It's been a long-standing matter of contention as to the right to alter a piece of artistic work. Generally speaking, if someone is to make alterations in a manner consistent with added artistic value, they have far more leeway than might be given otherwise under intellectual property law. But what if you're just removing things from said work?
The concept of "filtering" was at the heart of a lawsuit brought against streaming service VidAngel by several of the major film studios. As reported in Variety, VidAngel marketed to "faith-and-family" audiences by offering "filtered" versions of popular films on their service, with things like sex and drugs and violence edited out.
Setting aside questions as to whether or not those films would still make sense without those plot points, VidAngel didn't actually have the rights to any of the films it was "filtering"; instead, it was ripping DVDs and offering the edited versions to customers for rental. As you might imagine, movie studios did not look kindly on such an arrangement, and Disney, Warner Bothers, Fox and LucasFilm banded together to sue the service, ultimately winning a $62 million judgment in 2019.
VidAngel argued in its defense that its "filtering" was permitted under the 2005 Family Movie Act, but a look at the summary and text of that bill shows that the measure provides for a limited use of copyright exemption for edited works for private home viewing, and presumably not a entire business built around full, unlicensed movies.
The "filtered" streaming business wasn't as profitable as $62 million, it would seem, as VidAngel had to enter into bankruptcy proceedings to try and settle the debt, which it ultimately did for $9.9 million. Those proceedings allow VidAngel to reorganize and continue its business, which now seems focused on content from Amazon Prime and Netflix. Given that they're still operating without licensing the works from either service, it seems only a matter of time before they're back in court for another uphill legal battle.
Which raises the question as to whether all of this is worth it for VidAngel. They're offering something to what customers they have, but a model that runs afoul of the law doesn't seem sustainable in the long term. And ultimately consumers have the choice to avoid works they deem objectionable, just as studios choose to put out movies with the rating and content they choose for the audience they desire. VidAngel and its subscribers unfortunately can't have their cake and eat it too — provided cake isn't considered unacceptable.