March 28, 2017
Disney v. VidAngel: Pious Pirates or Fighting for Filtering?
The on-demand economy has arrived. More and more companies are dedicating their business to giving people what they want, when they want it. In terms of watching movies and television shows, various on-demand subscription streaming services such as have become the norm in many households, and popularity of subscription streaming services has steadily increased over time.
Beyond consumer desire to watch television and movies on demand, there are some who would prefer to control the content of the programming they and their families consume. What if instead of avoiding a movie or television show altogether, a consumer wants to watch exactly they want, when they want, with the ability to skip scenes and mute language they find objectionable? The most recent company to attempt to offer a video streaming service with filtering capabilities is VidAngel, with the tagline of “Movies for One Bleeping Dollar.”
VidAngel works a lot like a digital version of Redbox with a virtuous twist. Consumers rent and stream movies for one dollar per day, and select from an array of filters to edit out language, violence, and nudity the consumer does not wish to see. VidAngel quickly attracted the attention of studios, and was hit with a copyright infringement lawsuit, led by Disney Studios, in June 2016. VidAngel claims the wholesome high ground, arguing that the Family Movie Act of 2005 (which Congress enacted in the midst of a similar copyright suit involving the now defunct CleanFlicks) allows for the creation of filtering technology so that private owners of authorized copies of copyrighted works can control what they view in their own homes. VidAngel further claims antitrust violations on the part of the Hollywood studios, claiming the studios entered into secret contracts with the Directors Guild of America and streaming companies like Netflix to ensure that no one partnered with filtering companies, thus blocking filtering companies like VidAngel from ever being able to obtain licensing rights for the purpose of streaming filtered versions of major films.
VidAngel’s Family Movie Act defense is thin at best, and has been discussed in other media outlets. In a nutshell, VidAngel’s invocation of the Family Movie Act only works if they sell, not rent, the movies they are streaming. While VidAngel claims to do so, consumers are expected to then invariably “return” the movies within a day or two for a refund that results in having “owned” the movie for a dollar a day. In short, VidAngel will have a hard time arguing successfully that it is anything other than a rental service.
What of VidAngel’s second claim, that studios are in cahoots to keep filtering companies out of the market altogether? When the California federal district court granted (and the Ninth Circuit affirmed) an injunction against VidAngel in December, the opinion relied partially on “the presence of market alternatives” in the form of ClearPlay, VidAngel’s main competitor. That ClearPlay existed was enough to prove that the public would not lose access to filtering services were VidAngel to be shut down.
In a new twist, on February 7th VidAngel released a press release alerting the public to the fact that ClearPlay has not been filtering any new content since September 2016. As noted by VidAngel in its press release, it certainly seems that ClearPlay was not such a great market alternative after all if it took months for anyone to notice the company was not even streaming any new content, and that the judge’s reliance on the existence of ClearPlay in issuing the injunction may have been misplaced. Only after VidAngel sounded the alarm did ClearPlay issue a press release stating that the hiatus on streaming new content is only temporary and a result of “technical issues” which will hopefully be resolved soon.
While VidAngel’s cries of Hollywood foul play against filtering services at first seemed far-fetched, ClearPlay’s current technical difficulties are enough to give one pause. VidAngel first started out as a service which functioned very similarly to ClearPlay, as an add-on to GooglePlay and YouTube. The company encountered issues parallel to what ClearPlay claims to be facing now, and were eventually sent a cease and desist letter by Google, which led VidAngel to switch business tactics and embark on its convoluted sales-but-actually-rental approach to filtering.
What remains to be seen is whether this new development with ClearPlay will sway the court into viewing the pending litigation through the lens of VidAngel’s antitrust claims. In the meantime, perhaps consumers would be interested in giving Disney’s convenient (albeit functionally very different) internet filtering device, Circle, a try.