Meet the Competition to Sean Parker’s Screening Room

As sparks fly over Parker's proposal, B&C catches up with Xcinex, another day-and-date service for new theatrical titles, about its battle plans
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When news broke this month that Sean Parker—the former Facebook president and cofounder of Napster—was looking to launch a new service (The Screening Room) that streams movies to the home the same day they’re in theaters, Cihan Atkin could only laugh about the news.

Atkin, founder and CEO of Rockville, Md.-based start-up Xcinex (pronounced “cine-x”), has been shopping this exact idea around Hollywood for a while. And while he doesn’t have Parker’s billions of dollars or the reported support of filmmakers like Steven Spielberg, J.J. Abrams and Peter Jackson, his company does have one advantage over Parker’s endeavor to bring day and date theatrical movies into the home: a four-year head start.

“I was actually very happy, because until Sean Parker’s [news] came out, we had no competition, really, nobody trying to get into our space,” Atkin told B&C. “We were thinking maybe we were the only crazy guys trying to do this. [Screening Room] means the market for this is real, we’re not the only ones trying to do something that others think is impossible. Now there are serious players trying to get into our market.

“He’s got the fame and all the money. We’ve got the real solution, a technology that solves all the handicaps that potentially block a Xcinex or The Screening Room from going to market.”

Both Parker’s proposed service and Xcinex would see consumers buying a set-top box for the home ($150 for The Screening Room, $160 for Xcinex). Both would offer films the same day they appear in theaters. But Atkin said the similarities end there.

“[Parker’s] poking at the belly of the beast, trying to find a soft spot, but his model is handicapped. And one of the biggest handicaps is it’s impossible to get the major studios to commit content or try out a new model that doesn’t replicate the theatrical model,” Atkin said. In other words, unless the studios can make the same money per head in the home that they would make selling theatrical tickets, day-and-date home releases of theatrical movies is a non-starter for the industry.

While news reports have The Screening Room charging consumers a flat fee of $50 to stream a new theatrical film, Xcinex’s device is pay-per-viewer, capable of detecting the number of viewers in the room, charging for every person watching the content (and also capable of “telling the difference between a dog and an infant,” Atkin added). The Xcinex device uses thermal imaging to count the number of adult viewers in the room, and will pause the content being streamed when an additional person enters the room. For each person watching, the content owners can charge whatever premium “ticket” price they decide on.

“Whether you charge $50 a ticket or $100 a ticket, it’s not going to make sense for them, because you’ll never know how many people are in the room,” Atkin said. “And if you stream Batman v Superman to the home the same day it hits theaters, you’ll have college kids buying a $50 ticket and inviting 20 people over, and there’s no way a $50 or $100 ticket can cover the potential loss of all those extra heads in the room.”

And—perhaps most important to content owners—Xcinex’s technology is capable of recognizing and defeating any recording device being used in the room, using a combination of reflective-lens technology and pattern and object recognition. If a smartphone or camcorder lens is detected by the device, the content will pause until the device is removed form the line of sight of the device.

“We offer a 99% guarantee that any new person in the room will be detected, and guarantee that people won’t be able to steal the content,” Atkin said. “They can’t pull out their smart phone or a camcorder, try and record or live stream the movie.”

Content owners would be able to control everything from prices to expiration dates, and four of the six major Hollywood studios have already telegraphed their interest in Xcinex, Atkin said. Additionally, Xcinex looks to expand beyond Hollywood new-release films, offering live concert performances and sports. The company is targeting a Christmas 2017 debut, with as many as 500,000 subscribers at launch.

Screening Room Blowback

This isn’t the first time someone’s tried to close the window between theatrical and home entertainment.

In 2011, DirecTV debuted its Home Premiere premium VOD service, offering films 30 days after theatrical debuts, for $30. It failed. That same year Comcast announced plans to offer Universal Studios’ films for $60 a pop just weeks after they hit theaters. That didn’t last long either. Time Warner Cable dabbled with the idea as well, with little success, and even the studios themselves have tried offering theatrical films on digital the same day as theatrical (Warner Bros. and Veronica Mars, Sony Pictures and The Interview).

Just like with each of those premium VOD disappointments, theater owners have come out in force against the idea of Parker’s service.

“The exclusive theatrical release window makes new movies events [and] success there establishes brand value and bolsters revenue in downstream markets,” the National Association of Theater Owners (NATO), representing 32,000-plus theater screens in the U.S., said in a statement. “NATO has consistently called on movie distributors and exhibitors to discuss as partners release models that can grow the business for everyone. 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.”

The U.K. Cinema Association—representing more than 90% of U.K. cinema operators—was less diplomatic with its opinion of The Screening Room and its business model.

“The Screening Room represents a massive risk to the future prosperity not only of this association’s members and their counterparts in other territories, but also of colleagues across the wider film industry,” the group said in a statement. “There is no evidence to suggest that significant numbers of people are willing to pay £35 ($50) to watch even the biggest films at home on day of release.

“Even if that were not the case, it is difficult to envisage how this proposal—if adopted—could do anything other than present an unprecedented opportunity for film piracy while at the same time damaging the foundations of a cinema business which remains the key driver of revenue for the entire business.”

And the Art House Convergence—a collection of approximately 600 art house theaters and exhibitors in the U.S.—also slammed the idea of The Screening Room, questioning not the day-and-date model it would offer, but the pricing.

“How will Screening Room prevent the sale of these devices to an apartment complex, a bar owner, or any other individual or company interested in creating their own pop-up exhibition space?” the statement reads. “We must consider how the existing structures for exhibition will be affected or enforced, including rights fees…and box office percentages.”

And while The Screening Room does have A-list filmmaker support, not every director is on board with the idea of day-and-date releases.

“I'm with [Christopher] Nolan, [Jon] Landau and [James] Cameron,” director Roland Emmerich tweeted in response to The Screening Room proposal. “It’s crucial that we support and protect the cinematic experience.”

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