How Screening Room Is Challenging the Way Hollywood Works

Sean Parker’s Screening Room project is creating real hullabaloo in Hollywood this week. The service offers the possibility to watch major releases at home on the day they hit cinemas. Exhibitors are up in arms about it. In the filmmakers’ camp, news of the service has polarised directors, with big names on either side of the fence.
We’ve analysed all the information available and the arguments as they evolved. What follows are the pros and cons of Screening Room concept, as well as our take on the matter.

What we know

The information about Screening Room broke on Variety, which described the service as being accessible through a set top box (priced at 150$), with an additional cost of 50$ per film (available for viewing for 48 hours).

Resistance from exhibitors was expected by the founders, so a compensation scheme has been proposed. The revenue split is as follows: Screening Room(10%), participating exhibitors (20%), while the rest would go towards distributors and the studios/ producers. What’s more, for each viewing the users will also receive 2 tickets to a nearby cinema; this is supposed to act as incentive for consumers and exhibitors to become partners.
Discussions are continuing with Universal, Fox and Sony, while Disney apparently has already refused to partner up in this venture. Reports also suggest that Screening Room is close to enlisting support from a major exhibitor, the AMC chain- which recently acquired Carmike Cinemas.
While the initiators of the project have not yet made any public declaration, there are plenty of industry heavy weights weighing in on the argument.

Who’s for it and what are the arguments?

Parker and Akkaraju have already enlisted a powerful advisor, Jeff Blake, former worldwide marketing and distribution chief at Sony. Since the first announcement in the press, a series of high profile filmmakers have voiced their support for the initiative. The list includes Peter Jackson, Steven Spielberg, Martin Scorsese and JJ Abrams.

The main benefits they find in Screening Room is that it offers the possibility of developing a strong anti piracy system and that it will attract audiences who don’t or can’t go to the cinema.
Arguments for ‘the pros’ include:

• Attracting audiences that don’t go to the cinema —cinema attendance is stage of life dependent, as per the main finding from Stradella Road’s insightful 2010 report. The odds of movie attendance are heavily stacked against those with children and a busy work life balance, to the point where going to the cinema requires careful planning and additional costs such as baby sitting, etc.;

Source
“The price point we’re going for is to target people who are working adults, young adults who used to go to the movies, and now can’t because of kids or other obligations,” (…). This is an incredibly large group, according to statistics gathered by the Motion Picture Association of America.” (in What’s So Great About Screening Room? The Inside Story of Sean Parker’s Day and Date System)

• Combating piracy?—?A key finding of a recent EAC report was that 55% of people interviewed, downloaded or streamed films illegally. Several of the major reasons cited we’re related to access and availability. The same study found that people with the best home entertainment set ups were most likely to pirate films?—?“the percentage of “pirates” (55%) rises in households who own a smart TV (61%), a home cinema system (66%), and a VOD subscription (69%).” So, households that are technologically-equipped download the most. Citing these facts: if the industry could reorganise and solve the problems of cost, convenience and access, then levels of piracy should decrease.
• Getting more bang for your buck?—?traditionally marketing budgets are blown over opening weekends. Then there is a pause before the next tranche of money is deployed for home entertainment purposes. It’s tremendously wasteful and subject to many outside variables, such as weather, that can have a real impact on the bottom line. For mid sized original screenplays to be successful there is just too much chance involved for a rugged methodology. The Screening Room offers the distributors time to understand the nuances of their campaign and optimise to get more out of their marketing spends;

Who’s against and what are their arguments?

Opposers include successful filmmakers: James Cameron, Cristopher Nolan and Roland Emmerich, among others. Cinema chains and associations of exhibitors have also expressed disapproval.

“some exhibitors worry that they would essentially be midwifing their demise by agreeing to shrink the windows” (Brent Lang, Variety)
Public statements have been issued by the National Association of Theatre Owners, as well as Art House Convergence (reuniting smaller chains and art house venues) and UNIC (International Union of Cinemas). The statement of the National Association of Theatre Owners suggests that they might be more keen to review the sanctity of release windows and negotiate with studios and distributors, just as long as it does not involve day and date for the big releases that are their bread and butter.

Arguments for ‘the Cons’ include:

• Putting cinemas out of business?—?if viewers can see a film at home at on the same day it premiers in cinema, cinema attendance will soon become extinct;
• High price?—?at 50$ per viewing, there would need to be 5 people contributing to covering the cost for it to be as low as a cinema ticket. The price looks high especially since this would just be for rental not ownership;
• Piracy threat?—?quality is not that important for many people and many who pirate content focus on seeing it first rather than seeing it in the best conditions and optimal quality;
• Shifting focus from theatrical release (and opening weekend)?—?right now a lot of the effort to market movies focuses on release weekend because of their perceived potential of creating word of mouth. Taking the theatrical experience out of the equation will kill the potential for this, some argue. (We have previously shown how this myth is partially debunked in the current landscape, but it is no secret that it is still a widely held belief in the industry);
• Alienating audiences?—?Screening Room would not only cater to families with children, it would further diminish the audience of singles and childless couples which currently make for the most part of the cinema goers;
• Perpetuating franchises?—?such an initiatives would only perpetuate the proliferation of franchises and sequels to the detriment of original and interesting film offerings.

“There can’t be an exhibitor worth anything that doesn’t know this is where we’re headed. Short of surrendering and sticking their head in the sand, this is something both sides need to work on.” (David Weitzner, former studio marketing chief)

What’s Gruvi’s take?

I think it’s important to put this into perspective. The movie industry just set another revenue record in 2015, despite piracy and all the other factors it has rallied against.
Back in the early years of the proliferation of VHS tapes cinemas had a chance to have a better place at the table. Instead they chose to hold on to a monopolistic position. VHS eventually won, yet cinemas and film companies continued to make more money than ever before.
So we’re going to see panic and vitriol and mounting tension, and probably more arguments like this delightful jewel
“I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone ….” (Jack Valentii on behalf of the MPAA from the 1982 Congressional hearing)
Which leads to this: “Disruption is better when it’s other people’s jobs” (as DHH aptly puts it). If the cinemas could, they would be the ones launching an initiative like the Screening Room; and they would have done it years ago. But they can’t, because too much is vested in political interests and relationships and these are not conducive to the sudden break throughs and changes that technology can often provide.

Smashing the windows and reorganising the economics of exhibition
If it goes through, Screening Room will have a major impact on release windows, as well as on the way exhibitors conduct business. As we predicted a couple of months back, in our review of 10 trends that will influence the entertainment industry, cinemas who are not focusing on creating great user experiences will suffer, a point repeated by others in the entertainment industry.
“The window will inevitably shrink?—?cinemas need to understand that it is as much about the quality of the venue and the experience delivered as it is about content” (John Sullivan Founding Director of Cinema Next)

Pricing Flexibility

Such an initiative is likely to accelerate the development of flexible pricing, for example certain titles being cheaper than mainstream blockbusters. Or viewing content in certain territories is less expensive – Netflix are now blocking VPNs so it would be possible to do the same and avoid VPN related piracy.
All this will be great for getting more films seen and making more money from the content. We are talking about a global audience now, one that has access to the latest technology and that is in danger of falling out of the habit of ‘Legal Viewing’. The main reason why pirates win is because they offer better access.
“The sooner you stop fighting the present, the sooner you can get to work on figuring out the future.” (Thanks again, DHH)
The bottom line is that if we really want to save this industry, movies should be seen! If we want diversity in filmmaking and if we want risks to be taken on new talents (whether it’s directors, actors, writers etc.), then movies should be easily accessible to all and it should be easy for people to pay and watch them legally wether that be in a cinema or at home.

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