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The studios say the software, written by a Norwegian teenager, is a piracy tool.
The government in China has recognized that there is a piracy issue, and claims to have taken steps to cut down the level of piracy.
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The service must also prove to content providers that Joost really is a "piracy-proof Internet platform," a claim made in one of the company's press releases.
"It is not clear from the information available to date whether this was a piracy event," he said.
If the entertainment industry's legal arm gets out of control, they say, they could deem almost anything to be a piracy site.
"Even if it does launch, if Screening Room proves to be a piracy issue, it won't last for long because studios won't stand for that".
In his first substantial interview since his arrest at his mansion north of Auckland, New Zealand, on 20 January, Dotcom denied that he was a "piracy king".
"Streaming technology is very attractive in theory to publishers as it's a piracy buster," said Giancarlo Varanini, senior editor at the news site Gamespot.
CSS is an anti-piracy scheme for DVDs that uses encryption to protect the disc's contents.
"Any new legitimate place to consume music is a fantastic anti-piracy tool," Wells said.
That seems implausible, and – tellingly – his new site is already a piracy hub.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com