FCC paves way for studios to push movies into the home, rattling theaters

By Richard Verrier
Federal regulators have granted a controversial waiver to the Hollywood studios that clears the way for them to show first-run movies in the home shortly after -- or even during -- their release in theaters.

The Federal Communications Commission on Friday granted a petition from the Motion Picture Assn. of America, the chief lobbying group for the major studios, that would permit for a limited-period use of "selectable output control" technology for watching movies in the home. The technology disables video and audio outputs on set-top boxes to prevent illicit recording.

The lack of security has been a technical block to delivering first-run movies directly to consumers in the home. Currently, movies are available for people to watch in the home via video-on-demand three to four months after they appear in theaters and simultaneous or soon after they are released on DVD.

Calling the FCC's ruling an "important victory," MPAA interim Chief Executive Bob Pisano said "it is a major step forward in the development of new business models by the motion picture industry to respond to growing consumer demand."

But movie theater operators view warily any move by the studios to push up the showing of major Hollywood movies before they come out on DVD, fearing that it will undercut ticket sales.

"The FCC's decision is not surprising," said the National Assn. of Theater Owners. "Movie theft is a serious problem. The issue of the theatrical release window, however, will be decided in the marketplace."

Also unhappy with the FCC's decision are consumer groups, who says the disabling the video and audio outputs on the set-top box will limit the ability of people to record programming and force consumers to buy new equipment to watch movies on TV.

“We are disappointed that the [FCC] has succumbed to the special-interest pleadings of the big media companies and ignored the thousands of letters from consumers," said Public Knowledge, a Washington-based public interest group. "The order allowing the use of 'selectable output control' will allow the big firms for the first time to take control of a consumer's TV set or set-top box, blocking viewing of a TV program or motion picture."

Under the ruling, studios could use the technology for a window of 90 days, or until the movie is released in DVD, whichever comes first. After the 90-day window, the studio would no longer have the security protocol. The limited granting of the waiver was a concession to consumer groups who opposed it.