Why Disney is Fighting Parents

In an under-the-radar legal battle, the Walt Disney Company has gone on the offensive against American parents.

Joined by three other major Hollywood studios — Twentieth Century Fox, Warner Brothers, and Lucasfilm — Disney is teeing up against VidAngel, a technology company based in Provo, Utah, that enables families to filter the content of streaming movies in their own homes. The studios are demanding a jury trial to review the VidAngel technology.

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But file that request under, “Be careful what you wish for.” Shining more daylight on the fight over filtering may reveal a very different picture than the one the studios and their attorneys want to create. And asking a jury to judge a case that pits common sense and the clear intent of Congress against legalistic big-business protectionism might not end well for the studios. (VidAngel filed a counter complaint against the Hollywood studios.)

This story is anchored by the creation of the Family Entertainment and Copyright Act, “The Family Movie Act” (FMA), over a decade ago in 2005. Congress passed the law intending to clarify the rights of parents to use filtering in the privacy of their own homes to view film and TV content. The law stipulates that the movie has to be an “authorized copy” and the filtering must be done by “a member of the private household.” The explicit intent was to empower parents to avoid objectionable and offensive material by controlling the content of movies and television watched privately at home.

At the time, the Motion Picture Association of America and the Directors Guild actively opposed the law.

Having failed to stop filtering in Congress, the film industry is continuing its aggressive opposition to filtering with this lawsuit against VidAngel. By doing so, Disney and its allies are targeting their own customers.

Empowering parents by supporting their personal choices, and enabling a personalized viewing experience, is more than just the right thing to do for the movie industry.

VidAngel’s market analysis, using a specially commissioned survey of a random sample of parents nationwide, found that at least 47 percent of parents want online filtering services. Their service meets that demand by allowing parents to order movies online, and then choose from a menu of dozens of filters of objectionable content.

The process empowers individual choice: What one parent views as problematic, another might not. But in the privacy of their own home, the parent gets to choose. Want your children to watch “The Martian,” one of 2015’s Best Picture Academy Award nominees — but don’t want the kids to hear the almost 40 uses of profanity? VidAngel makes that possible. The company is so precise in its filtering that even a G-rated movie like “The Lion King” has 141 possible filters.

To meet the FMA’s requirement that filtering must be done on an authorized copy, VidAngel sells a copy of a movie to its online customer for $20. The company maintains a vault with actual physical copies of the movies, obtained on the open market. When the movie is sold, the physical copy is taken out of circulation and marked with a barcode connected to the individual consumer. After viewing the movie streaming online with the filters, the customer has the option to receive the (unaltered) hard copy of the movie — or sell it back to VidAngel.

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Yet the studios still argue that VidAngel is infringing on their copyright by streaming video without a license. But there’s a clever Catch-22 that the studios themselves have manufactured: Under a 2014 collective bargaining agreement with the Directors Guild of America, they are prohibited from agreeing to any distribution partnerships that involve movie filtering. So despite the fact that the Family Movie Act explicitly prescribes “content screening” to protect consumer conscience and preference, the studios and directors have locked up the content. This maneuvering by the industry is why VidAngel must sell the movies, rather than rent the streaming as other online services such as Netflix do.

Significantly, VidAngel would prefer to operate with a streaming license, rather than its current sell-stream-buyback business model. But the studios’ stance toward filtering is resolutely obstructionist. Prior to the lawsuit, VidAngel reached out to the Walt Disney Company in an attempt to forge a cooperative relationship and to buy product from them directly. The response was the current lawsuit.

The digital revolution enables more sophisticated, targeted, and seamless filtering technology.

The strange aspect of Disney’s filtering vendetta is how refusing to accommodate content screening undermines their own business. According to an InspireBuzz/National Research Group poll conducted for VidAngel, nearly 3 in 4 (72 percent) of parents in the values audience say they will “definitely” or “probably” use the service. Filtering actually expands the movie-viewer market and has tremendous profit potential for the studios. It’s really puzzling that they themselves have not moved into this market segment.

The future belongs to filtering. And the studios are the ones standing in the way of progress and individualized choice.

The latest data from the Digital Entertainment Group found that in 2014, for the first time, Americans spent more money on digital — $7.53 billion — than on hard copies of movie entertainment. As devices proliferate and become even more sophisticated, those numbers will keep increasing. The digital revolution enables more sophisticated, targeted, and seamless filtering technology.

As for the studios’ viewpoint on all of this, the studio plaintiffs said in a joint statement, “VidAngel is an unauthorized VOD streaming service, trying to undercut legitimate services like Netflix, Hulu, and iTunes that license movies and TV shows from the copyright owners. This case isn’t about whether filtering is lawful and we are not challenging legal uses of the Family Movie Act.”

Yet empowering parents by supporting their personal choices, and enabling a personalized viewing experience, is more than just the right thing to do for the movie industry. It’s the cutting-edge move, too.

Charmaine Yoest is a senior fellow with American Values.