The Screening Room: Is Hollywood On The Brink Of A Civil War? (Part II)

Last time, I talked a bit about The Screening Room, Sean Parker’s new digital streaming service, and the brewing battle between it and the theater owners, as well as the major filmmakers lining up on opposite sides of the issue. I talked a little about the potential pitfalls of the system and what’s at risk here.

But that really only scratched the surface, because there’s a lot more to discuss.

For starters, there’s the tidbit I dropped at the end of the last installment, about how the theater owners (otherwise known as the National Association of Theater Owners, or NATO) had the opportunity to get involved in the home video business at its inception, but didn’t take advantage of it.

Back in the late 1970s, as the concept of releasing movies on VHS was first becoming a reality, NATO was offered the chance to be the main distributor and retailer, but chose not to. This was, of course, the latest in perceived threats to the movie theater industry, so rather than grasp the chance to have some control over the sale of movies for people to watch at home — movies that were, by the way, at least six months or even years out of theaters — they chose to bury their heads in the sand and pretend that this new development was just going to go away.

It didn’t, of course, and so the industry missed out on hundreds of billions of dollars in revenue, ultimately giving rise to the video store industry and, indirectly, the careers of Quentin Tarantino and the dozens, nee hundreds, of imitators who came in his wake.

This is an industry, remember, that was ultimately decimated by, you guessed it, streaming video and easier access to content thanks to the internet.

That new source of revenue for the studios led to more movies being made and, therefore, more product for the theaters who showed them, but it also gave us, really for the first time, the opportunity to watch movies in the comfort of our own homes. Not everyone in the exhibitor business has been around long enough to be a part of this massive miscalculation, but those who have assuredly possess long memories and won’t allow it to happen again. Hang on to that thought for a moment, though, because we’ll come back to it.

Another thing I mentioned last time, and dismissed rather summarily, was the idea of piracy and the threat it poses to the whole enterprise. Parker’s involvement in this is at least partly responsible for raising the alarm bells, thanks to his creation of Napster and what it’s perceived to have done to the music industry.

Except, Napster didn’t hurt the music industry quite as much as you think. In fact, Apple did more to hurt the industry, thanks to iTunes. The record labels were so terrified of having their music stolen and downloaded for free, that when Steve Jobs brought them the idea of iTunes, the labels ran to it, thinking that it was better to get some payment for their music than none, panicked as they were about it all being stolen entirely. Even if it meant cutting Apple in for an enormous (somewhere in the vicinity of 30 percent) cut of the sale. Now, the industry is lagging, but not because of piracy, it’s because the labels allowed the wolf into the hen house.

See, unlike the music business, which didn’t really see this whole thing coming, the theater owners have seen looking square in the face of obsolescence for a while now, so this can’t be news. On the contrary, it looks to me like they’re not going to make the same mistake twice and are, in fact, finding a way to get more involved in the process, rather than let “a third party” (as they describe Parker and his partner, Prem Akkaraju) set the rules of the game.

I’ve read something about there being questions as to whether or not studios will sign on to this, but it seems like that’s a no brainer. Offering them an opportunity for an additional revenue stream? Why on earth wouldn’t they take that? Sure, one could point to what Netflix went through back in the fall with Beasts of No Nation, and how the exhibitors almost universally boycotted the film and forced the company to four-wall it, but to suddenly stop showing studio releases in an effort to prevent them from using a service like The Screening Room seems self-defeating. It’s the very definition of cutting off one’s nose to spite the face, because if NATO and AHC stop showing the movies offered by distributors, what are they going to put on their screens at all?

Look, Parker and Akkaraju are still working out the specifics and clearly have a lot of kinks to iron out, but if they find a proper formula to cover the theaters and make sure they get their proper cut, there’s no reason to think that they can’t make this work and make everyone happy. It’s in everyone’s best interests to do so, which means that the best move Parker and Akkaraju can make is to sit down with NATO and AHC and come up with a feasible profit sharing plan. Likewise, rather than go to war over this, the theater owners should be eager to meet at the bargaining table to see what they can get out of this plan.

The world is changing. Of that there can be no debate. Streaming first run movies is the way of the future, and the future is now. The question for both sides is, are you going to take advantage of it? Or watch it pass you by?

Read Part I of ‘The Screening Room: Is Hollywood On The Brink Of A Civil War?’

Neil Turitz is a filmmaker and journalist who has spent close to two decades in the independent film world and writing about Hollywood. Aside from being a successful screenwriter and director, he was also the editor-in-chief of the entertainment news website and newsletter Film News Briefs for close to five years, before merging it with SSN Insider in the spring of 2013, where he continues to contribute as Senior Editor.