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Sean Parker Really Wants to Help the Movie Business, Honest

Day Three Of The World Economic Forum 2012Day Three Of The World Economic Forum 2012
Sean Parker at the World Economic ForumPhotograph by Simon Dawson — Bloomberg via Getty Images

It has to be hard pitching a new-media business when your name is Sean Parker. While helping to build Facebook in the early days is definitely a feather in your cap, many people also know you as a co-founder of Napster, and that doesn’t generate what you might call warm feelings. But there’s more than that behind the movie industry’s reluctance to embrace Parker’s Screening Room.

For one thing, Screening Room is about as far away from copyright-infringing downloads as you could possibly get. The new venture from Parker and co-founder Prem Akkaraju is designed to give movie studios an additional way to reach potential viewers in the early days of a movie’s release, while it’s still in theaters.

The Screening Room pitch is fairly straightforward. Consumers buy a $150 box that sits near their television set, and by using it they can buy first-run movies on the same day they appear in theaters, for $50 apiece. Through encryption and other digital protection mechanisms, users are given 48 hours to watch the movie, and copying or sharing of the content is (theoretically) impossible.

Parker and his partner have reportedly signed up some pretty high-profile supporters, including Hollywood names like Steven Spielberg, Martin Scorsese, J.J. Abrams and Ron Howard. In a statement they released recently, Howard and his partner Brian Grazer said:

When we met Sean and Prem last year it was clear Screening Room was the only solution that supports all stakeholders in the industry: exhibitors, studios and filmmakers. The SR model is fair, balanced and provides significant value for the entire industry that we love. We make movies for the big screen and for as many people to see it. Screening Room uniquely provides that solution.

One of the largest movie chains in the country, AMC Theatres, has also reportedly signed on in support of the Screening Room model. But plenty of others in the industry don’t like it at all.

The National Association of Theatre Owners, for example, says it emphatically isn’t in favor of Screening Room’s model. Although it doesn’t go into great detail about why, the organization said in a statement that solutions to the ongoing issues caused by the digital release of films should be developed “by distributors and exhibitors in company-to-company discussions, not by a third party.”

Cinemark, one of the nation’s largest theater owners, told Entertainment Weekly that it is skeptical about Parker’s plan, because the traditional theater exhibition window “has been the most stable window long-term, and the theatrical success of a film drives the value proposition for the studios’ downstream ancillary markets.”

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The chance that movies released through Screening Room’s proprietary box might be pirated is probably among the fears that theater owners have, but the real concern is much bigger than that. In a nutshell, theater chains are afraid that the lure of the movie theater is waning already, and that offering families the ability to watch first-run films in their own homes will eat even further into the grip that the country’s movie chains have on the “release window.”

It’s not just theater chains who don’t like Screening Room. Despite the support of Scorsese and Spielberg, other Hollywood directors aren’t crazy about the proposal, including Titanic director James Cameron and Inception director Christopher Nolan. Bill Mechanic, a filmmaker and former executive with 20th Century Fox, told Deadline:

Anything that tries to eliminate the theatrical window or shorten it where it doesn’t matter is completely short-sighted. And if you are in a business that no longer has theatrical, it becomes the land of the giants—then it is a question of only what can break through the clutter. It’s very myopic to think that it’s not ultimately destructive.

In essence, the control over what movies get seen and when—and the magical experience of seeing a film on the “big screen”—is about all the theater industry has going for it any more when it comes to competing with digital content from Netflix and others. So any attempt to shrink the release window brings chains out with guns blazing, including attempts by new content companies to release their films online at the same time as they appear in theaters.

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In a statement about Screening Room, the Art House Convergence—which represents about 600 cinema owners—said the company’s model is “incongruous with the movie exhibition sector by devaluing the in-theater experience.” The group went on to say that the project would result in “a decline in overall film profitability through the cannibalization of theatrical revenue. The theatrical experience is unique and beneficial to maximizing profit for films. Cinema grosses must be protected.”

Parker and his partner have tried to mollify movie distributors and chains by promising a revenue share, with exhibitors getting a piece of the $50 per movie fee. It’s also offering users two tickets to see the same movie they just bought through Screening Room in an actual theater. But groups like the AHC aren’t convinced this is going to make up for the disruption they face. As the group said:

The proposed model suggests exhibitors will receive $20 for each film purchased. At first glance, an exhibitor may think it represents a small, but potentially steady, additional revenue stream. But how will this actually be divided among the number of theaters playing the purchased title; will exhibitors who open the title receive more than an exhibitor who does not get the title until several weeks later?

In their attempt to cozy up to the movie industry, meanwhile, Parker and Akkaraju may have also managed to structure their service so that few consumers will be interested in it. Are there that many movie lovers who want to buy a separate set-top box just so they can pay $50 for a first-run movie the same day it appears in theaters? Even if you assume multiple people are going to watch, $50 per movie isn’t exactly cheap. But even at that price, it still seems to be too much of a threat for theater chains to embrace.