Four years ago, the in-home day and date venture Screening Room polarized exhibitors and studios even as its backers and superstar director/shareholders promised windfalls as high as $8 billion in annual revenue to be split between movie makers and exhibitors from the affluent but homebound 25-39 demo. The disruptive venture is back with a new name – SR Labs — $27.5 million in equity financing, and a new CEO in former Sony Pictures Home Entertainment president Man Jit Singh. Given the current climate, it seems a model worth re-considering.
Founder and ex-SFX Entertainment and JPMorgan Entertainment Partners honcho Prem Akkaraju has been elevated to Executive Chairman; Ex-Intel and Microsoft exec Jim Baldwin continues as Chief Technology Officer and they head up an advisory board that consists of Napster/Facebook/Spotify investor Sean Parker and Jeff Blake, the former Sony Pictures chairman of worldwide marketing and distribution.
SR Labs said it has been issued 11 domestic and 25 global utility patents that its backers believe has strengthened its guarantee of a secure and safe-from-piracy delivery system through set top boxes that will retail for $150, and will allow customers to spend $50 to watch brand new films each Friday as they open in theaters.
Despite the argument of its backers that the service would not harm existing box office revenues, and despite impassioned endorsements from filmmakers including Peter Jackson, Steven Spielberg, Martin Scorsese and JJ Abrams who signed on as shareholders, and despite rumors of a letter of intent signed by leading theater chain AMC, the industry largely spurned Screening Room in its first go-around. Filmmakers like James Cameron, and theater owners believed that it would hurt the movie going industry, with some using words like “doom.” The architects of Screening Room made their case to exhibitors at Cinemacon that year, but clearly the business wasn’t ready to consider a major change to the traditional theatrical windowing system. Indie theaters aligned with this effort, signing an open letter against the venture.
The world looks very different now, not only because of the continuing infiltration of streamers offering movie-quality in-home original programming, but especially because of a global pandemic that has shut theaters up tight and has sent debt-heavy chains like AMC teetering toward Chapter 11. In an eloquent conversation to explain why he went from a skeptic to a believer that the Screening Room technology could boost the health of both sides of the movie making experience by injecting $8 billion to $10 billion in revenue from an affluent but homebound 25-39 demographic, Peter Jackson firmly believed Screening Room could be an important lifeline not only to the health of movie makers but also theaters that would receive the equivalent of two ticket sales for each $50 purchase, along with six dollars for concessions.
As it is now, theaters have been completely cut out of the revenue picture as film studios opened films from Bloodshot to Trolls World Tour directly on VOD after theaters shuttered, for around $20 per in-home purchase. Even after theaters re-open, it will likely take time to restore customer confidence in moviegoing, and streamers will have had the better part of a year to assert themselves as a viable stay-at-home alternative. If SR Labs could provide even a high percentage of the revenues Jackson believed it would, that could be an important way for exhibitors to diversify its revenue stream from one limited to customers coming to theaters and spending on concessions.
SR Labs principals, who didn’t say much on the record as stories leaked out several years ago, issued a series of statements today as the principals press their case anew to be a part of the theatrical ecosystem and help create an extra revenue source for both sides, when theaters reopen and the economics of moviegoing in a brave new world takes shape. The venture would itself get a portion of the revenue from each sale.
Said SR Labs investor Sean Parker: “In the face of the SARS-CoV-2 pandemic, our world has been upended by an invisible enemy sparing no country or industry. The damage has been especially acute amongst film studios and theatrical exhibitors. Since my earliest memories as a child, my hopes, values, and aspirations were shaped by the power of film, and the immersive nature of the theatrical experience. We must do everything in our power to preserve the time-honored tradition of theatrical exhibition at this pivotal moment, when its very existence is under threat. We have endured many tumultuous moments in our history. This too will pass. But in the face of existential threats, it is only by summoning our greatest abilities—our collective creativity and innovative capacities—that we have not only survived, but also prospered. We need to work together to preserve the cinematic experience, not only for writers and filmmakers, but also for the moviegoing public, and for the benefit of future generations who have yet to experience the magic of cinema themselves. We at SR Labs are committed to achieving one goal: providing both studios and exhibitors the tools and technologies they need to future-proof and expand their businesses. I could not be more excited to work with Man Jit and the leadership team in realizing this goal.”
Said co-founder and executive chairman Akkaraju: “Man Jit brings a wealth of studio experience, industry relationships, and knowledge of content licensing to the company. SR Labs has built a suite of innovative technology solutions to service the rapidly-changing film industry, and at its heart, SR Labs is dedicated to creating the most cost-effective platform for digital delivery of secure high-bandwidth video formats to support digital cinema, 4K/HDR and beyond.”
Said SR Labs CEO Man Jit Singh: “The traditional film business is undergoing a seismic shift, driven by a combination of new content providers and changing consumer expectations. I’m excited to join the team at SR Labs at such a pivotal moment. Working together with Prem and the incredible team he and Sean have assembled, I believe we can leverage our unique technology to drive meaningful value for both film studios, as well as the theatrical exhibitors.”
Let the discussion begin anew.