean Parker’s proposed service has the support of several A-list filmmakers, but studios and exhibitors remain wary — and rightfully so

Seventeen years after he shook up the music industry by co-founding Napster, Sean Parker is trying to disrupt the movie industry with Screening Room, a service that aims to offer new movies in the home for $50 on the same day they hit theaters.

Parker has enlisted the support of nearly a dozen industry heavyweights, including directors Steven Spielberg and Peter Jackson, but most exhibitors remain opposed to the idea, and studios aren’t quite sure what to make of it given their different business models.

Spielberg, Jackson and fellow A-listers J.J. Abrams, Martin Scorsese, Ron Howard, Brian Grazer and Frank Marshall are among the early proponents of Screening Room, which they feel is the future of making movies more accessible to the masses — and the future is inevitable. Indeed, many believe that major change in the traditional distribution is a matter of when, not if.

That may be so, but it won’t arrive anytime soon if the exhibition industry’s lobbying arm, the National Association of Theatre Owners, has a say in the controversial matter.

It’s unclear whether industry influencers like Spielberg and Abrams are actual investors or merely lending their public support in exchange for a stake. Howard and Grazer will serve on an advisory board to the company, though they are not believed to be involved as personal investors.

A representative for Spielberg declined to comment. Skip Brittenham is representing Screening Room, which also counts former Sony Pictures vice chairman Jeff Blake as a consultant and stakeholder.

Backed by Parker and Prem Akkaraju, Screening Room proposes that consumers watch new movies over a 48-hour window beginning the day of its theatrical release via a set-top box that would cost roughly $150. According to the proposal, theater owners and studios would collect as much as $20 each of the $50 fee for a new movie. But there’s that mysterious phrasing that Hollywood knows all too well — “as much as.”

It remains unclear how that formula would be calculated, and therein lies the rub that has led to a Hollywood divided: Many theater owners compete in the same geographic markets, so how would the exhibition revenues be divided among them?

And since Disney, which is believed to oppose the plan, releases family films that draw millions of children who devour millions more in concessions, how can those movies operate under the same formula as others?

Recognizing that theaters count on concession sales to make money, Screening Room will also provide customers with two free tickets to see the movie in theaters. But if they just spent $50 to watch the movie at home, then why would they go to a theater and watch it again?

Yes, Screening Room may help a studio’s bottom line by broadening the audience and reaching customers who may not have time to get to theaters on a given weekend, but it’s unclear how it would benefit theaters given their reliance on concessions sales.

That’s where the divide currently lies. Exhibitors believe that Screening Room will encourage people to stay at home rather than head out to theaters. In a statement, Jackson counters that Screening Room will grow overall revenues, saying that “Screening Room will expand the audience for a movie — not shift it from cinema to living room.”

As of this writing, Chinese-owned AMC has been identified as the theater chain most receptive to the proposal, going so far as to sign a letter of intent that includes certain unannounced contingencies. Regal and Cinemark have shown little interest and seem less likely to join. NATO has yet to officially weigh in on Screening Room as the organization gathers facts, but expect a strong response this week.

For their part, studios are currently weighing the benefits of Screening Room and few have commented publicly. “This whole idea is in such a nascent stage that there’s not much to talk about,” Chris Aronson, president of domestic distribution at Twentieth Century Fox, told TheWrap.

Some studios, like Disney, that rely heavily on family and event films seem unlikely to get on board.

But others have demonstrated a willingness to experiment with new models of distribution that alter the traditional three-month window between a theatrical release and a movie’s availability for home viewing.

Paramount tried to upend the traditional theatrical window last fall with the final “Paranormal Activity” movie and “Scouts Guide to the Zombie Apocalypse” — a plan that was far more favorable to exhibitors than the Screening Room is. In 2011, Universal attempted to offer the Eddie Murphy-Ben Stiller movie “Tower Heist” for home viewing just three weeks after its theatrical release at an approximate cost of $60, but the studio scuttled the plan after several theater chains threatened not to book the film at all.

Studios have been trying to make up for lost revenue from waning DVD sales, and Screening Room seems like it could help gain back some of that financial ground. However, studios also have understandable concerns about the Screening Room set-top box. While Parker & Co. insist it will be equipped with anti-piracy technology, the company’s technology remains untested — and any gaps might exacerbate piracy issue, which are already a major liability for studios.

China is also likely to play a factor in their thinking, as that country is committing to the theatrical business in full, building new theaters each week to accommodate the increased demand caused by an influx of Hollywood releases.

Some believe there is merit in Screening Room but that the current proposal doesn’t fly in its current form and will require multiple tweaks, including, possibly, a higher price point. One thing is for certain, the service will have the crowd buzzing at next’s month CinemaCon in Las Vegas.

That same crowd was mired in debate back in 2011, when Jackson and nearly two dozen other directors penned a letter objecting to studios’ deal with DirecTV to shrink the theatrical release window, which, they believed, would threaten the theatrical business.

Right now, Jackson is the only filmmaker on that list to have had a change of heart, while A-listers such as James Cameron, Michael Bay, Kathryn Bigelow, Roland Emmerich, Antoine Fuqua, Michael Mann, Todd Phillips, Brett Ratner, Robert Rodriguez and Gore Verbinski have not yet weighed in on the Screening Room.

Jackson sent the following statement to TheWrap, explaining his support of Screening Room. Read it in full below:

I had concerns about “DirecTV” in 2011, because it was a concept that I believe would have led to the cannibalization of theatrical revenues, to the ultimate detriment of the movie business.

Screening Room, however, is very carefully designed to capture an audience that does not currently go to the cinema.

That is a critical point of difference with the DirecTV approach – and along with Screening Room’s robust anti-piracy strategy, is exactly why Screening Room has my support.

Screening Room will expand the audience for a movie – not shift it from cinema to living room. It does not play off studio against theater owner.  Instead it respects both, and is structured to support the long term health of both exhibitors and distributors – resulting in greater sustainability for the wider film industry itself.