Why the Screening Room is Destined to Fail with its $50-a-Movie Streaming Scheme

When news emerged last week that Napster co-founder Sean Parker and former SFX Entertainment chief content officer Prem Akkaraju were planning to launch a service named the Screening Room that will stream new theatrical releases to customers in their homes for $50 a title, it received support from filmmakers Steven Spielberg, J.J. Abrams, Peter Jackson, Taylor Hackford and Imagine Films founders Ron Howard and Brian Grazer, many of whom are shareholders in the start-up.

While the studios and the filmmakers are likely reassured by the proprietary anti-piracy encryption software in the Streaming Room’s standalone set-top box (price: $150), exhibitors aren’t quite convinced. They didn’t immediately cry foul the way they did back in the fall of 2014 when it was announced that “Crouching Tiger, Hidden Dragon: Sword of Destiny” would be released day and date in Imax theaters and on Netflix. (It probably didn’t hurt that participating theater chains will reportedly get $20 of the $50 rental fee.)

But today the National Assn. of Theater Owners (NATO) issued a statement regarding the Screening Room that was vaguely unsupportive (“The exclusive theatrical release window makes new movies events.”), but mostly just vague.

The Art House Convergence, representing 600 theaters and allied cinema exhibition businesses, was more forthright in its opposition in an open letter, stating, “The proposed model is incongruous with the movie exhibition sector by devaluing the in-theater experience and enabling increased piracy.”

The letter argues that without the night vision surveillance employed by theaters, the Screening Room will open the industry up to rampant piracy, but it fails to consider that the encryption software will likely contain watermarking technology to trace pirated copies back to the individual Screening Room user.

Five years from now, both the hand-wringing and the praise will likely look like much ado about nothing in hindsight. Because, while the Streaming Room may have looked impressive when they gave Power Point presentation in the conference room, it doesn’t seem to have a solid appeal for consumers, making it destined to join a long list of other hyped-but-forgotten entertainment tech such as DiVX and UltraViolet (which boasts more than 9M users, none of whom anyone seems to have met).

At first glance, the math looks good for Screening Room. The average ticket price at North American movies theaters is currently $8.70, but if you’re an Angeleno going to a movie at the ArcLight in Hollywood, you’ll pay $15 for the privilege. So $50 is a reasonable price for a family when one factors that home viewers will not only save on gas and possible parking charges, they’ll likely spend substantially less on snacks. The deal also includes two free tickets to the movie rented, which means added value for the customer, as well as the exhibitors, who will benefit from the potential concession sales generated.

But there are many intangibles to the moviegoing value proposition. Not only do theatergoers see the film projected on a screen that dwarfs even the largest consumer LED TV, accompanied by a booming sound system, they get to share the thrills, laughs and/or tears with a crowd in a darkened room without the distractions of home.

The sharing factor is especially important with the type of tentpole projects made by Jackson, Abrams and Spielberg, like “Lord of the Rings,” “Star Wars: The Force Awakens” or the next “Raiders of the Ark” film (just announced for 2019), where even the normally torturous process of waiting in line is part of a treasured communal experience.

If the movie isn’t an event, viewers who aren’t motivated to venture out to the theater will likely be willing to wait a few months and watch the film at their leisure via one of their monthly subscriptions to cable, satellite of VOD services or on DVD or blu-ray, which they can rent or buy for substantially less than $50. Not only will they save money, they won’t be confined by Streaming Room’s 48-hour viewing window.

Then there’s the issue of Streaming Room’s standalone set-top box, which costs $150 and presumably — but not necessarily (they haven’t released the specs) — does only one thing. So the company is asking people to spend a decent chunk of change (more than Roku, AppleTV, Amazon Fire or blu-ray/streaming device; less than an Xbox or a PlayStation), when they likely already have at least one device that can access a multitude of streaming services, as well as allows them to play discs and games.

Streaming Room’s $50-per-film price seems particularly high when one compares it to the cost of pay-per-view fights. The price of UFC pay-per-view bouts was recently upped to $59.99, while last year’s Floyd Mayweather vs. Manny Pacquiao fight set the record as the most expensive pay-per-view ever, and it cost only $99 — for a live event with an undetermined outcome, held in a single venue with a minimum ticket price of $1,500 — no special device required.

When all the factors are considered, the Screen Room fails on price, convenience and selection compared to MVPDs and streaming services like Netflix, Amazon or Hulu. All it offers is an early home viewing window, which is becoming increasingly less significant as streamers like Netflix spend big money on original films that premiere online or day and date with their theatrical releases. So, while the filmmakers who hold a stake in the company probably wouldn’t mind further padding their fortunes if it’s success, they can sleep well knowing the service will not cannibalize audiences who flock to theaters to see their films in all their big screen glory.