EXCLUSIVE: The roster of filmmakers who’ve become shareholders and advocates to Sean Parker and Prem Akkaraju is expanding. I’m told that Martin Scorsese, Taylor Hackford, Frank Marshall and even more can be added to a reported list that includes Steven Spielberg, Peter Jackson, JJ Abrams and Imagine’s Ron Howard and Brian Grazer. There is one major theater chain aboard already, AMC, and it would seem momentum is growing for a new set-top box technology that would allow consumers to see movies at home when they open in theaters, at a $50 price point.
It’s still early, though, and at least two studios are waiting to be shown the service as they all mull the possibility of playing ball. Theaters and studios both will have to join up or this venture will not happen. After Variety revealed this enterprising new service last week, Deadline reported that exhibitors aren’t exactly jazzed by this, not a surprise since they’ve spurned all previous entreaties to cut into the established window between theatrical and ancillary. Their apprehension is understandable; they are the last vestige of a brick-and-mortar enterprise and are fearful of going the way of the record store and the book store if they allow their venues and concession stands to be bypassed.
Backers of the service have worked out the technology and a formula they say will compensate theaters and studios for what ticket sales and concessions revenues would have been, targeting a demo that barely makes it to movie theaters. They now are trying to persuade theater owners that this is an extension of their screen business by plugging into consumers with money to shell out $50 but no time to leave the house to go the movie theater. They are trying to persuade studios that this could restore the safety net they lost when DVD revenues cratered. It is a most disruptive concept, but everybody in Hollywood talks about how fractured the movie business is with the windowing required for theatrical runs, and it was inevitable that somebody would come up with a way to exploit that.
NATO hasn’t yet weighed in on this, but it in 2011 the trade group released an open letter in response to DirecTV’s premium video on demand service. It was signed by Jackson, who now is backing the Screening Room program. They were joined by Michael Bay, Kathryn Bigelow, James Cameron, Guillermo del Toro, Roland Emmerich, Antoine Fuqua, Todd Garner, Lawrence Gordon, Stephen Gyllenhaal, Gale Anne Hurd, Peter Jackson, Karyn Kusama, Jon Landau, Shawn Levy, Michael Mann, Bill Mechanic, Jamie Patricof, Todd Phillips, Brett Ratner, Robert Rodriguez, Adam Shankman, Robert Zemeckis and Gore Verbinski.
Jackson released a statement today to the trades, addressing his change of heart:
“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. That 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.”
Here was the letter that all those directors signed in 2011, which seems like a century ago in this fast-moving technological age:
AN OPEN LETTER FROM THE CREATIVE COMMUNITY ON PROTECTING THE MOVIE-GOING EXPERIENCE
We are the artists and business professionals who help make the movie business great. We produce and direct movies. We work on the business deals that help get movies made. At the end of the day, we are also simply big movie fans.
Lately, there’s been a lot of talk by leaders at some major studios and cable companies about early-to-the-home “premium video-on-demand.” In this proposed distribution model, new movies can be shown in homes while these same films are still in their theatrical run.
In this scenario, those who own televisions with an HDMI input would be able to order a film through their cable system or an Internet provider as a digital rental. Terms and timing have yet to be made concrete, but there has been talk of windows of 60 days after theatrical release at a price of $30.
Currently, the average theatrical release window is over four months (132 days). The theatrical release window model has worked for years for everyone in the movie business. Current theatrical windows protect the exclusivity of new films showing in state-of-the-art theaters bolstered by the latest in digital projection, digital sound, and stadium seating.
As a crucial part of a business that last year grossed close to $32 billion in worldwide theatrical ticket sales, we in the creative community feel that now is the time for studios and cable companies to acknowledge that a release pattern for premium video-on-demand that invades the current theatrical window could irrevocably harm the financial model of our film industry.
Major studios are struggling to replace the revenue lost by the declining value of DVD transactions. Low-cost rentals and subscriptions are undermining higher priced DVD sales and rentals. But the problem of declining revenue in home video will not be solved by importing into the theatrical window a distribution model that cannibalizes theatrical ticket sales.
Make no mistake: History has shown that price points cannot be maintained in the home video window. What sells for $30-a-viewing today could be blown out for $9.99 within a few years. If wiser heads do not prevail, the cannibalization of theatrical revenue in favor of a faulty, premature home video window could lead to the loss of hundreds of millions of dollars in annual revenue. Some theaters will close. The competition for those screens that remain will become that much more intense, foreclosing all but the most commercial movies from theatrical release. Specialty films whose success depends on platform releases that slowly build in awareness would be severely threatened under this new model. Careers that are built on the risks that can be taken with lower budget films may never have the chance to blossom under this cut-throat new model.
Further, releasing a pristine, digital copy of new movies early to the home will only increase the piracy problem—not solve it.
As leaders in the creative community, we ask for a seat at the table. We want to hear the studios’ plans for how this new distribution model will affect the future of the industry that we love.
And until that happens, we ask that our studio partners do not rashly undermine the current – and successful – system of releasing films in a sequential distribution window that encourages movie lovers to see films in the optimum, and most profitable, exhibition arena: the movie theaters of America.
We encourage our colleagues in the creative community to join with us by calling or emailing NATO at 202-962-0054 or email@example.com.
Guillermo del Toro
Gale Anne Hurd