How Movie Theaters Banished Telemeter, Herald of Both Netflix and HBO, to Canada

In the late 1940s, coin-operated televisions seemed like the wave of the future. Post-WWII startups with names like like Covideo and Televista, along with established players like General Electric, all developed pay-as-you-go receivers. Typically, these units were marketed for commercial use: hotels, hospital waiting rooms, laundromats, airports, and any other public space where folks might have some time to kill.

The premise behind this early coin-op technology was no different than a pay phone or a washing machine: drop the required coins in the slot, and the TV would power up, granting the viewer timed access to local stations. And, at least initially, these units made a killing: America was just developing its national TV addiction and bored consumers were more than willing to drop their lunch money into the slot. Commercial locations were so successful that industry insiders quickly started to wonder if the model could be replicated for residential use. Obviously, there was a question within a question: How could people be compelled to pay to watch their own TVs, on which broadcast channels were already free.

The answer was the same then as it is now: premium content.

Companies like RCA and Zenith began to experiment with broadcasting unique programs over dedicated broadcast frequencies. It was a sound idea in theory, but, in practice, it posed a big problem: The converters interfered with other signals. By installing a coin-operated box, companies were making it more or less impossible to watch regular broadcast TV. The FCC, which regulated all broadcast signals free or paid, wasn’t having it — so they refused to grant licenses to any new stations that interfered with existing stations.

But The International Telemeter Corporation, a small startup, devised a plan that would change the entire trajectory of pay-per-view TV. Instead of broadcasting over the air, the Telemeter would be a massive closed-circuit system. The coin-operated converter included a router that would let the viewer choose between broadcast channels and the closed circuit network broadcast through a wired coaxial connection. The new service would feature three channels of streaming content, playing unique programming on a 24-hour loop. Receiving a refreshed schedule every week, the customer could then deposit money directly into their Telemeter receiver and watch the program of their choice.

The closed-circuit Telemeter system was remarkable in two ways: first, because it was a proprietary closed-circuit system, Telemeter fell outside of the auspices of the FCC, which allowed for much more freedom. Secondly, unlike the RCA and Zenith models, the Telemeter converter didn’t interfere with any broadcast signals.

The technology was a great success, but there was still the issue of content. Luckily for Telemeter, one of their earliest and biggest investors was Paramount Pictures. Originally, the idea behind investing in the new pay-per-view service was so the movie giant could enter into the TV market. From Paramount’s standpoint, producing exclusive content for their new pay-TV service could offer similar profits at a smaller production cost.

Wanting to initially focus on news, sporting events, and a smattering of sitcoms and serials, Paramount and Telemeter installed their first closed-circuit network in Palm Springs, California in 1953. The testing sample was small (only a few dozen customers were connected in the initial phase) but the service was generally very well received. However, Telemeter struggled to come up with enough content for their three channels; licensing sporting events and producing quality content was more expensive (and slower) than foretasted. As it turned out, customers were more than willing to put their coins in the slot as long as they were being provided with fresh programming.

After a few months of what amounted to begging from Telemeter execs, Paramount finally decided to test movies on their coin-operated service. Given the quality of televisions in 1953, this was quite a risk. After all, movies were meant to be viewed in a theater, not just for the superior visual and audio quality, but for the experience. Would viewers really be willing to spend money on the ability to watch Hollywood blockbusters from the tiny, black-and-white screens in their living rooms?

Yes. Almost 100% of Telemeter’s customers slid their $1.25 in the slot to watch the world premiere of the not-as-transphobic-as-it-sounds Ginger Rodgers and William Holden film Forever Female, live from the Plaza Theater. The test was so successful that Telemeter and Paramount completely revamped their Palm Springs strategy: Instead of pushing original TV content, Telemeter would focus on sporting events and first-run Paramount films. By 1954, they expanded their test market to 154 households, with an average monthly take of over $15.00 per unit.

Word of the Palm Springs tests began to spread, and soon, calls came from across the nation urging Telemeter to expand into new markets. 1950s America was more than ready to get their nuclear-age Netflix and chill on. According to a 1955 Gallup Poll, when asked if the cost was the same, respondents overwhelming said they would rather watch Hollywood releases from the comfort of their own homes.

Ironically, while Paramount’s decisions to start streaming movies on closed-circuit networks would eventually pave the way for premium cable services like HBO and streaming movie services like Netflix, it ended up being Telemeter’s downfall. Movie theater owners, competing movie studios, and even broadcast TV stations were apoplectic. Telemeter was subject to several lawsuits and Paramount was even hit with an anti-trust lawsuit for preventing other studio’s films from being played on the Telemeter channels. Between the legal costs, and court decisions that both temporarily halted the streaming of films, and put closed circuit systems under the FCC umbrella, Telemeter shuttered their Palm Springs experiment.

While Telemeter was forced to pull out of the U.S., they revived the service in Canada, outside of FCC regulation and U.S. antitrust laws. With over 1,000 initial subscribers, the service continued offering first-run Paramount films, streaming sports, exclusive TV dramas, documentaries, comedy specials and even Broadway shows and operas. At it’s peak, the service would have almost 7,000 paying customers, but ultimately, there just wasn’t enough profit to justify the large expenses of exclusive content and the infrastructure needed for the closed circuit networks.

While Telemeter didn’t invent the technology, their idea (especially the gamble to air first-run Hollywood releases) for broadcasting paid content paved the way for HBO GO, pay-per-view, and streaming services like Netflix. Sadly, the service was discontinued in 1965, less than a decade before deregulation cleared the way for basic cable networks, and premium content providers like HBO.