Theatrical distribution has managed so far largely to resist wholesale transformation by digital delivery technologies. TV is already in the living room, and most content is owned by the networks themselves. Theatrical exhibition, on the other hand, is controlled by independent exhibitors, who have pushed back hard against any shortening of the exclusive window between theatrical and home video release of movies. Although the studios have been able to shorten the window over time, they have not been able to eliminate it, nor is it necessarily in their interest to do so, since theatrical release brings a credibility and awareness to a picture that supports its performance in ancillary markets.
In a surprising development, it appears that this may be headed for a change. Sean Parker, the founder of Napster, has announced a startup called The Screening Room that just might enable concurrent (“day and date”) release of movies in theaters and at home. A few features make this feasible. Consumers will purchase a special set top box with strong anti-piracy protection. Movies will cost $50 (about the cost of four theater tickets) for a 48-hour rental. To incentivize exhibitors to go along, the service will cut them in for a significant share of the fee, and also offer free tickets to buyers to see the movie at a theater of their choice, so that exhibitors can also benefit from concession sales. The remainder of the fee will be split between the studio and The Screening Room itself.
Reactions to this announcement have been vocal, and mixed. Producer-director Ron Howard, and his partner in Imagine Entertainment, Brian Grazer, have come out in support. So has Peter Jackson (Lord of the Rings), who believes that The Screening Room will create new audiences for theatrical films rather than cannibalize existing ones. Other directors, notably James Cameron (Titanic, Avatar) and Christopher Nolan (the Dark Knight trilogy) have expressed their opposition. The large national exhibition chain AMC is said to be considering participating, but most other major chains, and the trade association that represents 600 independent and art house exhibitors, have blasted what they predict will undermine the unique theatrical experience.
The National Association of Theater Owners (NATO), which is the principal association for major exhibitors, while taking the position that each of its members should decide for itself whether to participate in the service, has made its basic opposition clear, saying, "The exclusive theatrical release window makes new movies events. Success there establishes brand value and bolsters revenue in downstream markets." NATO also stated that any change in theatrical release models should be worked out directly between distributors and exhibitors, and not dictated by third parties (presumably including The Screening Room).
Though The Screening Room may not be the answer, it’s increasingly clear to all that the theatrical business is in trouble. Although revenues keep rising due to rising ticket prices, the number of admissions is on a steady downward trend. The market is becoming hollowed out as studio output focuses increasingly on mega-budget blockbusters in place of mid-budget comedies and dramas. Exhibitors are rightly investing in high-tech projection and sound, stadium seating and upscale concession offerings in order to entice people from their living rooms, but this seems to many like a rear-guard action in light of the vast quantity and quality of offerings available at home.
Though slower in coming, theatrical exhibition is starting the same painful transformation that is rocking the world of television. It’s too soon to tell where we will end up, but it will certainly be somewhere very different than today.
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