VidAngel

History

VidAngel was founded in 2013 in Provo, Utah as a startup company with only six employees and launched in 2014. Since its launch, the service availability has expanded to Amazon Fire TV, Roku, Chromecast, Android TV, and Apple TV. In March 2014, VidAngel released a statement that it had moved its headquarters to Silicon Valley, California.

In December 2016, VidAngel initiated a Regulation A+ (mini initial public offering) securities offering, seeking to raise $5 million in investments to use in its lawsuit with the movie studios; it reached that goal in 28 hours, and ultimately raised over $10 million over the course of five days.

Also in December 2016, VidAngel CEO Neal Harmon announced that VidAngel would launch its own content creation studio in early 2017, and would begin releasing independent films to ensure it is able to continue to offer content to customers in case it was ordered to stop streaming studio movies during its legal battle with the studios.

Operations

VidAngel allows users to select filters that remove instances of objectionable content, such as nudity, profanity, and graphic violence, from videos. The customer purchases the film from VidAngel for $20, giving them the right to filter objectionable content. Once the customer is finished with the film, they can sell it back to VidAngel for $19 for standard definition or $18 for high definition, effectively paying $1-$2 for a 24-hour period. The sell-back credit decreases by $1-$2 per day that the film is not sold back. According to VidAngel, 96% of customers filter at least two instances from a film, and on average filter 17 instances per film.

Legal basis

VidAngel cites the Family Movie Act of 2005 (FMA) as legally protecting customers' right to use their service to filter films. They say that under the FMA, they are allowed to stream filtered movies to customers as long as the movie is an authorized copy watched in the privacy of the home, and no permanent filtered copy is created. VidAngel buys a physical disc of each movie they offer. They contend that the FMA provides an exemption from the Digital Millennium Copyright Act (DMCA) for the purpose of filtering, allowing VidAngel to legally decrypt discs.

According to VidAngel, they previously tried three different arrangements to legally filter movies in partnership with studios: teaming with Google to add filters to licensed films available on Google Play; buy a licensed movie on YouTube then apply filters to it; and buying discs directly from the studios. The studios rejected all three proposals, so VidAngel now buys licensed discs from retail stores, and spends about 1/3 of its revenue on discs.

Studio lawsuit

On June 12, 2016, production companies such as Lucasfilm, 20th Century Fox, Disney, and Warner Bros. filed a federal lawsuit against VidAngel for unlicensed video streaming, accusing them of violating the DMCA. The case, Disney Enterprises, Inc. et al v. VidAngel, Inc., was filed in the United States District Court for the Central District of California. VidAngel's defense is that members actually own a digital copy of the film when they stream it for $20 and VidAngel will buy it back for $19 and have a right to filter content under the Family Home Movie Act of 2005. VidAngel has filed a counterclaim against the companies and the preliminary hearing was held on November 14, 2016.

Judge Andre Birotte, Jr., in a ruling on December 12, 2016, granted Disney’s motion for a preliminary injunction, blocking VidAngel from streaming movies. Shortly thereafter, VidAngel requested a stay of the preliminary injunction, citing the irreparable legal harm they would suffer from not being able to operate while the case makes its way through the courts. VidAngel has vowed to fight the case all the way to the United States Supreme Court. VidAngel complied to the court's order to stop streaming on December 30, 2016.