Hundreds of cinemas rally against Sean Parker's plans for $50 home movie service

Cinemas News

Hundreds of smaller and art-house theatres are protesting a controversial new plan to make new movies available in the home for $50 on the same day that they hit theatres.

In an open letter to the Screening Room from the Art House Convergence, cinema owners said the proposed model is "incongruous with the movie exhibition sector by devaluing the in-theatre experience and enabling increased piracy. Furthermore, we seriously question the economics of the proposed revenue-sharing model."

"We are not debating the day-and-date aspect of this model, nor are we arguing for the decrease in home entertainment availability for customers—most independent theatres already play alongside VOD and Premium VOD, and as exhibitors, we are acutely aware of patrons who stay home to watch films instead of coming out to our theatres," the letter continued.

The organization, of which Alamo Drafthouse founder Tim League is a vocal member, said if studios and larger theatre owners agree to the plan, "we will see a wildfire spread of pirated content, and consequently a decline in overall film profitability through the cannibalization of theatrical revenue. The theatrical experience is unique and beneficial to maximizing profit for films. A theatrical release contributes to healthy ancillary revenue generation and thus cinema grosses must be protected from the potential erosion effect of piracy."

Sean Parker—the founder of Napster who later played a key role in Facebook's rise—and music executive Prem Akkaraju are pitching the proposal for their new company, The Screening Room, and will need significant support from theatre owners if it is to work. Otherwise, Hollywood studios will be reluctant to license their titles in fear that exhibitors could retaliate by either refusing to carry the movies in question or by striking tough terms to agree to book them.

The Screening Room hopes to entice exhibitors by sharing revenue, and giving them $20 for every $50 spent by a consumer renting a title for a 48-hour window. Parker and Akkaraju's push comes at a time when serious discussions are going on between studios and theatre owners about how to shorten windows without jeopardizing the box office; however, a $50 day-and-date rental service may not be the solution.
"There are many unanswered questions as to how this business model will actually work," the Art House convergence said. "The proposed model, as we have read in countless articles, 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 theatres 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 (based on a distributor’s decision); who will audit the revenue to ensure exhibitors are being paid fairly; does this revenue come from Screening Room or from the distributor…these are just a few of the issues yet to be explained."

Major theatre circuits Cinemark and Regal Entertainment aren't expected to partner with The Screening Room, according to sources. Hollywood studios could be reluctant to license their films unless a majority of the bigger circuits go along, even as a raft of top filmmakers, including J.J. Abrams and Peter Jackson, are advising the Screening Room, saying the plan is good for cinema owners since it will target consumers who don't normally go to the movies.

So far, the National Association of Theatre Owners hasn't weighed in.—The Hollywood Reporter