Theater Owner Rejects Proposed $50 Home Movie Service: "It Feels Like a Half-Baked Plan"

Tim League - H 2014
Courtesy of Film Independent

Alamo Drafthouse founder Tim League doubts Hollywood studios will agree to Sean Parker's plan and chains like Cinemark and Regal aren't likely to go along, but filmmakers like Peter Jackson line up in support.

Theater owners have started to weigh in on Sean Parker's bold bid to make new films available to rent in the home for $50 via an encrypted $150 set-top box on the same day they hit theaters — and not all the theater chains are happy about it.

"I think this is not a good idea, and I sincerely doubt the studios will go for it at that price point. It feels like a half-baked plan to me," said Tim League, founder and CEO of Alamo Drafthouse Cinema.

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 theater 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 theater owners about how to shorten windows without jeopardizing the box office; however, a $50 day-and-date rental service may not be the solution. (In the past, League has not been adverse to playing day-and date releases.)

Major theater circuits Cinemark and Regal Entertainment aren't expected to partner with The Screening Room, according to sources. While Cinemark wouldn't reveal its position, CEO Mark Zoradi issued a statement raising his concerns.

"The 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," he said. "Cinemark believes that any day-and-date propositions must be critically evaluated to avoid the devaluation of the exhibition window and all subsequent revenue streams of our content providers."

“Cinemark diligently evaluates and considers all business proposals. We have great relationships and an open dialogue with our studio partners and work directly with them individually regarding film content, windows, and decisions that may impact the long-term health of our industry," said Zoradi, a longtime studio executive who recently took the job at Cinemark.

Cinemark is the third-largest chain in the U.S. behind Regal and AMC Entertainment.

AMC, on the other hand, has signed a letter of intent with Parker's company, according to several sources who have been briefed on the matter. However, any formal deal is incumbent on certain conditions being met. AMC, owned by Chinese giant Dalian Wanda Group, will pass Regal to become the largest theater circuit in North America once it completes its recently announced acquisition of Carmike Cinemas later this year.

To date, both Cinemark and Regal have declined to make a similar commitment.

The Screening Room, represented by attorney Skip Brittenham, has attracted a powerful board of advisors that includes J.J. Abrams, Steven Spielberg, Brian Grazer, Ron Howard and Peter Jackson, who in 2011 was among 23 directors and producers who opposed a plan to make movies available on premium VOD 60 days after their release. 

But in a statement to The Hollywood Reporter, Jackson explained his support for the new proposal, saying, "I had concerns about 'DirecTV' in 2011, because it was a concept that I believe would have led to the cannibalization of theatrical revenues, to the ultimate detriment of the movie business. Screening Room, however, is very carefully designed to capture an audience that does not currently go to the cinema."

He continued, "This is a critical point of difference with the DirecTV approach — and along with Screening Room's robust anti-piracy strategy, is exactly why Screening Room has my support. Screening Room will expand the audience for a movie — not shift it from cinema to living room. It does not play off studio against theater owner. Instead it respects both, and is structured to support the long-term health of both exhibitors and distributors — resulting in greater sustainability for the wider film industry itself."

Former Sony Pictures vice chairman Jeff Blake is consulting with the venture and, along with Akkaraju, has been meeting with the major studios in recent weeks and months, including Fox, Universal, Sony and Paramount. Disney won't participate in the venture, although the others have yet to decide on the proposal.