Cinemas at war with studios over plan to screen films in homes

Cinema chains could refuse to show major films in a showdown with two leading studios over home viewing.

Warner Brothers and 20th Century Fox are expected to soon launch a premium online video-on-demand service, allowing people to watch movies on their TVs and computers a month after they are first screened.

Cinema companies are outraged by the proposals, which would greatly reduce the standard gap of four months between cinematic openings and films becoming legally available for the small screen. They believe it would greatly cut into profits by reducing their time window for luring audiences into cinemas and have warned that it would cause many cinemas to close down.

Their cause is supported by 23 of the world's most successful directors – including James Cameron, Kathryn Bigelow, Guillermo del Toro and Michael Mann – who attacked the plans in an open letter published in Hollywood trade magazine Variety.

Last year, the UK's three largest cinema chains announced they would refuse to screen Tim Burton's film Alice in Wonderland due to Disney's plan to release the movie on DVD a month earlier than usual. Although Cineworld and Vue eventually relented, Odeon went through with the boycott.

The prospect of this occurring on a much wider scale is looking likely, with cinemas in the US already cutting the number of promotional trailers they are showing for both studios.

Under the studios' scheme, which will be launched in the US, customers would pay $30 (£18) to rent a single movie digitally. Though this is a relatively high price for an individual film, they believe it is cost-effective for families for whom the convenience of watching from the sofa rather than the cinema would be a prime incentive. There is also speculation that Google will sign deals with Sony and Universal to stream films through YouTube in competition with iTunes and Amazon.

Californian satellite broadcaster DirecTV has already launched its own premium video-on-demand service, showing the Sony-made film Just Go With It starring Jennifer Aniston just nine weeks after its cinema debut. It made no recognisable impact on the film's big-screen performance, but cinemas are nevertheless concerned that in time it will be harmful to business.

Studios are pursuing the idea of video-on-demand to combat falls in DVD sales and rental revenues, now 40 per cent lower than at their peak. It would also reduce the attraction of pirated discs and downloads.

Not all major studios are in favour of the plan. Paramount said recently that backing the scheme could make their films less attractive to cinemas when they are deciding whether to show competing titles instead.

James Cameron, the man behind the two biggest grossing films of all time – Avatar and Titanic – has been a leading critics of the plans. Leading the open letter from fellow directors, he wrote: "The cinema experience is the wellspring of our entire business, regardless of what platforms we trickle down to. If the exhibitors are worried, I'm worried. We should be listening to them."