A new startup called Screening Room is aiming to breathe some life into the idea of offering new release movies in-home while disrupting the film distribution market in the process.
The idea behind Screening Room is that the company would charge $150 for access to a set top that would transmit the new movie for 48 hours with each viewing of the film costing $50. And the company will be sporting some serious secure anti-piracy technology to put those worried about piracy of the content at ease.
The company is making the deal interesting, and much more enticing by proposing that exhibitors get a big cut of the revenue. Possibly up to $20 of the $50 per-view fee. Plus, Screening Room will offer customers paying the $50 service fee two free movie tickets to watch the film in whatever cinema they choose, so exhibitors also get a chance to cash in on concession sales from those viewers. Distributors participating with the service would also receive a cut, believed to be 20%, from the proceeds before the Screening Room took its own 10% fee.
Of course movie theaters were not the first to get on board with this, fearing the shrinking window between theater release and home entertainment release since shorter theatrical runs equates to less revenue for exhibitors. Many have joined together to rally against the service. The Art House Convergence, which represents 600 cinema owners said the proposed model is “incongruous with the movie exhibition sector by devaluing the in-theater experience and enabling increased piracy. Furthermore, we seriously question the economics of the proposed revenue-sharing model.”
Screening Room is trying to sweeten the deal by including movie tickets in the package so viewers still have the option to view in the cinema although the question of why someone would spend $50 or more to view a new movie release at home only to go out and view it again in the theater does pose itself.
Then there is the fact that the Screening Room wants to become the exclusive content partner with studios which could pose a challenge considering some studios make its films available through parent companies.
The pricing of the service poses another dilemma for the model entirely. Viewing costs of $50 per-view is much too steep for the average person or family, and that is without the cost of access to the set top required to actually view the film. While there are many people out there who would have no problem dishing out that much money to view a newly released film from the comfort of their own home, the average middle-class person is not in that demographic (although the concept of Movie parties and neighbors being invited might make it more affordable).
Going to a theater to see a newly released film is not always about the film itself; people go to meet up with friends or on a date. Many people want to watch the film in a theater on a huge screen with popcorn in hand, an experience that cannot be replicated at home. Of course the adding petrol, parking and concessions costs to the price of the ticket often make this an $80 experience for a family.
The Art House Convergence argues this point as well, “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,” said Tim League, a leading member of the organization. And yet the studios only get 50% of the ticket price and this phase of a movie exploitation window – US theaters – has been shrinking radically as overseas theaters, DVD and Online revenue has squeezed it.
But many major studios and some exhibitors are warming up to the idea and expressing interest in the service. Sources familiar with the matter say Universal, Fox and Sony are interested in the Screening Room venture and officials from the company have told studio execs that it is close to signing a deal with AMC, which is poised to become the world’s largest exhibitor pending the approval of its acquisition of Carmike Cinemas. For now, those studios will continue reviewing the terms and business plan openly with Screening Room as no deals have been made yet. Once the first deal signs up, there will be a host of copycat businesses getting VC funding, a move that may attract companies like Facebook and Google to the idea of hosting movies on a vast scale – a move that might decimate US cinemas.
So although the venture appears far-fetched, it has a leg to stand on. Other services like this have been tested without much success, but the fact remains that viewing habits are changing and while at the moment the changing landscape of video is for the most part contained to the home eventually the way we view new movie releases will begin to change as well, and those changes may not be as kind to distributors.
This first ran in Rider Research’s Online Reporter.