Why Sean Parker’s Screening Room Plan to Home-Stream New Movies for $50 Is Absurd (Guest Blog)

Former CEO of Ticketmaster Fredric D. Rosen suggests that distributors and exhibitors look to the premium pricing model of live music

Last Updated: April 26, 2016 @ 10:23 AM

At the recent CinemaCon presentations in Las Vegas, the studios employed everything from Broadway production values to superstar appearances to generate heat for their films. But there was no hotter topic than the concept of Screening Room, which wants to offer moviegoers new releases in their homes for $50 per viewing on the same day they hit theaters.

The plan is controversial for all the obvious reasons. It would upset the balance of exhibitors, distributors and filmmakers. That’s a perfect trifecta whereby each constituency loses. That said, the lesson of the last 15 years is that if you don’t embrace technology, it buries you.

Home viewing of first-run movies is an idea whose time has come, assuming security concerns are addressed. 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.

The better model for the future of the industry is MLB.com. Approximately 18 years ago, all of the major league teams assigned their Internet and digital rights to this outfit — a company that’s now worth billions of dollars, with value that accrues back to the owners of the content.

Similarly, the company that provides day-and-date releases should be owned by the major stakeholders — the studios as majority owners and exhibitors as minority owners. From an executive standpoint, no third party or outsider should be allowed to lead the service. It should only be operated by someone who has the full trust and confidence of the major players in the existing industry.

Pricing is another issue to be addressed. Home viewing would be a premium service with an addressable market of millions of homes, not tens of millions. It would also provide an opportunity to change the paradigm that the public pays the same price for all movies, whether they cost $2 million or $200 million to produce.

The determining factor in pricing for the home would be convenience. The $50 charge proposed by Screening Room is absurd and destructive — it would eviscerate the present business model. That’s less than a family of four would pay to go to the movies today. It’s even less than the service charges typically levied by companies like Ticketmaster and Stub Hub, and it undermines both exhibitors and distributors.

Our friends in Silicon Valley, like the ones behind Screening Room, have never understood nor appreciated the value of content, which is why technology companies have an abysmal record of creating it and why there has been underlying tension between Silicon Valley and Hollywood. It’s the Hollywood content that has been pirated — not the devices they are played on.

The only ones qualified to price the content are the studios. Home viewing of a lower-budgeted movie like “Brooklyn” or “The Room” might cost $200 to $250, while a blockbuster like “Jurassic World” or “Star Wars” might be $600 to $700.

This is analogous to how pricing evolved in the live music business.

When I took over a struggling company called Ticketmaster in the early 1980s, no one scaled concert tickets. They were all priced at $18 to $25, front row to back row. Today, ticket pricing is scaled and people pay as much as $5,000 or more per ticket for VIP access.

Not everyone will be willing or able to spend hundreds of dollars to receive first-run movies in their homes. But a lot of people will. It’s called convenience. People aren’t only paying for the movie, they are paying for the convenience of having it in their own home. And as a result, the pool of dollars will grow.

The incremental revenue will go where it belongs, shared between the studios and the exhibitors. And affordable movies will still be affordable — whether it’s in multiplexes or at home following the usual windows of pay per view, digital and DVD.

That’s the best formula for success.