Sean Parker’s New Distribution Concept Has Studios & Exhibition Running For Exits

Today our sister publication Variety reported on the Screening Room, a new first-run movie service being pitched around town by Napster co-founder and former Facebook president Sean Parker. His twist on an old idea that has been thwarted before by exhibitors would be that major studio releases could be accessed via an anti-piracy technology.

Sean ParkerEssentially, $150 gets one a set-top box, with a $50 per-movie charge for a 48-hour rental. From what Deadline has learned, the concept is in the idea stage, but the whole idea has a number of executives in distribution and exhibition raising torches and pitchforks. Despite surrounding himself with former Sony distribution honcho Jeff Blake as a consultant, Parker is a Hollywood outsider — he’s the guy who (with Shawn and John Fanning) appeared seemingly out of nowhere with the controversial free music service Napster before metal band Metallica led the charge against them and pushed them into a major legal battle that had implications for the entire music industry.

Said one major studio distribution executive tonight, “This news is so damaging, I can’t tell you right now how unhappy I am.” Another warned that if the Screening Room becomes a reality, “it would be the beginning of the end, and half of the theaters in this country would close.” While the Variety report cites AMC Theatres being close to a deal, Deadline heard that Regal Entertainment Group — which has been critical of any attempt at thwarting the exhibition viewing window — has completely thumbed its nose at the idea. Parker’s plan– which is said to be in its R&D phase — is to cut exhibitors in for as much $20 per movie, along with providing consumers who shell out $50 with two tickets to see the movie at a theater of their choice. That’s so exhibition can make money off of concessions sales later. However, cutting theaters in on a deal that ultimately harms their existence is not being embraced. “Hopefully, this will fail,” said one film buyer in exhibition.

The high price point is also a point of debate. Some distributors think it caters to a high-end clientele, that no one would buy into it, particularly since it would rob audiences of the movie theater experience. “There’s no market for it,” said one studio executive. Others think that the price point is economical, particularly when one takes into account the extra costs involved in moviegoing (i.e. parking, babysitting fees, extra tickets for the family). Meanwhile, here is a service called Prima Cinema that delivers first-run quality films to your home theater via its equipment (for example, one can currently watch Paramount’s Whiskey Tango Foxtrot which opened last weekend). However, Prima Cinema isn’t perceived as a threat because the barriers of entry are extremely expensive with the movie rental being $750-$1,000; a service essentially for the Bel-Air crowd. “It’s not a scaleable business,” critiqued one insider.

Nonetheless, the news of the Screening Room continues the long-gestating attempt to close theatrical and home entertainment windows for studios. Universal originally had a plan in late 2011 to sell Tower Heist via premium VOD in several markets for $59.99 a pop three weeks after the film played. The studio pulled the plan after facing boycotts from exhibitors.

Essentially, such distribution plans are attempts by studios to cut their P&A spend and make money faster between the theater and VOD/DVD dates. Last fall, Paramount tried an experiment with a shortened theatrical to VOD window with its Paranormal Activity: The Ghost Dimension and Scouts Guide to the Zombie Apocalypse (which were released only a week apart), cutting the theaters in on some of the VOD cash. But the studio was only able to get AMC (which is owned by China conglom Dalian Wanda Group), Canada’s Cineplex and a few smaller venues on board. Essentially, at the end of the day, premium VOD isn’t a plan exhibition wants to play ball with.

Said one exhibitor, “Anyone who thinks this is going to work in this day and age needs their head examined.”

Anita Busch contributed to this report.

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