Why theater owners are rejecting Sean Parker’s controversial Screening Room

Tech entrepreneur and Napster co-founder Sean Parker wants to shake up the movie industry, and theater owners are not pleased.

The investor known for his key roles in Facebook, Napster and Spotify is working on a home-video service that will give people access to theatrical movies when they’re in cinemas for $50 each.

See more of Entertainment’s top stories on Facebook >>

Filmmakers who support the project, including Peter Jackson and Ron Howard, have contended that the start-up dubbed the Screening Room will expand the audience for their films by reaching more consumers.

But the National Assn. of Theatre Owners, a trade group representing exhibitors, issued a statement Wednesday throwing cold water on the idea, saying movie theater operators “will individually decide what business models work for movie theater operators.”

Theater owners have long rejected any attempts to shorten or eliminate their exclusive window on new studio releases, fearing such a move would cannibalize sales.

Major theater chains refused to show Netflix’s sequel to “Crouching Tiger, Hidden Dragon,” which was intended for a major simultaneous release. A Paramount Pictures plan to bring two low-budget horror movies to online stores early was also met with resistance.

The theater group acknowledged that new windowing models might be necessary to contend with shifts in consumer behaviors, but also defended the idea that the traditional release pattern makes movies into events.

“NATO has consistently called on movie distributors and exhibitors to discuss as partners release models that can grow the business for everyone,” the theater owners group said. “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.”

Follow Ryan Faughnder on Twitter for more entertainment business coverage: @rfaughnder