Two weeks ago came word of a controversial, yet intriguing concept proposed to both Hollywood studios and theater owners: a new encrypted set-top box that would allow moviegoers to watch new releases the same day they open in theaters. So, for example, you could watch Batman vs. Superman on March 25 at home for $50. The plan was generating some buzz and support from filmmakers like J.J. Abrams and Peter Jackson, but received its biggest setback today as the National Organization of Theater Owners have officially dismissed the proposal.

The Screening Room, a company co-founded by Sean Parker (as infamously portrayed by Justin Timberlake in The Social Network), wanted to sell his set-top box to consumers who would then pay $50 for new releases. Studios seemed interested if not skeptical (Disney declined to participate), but they needed the approval of theater owners before they would license their content. That approval will not be happening.

In a statement NATO said (via The Hollywood Reporter):

Recently there have been various reports in the media regarding a proposed movie release model called ‘The Screening Room.’ Within a few days of the first report, several different high profile movie directors publicly stated their support for the model, some claiming that the model is good for motion picture exhibitors. Movie theater operators, however, will individually decide what business models work for movie theater operators […]

More sophisticated window modeling may be needed for the growing success of a modern movie industry. Those models should be developed by distributors and exhibitors in company-to-company discussions, not by a third party

They closed with one final nail hammered deep into the coffin of The Screening Room. “Furthermore, we seriously question the economics of the proposed revenue-sharing model.”

Said revenue-sharing model was set to give theater owners $20 for every $50 movie buy, but the particulars of such a deal seemed complicated. While it would seemingly work well for the larger chains (tellingly, AMC Theaters was considering the proposal), it would be far more damaging for smaller theater owners across the country. If that 40% of revenue goes into a large pool, who or what decides how that money is divided and distributed among theaters? Would a New York City theater get more because they have (theoretically) more audience members? That could leave a much smaller portion for middle America theaters who would be trading $8-plus tickets for pennies in return.

This doesn’t even take into the consideration the proliferation of piracy caused by allowing fans to watch new releases on their TV. While the video would be encrypted, what is stopping anyone from videotaping their screen and torrenting the footage? Or livestreaming the movie as they watch?

As NATO mentions in their statement, the possibility of reexamining the theatrical window will continue to be discussed between exhibitors and studios. It may change and one day you may see this type of arrangement, but it almost certainly won’t be The Screening Room or any other third party wanna-be tech company.

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