In 1981, MTV told us that video killed the radio star. (Actually, the Buggles told us that in 1979 – but their song got on the map by being the first video shown on MTV.) Now, some 30 years later, it’s about to kill the cinema star, or at least the cineplex. At least, that’s what some alarmists fear will happen as a result of a recent FCC decision to allow cable and satellite companies to switch off set-top box outputs that do not provide sufficient copy protection.
At issue is a heretofore obscure FCC rule – Section 76.1903 – that prohibits cable and satellite companies (also known as multichannel video programming distributors or MVPDs) from disabling the audio-video outputs of customer’s set-top boxes. The prohibition is designed to protect consumers by ensuring that early adopters of high definition television (HDTV) would be able to connect their televisions to sources of HDTV programming. The prohibition, however, has long worried content providers because analog outputs (and some digital outputs) do not recognize copy protection technology. As a result, a movie flowing through an analog output might be going to a television set but it might also be going to a recording device, effectively by-passing the industries copy protection schemes.
In an attempt to plug this “analog hole”, the Motion Picture Association of America (MPAA) requested a broad waiver of the rule. The MPAA, which represents the studios that make and distribute movies, argued that without the ability to disable these non-secure outputs, content owners would never authorize distribution of the latest and greatest content through cable or satellite. A grant of the requested waiver would facilitate – and might even encourage – movie studios and MVPDs to provide home audiences with first-run high definition movies and other premium content.
The FCC agreed, although it placed several limits on the waiver. In practice, the waiver allows MVPDs to make use of a technology known as selectable output control (SOC). SOC allows an MVPD to encode programming with a signal that remotely disables certain of the audio/video outputs on the end user’s set-top box. SOC particularly targets those outputs that do not recognize copy protection technology (e.g., analog outputs). Allowing MPVDs to use SOC, the FCC reasoned, would encourage content providers to make new, high definition content available to home audiences because it would reduce the risk of unauthorized duplication and distribution of the content. The FCC attempted to limit any negative impact on consumers by limiting the timeframe in which SOC may be activated, limiting the outputs targeted by SOC activations and warning that SOC implementations that cause consumer confusion could lead to a revocation of the waiver.
This waiver arguably benefits consumers by encouraging content providers and MVPDs to provide access to first run movies to home audiences. Certain commentators, however, have proclaimed this as the beginning of the end for movie theaters. Why would people continue to endure traffic, parking, eight-bucks-a-bucket popcorn, and noisy, cellphone-using, chair-kicking fellow audience members if all the latest movies are available at home, in high def?
As multiplex screens grew smaller and television sets grew bigger, theater owners could at least take comfort in the fact that cable subscribers were just about the last people to get new movies. Hollywood’s longstanding “windowing” system provided new movies to MVPDs only after they had been released in theaters and then on DVD and other fixed media. The idea has always been that audiences would pay once to see it theaters, again to buy the DVD and again (via their cable bill) to see it on cable. Now theater owners may need to face the prospect of losing their window of exclusivity as studios have increased incentives to deal directly with MVPDs on early releases.
Such fears are not without merit. Two weeks after the FCC released its order, The Wall Street Journal reported Time Warner Cable Inc.’s proposal to several Hollywood studios to allow its subscribers to see movies at home just 30 days after theatrical release at around $25 per order. According to the report, some version of this proposal may result in first run movies in people’s homes by the end of this year. Given that this writer’s last trip to the movies cost over $100 in movie tickets, parking, popcorn, and babysitting, we will be watching these developments with great interest (and microwave popcorn).
