Netflix in Theaters: Why Traditional Cinemas Are Holding Up the Movie Business

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On October 26, 2013, Netflix chief content officer Ted Sarandos argued before a group of film industry insiders—producers, buyers, directors—who had gathered to hear him give the keynote at that year’s Film Independent Forum in Los Angeles, that the movie business will soon die unless cinema owners embrace the distribution model Netflix has championed. Ideally, Sarandos would like to see all films—from big-budget summer blockbuster hopefuls to small, independent documentaries—released simultaneously in traditional movie theaters and via Netflix streaming. In the nearly three years since Sarandos’s chiding speech, theater owners have still not adopted the Netflix model; but neither has the movie business died as a result.

Day-and-Date

When and where a movie is distributed after its initial cinema release is an issue as old as cable TV and videotape. Traditionally, movies with theatrical releases were not made available on premium cable movie channels (such as HBO or Showtime) or physical home media (like VHS or DVD) for at least three months after the movie’s debut. This window of exclusivity protects the theater owner’s investment by limiting the viewing choices for moviegoers. Netflix would like to shrink the window to nothing. It advocates for so-called “day-and-date” releases, wherein movie viewers would have the option of seeing a newly released film at home on Netflix or in the theater. As Sarandos says, “Just give the viewers what they want.”

For their part, the theater owners—who have been shamed as greedy, non-democratic and behind the times—claim to be protectors of the “movie as event.” John Fithian, president and CEO of the National Association of Theatre Owners, views the “window” debate to be one of life or death—for movies and theaters. Critical from the beginning of Netflix’s new film distribution plans, Fithian wrote in Variety magazine in early 2015 that “one of the biggest mistakes Hollywood made was allowing subscription services and cheap rentals to come early in the process and devalue movies in the minds of consumers.” Sarandos and Fithian agree that the end of movies as we know them is coming—but only if the other guy gets his way.

Qualifying Runs

Netflix’s relationship with movie theaters is complicated by the fact that, despite its disruptive, we-know-what-the-users-want attitude, the streaming network still needs the cache of an actual movie theater run in order to validate the quality of its Netflix-branded features. Unlike with the Emmy awards—which has honored Netflix’s TV series House of Cards and Orange Is the New Black, despite the fact that neither aired on traditional linear or cable TV—the Academy of Motion Picture Arts and Sciences requires that, in order for a film to be eligible for an Academy Award, it must have shown at a theater taking paid admission in Los Angeles County for seven consecutive days. Until Netflix’s millions of subscribers collectively decide that old-school merit-based honors don’t matter anymore, Netflix will seek out projects that can win awards and will endeavor to place them in competition by getting them shown in theaters.

Such “qualifying runs” have been orchestrated for the socially worthwhile Netflix documentaries Virunga and The Square (both nominated for, but failing to win, the Academy Award for best documentary feature) and the hard-hitting child-soldier feature film Beasts of No Nation, starring Idris Elba. In other cases, Netflix chose not to pursue even a short “qualifying” theatrical run. The first picture to come out of Netflix’s four-film production deal with comedian Adam Sandler, The Ridiculous 6, debuted via streaming in December 2015, was never seen in theaters and was roundly panned (receiving a 0 percent score on Rotten Tomatoes) even while it rose to the top of Netflix’s most-watched list. Likewise, Special Correspondents with Ricky Gervais, The Fundamentals of Caring with Paul Rudd and Selena Gomez, and the long-awaited sequel Pee-wee’s Big Holiday—none were screened outside of select film festivals.

Going IMAX Big

This bifurcated arrangement—streaming-only vs. streaming-plus-qualifying-run—may make sense for indies and documentaries, but Netflix’s feature film ambitions have forced a conflict with theater owners over larger films they hoped to show more widely. In February of this year, Netflix released Crouching Tiger, Hidden Dragon: Sword of Destiny, the sequel to the 2000 breakout martial arts film Crouching Tiger, Hidden Dragon. Netflix had originally wanted to make a big splash with the sequel by simultaneously releasing it in IMAX theaters throughout the U.S. and on Netflix streaming. But immediately upon hearing about Netflix’s day-and-date release plans, theater chains AMC, Regal Entertainment Group, Carmike Cinemark Theaters and Cineworld refused to go along, even though Netflix had already received support for its strategy from the IMAX organization itself. In the end, Sword of Destiny opened on only a dozen or so IMAX screens.

Not all theater owners reject Netflix’s ideas about film distribution. Indeed, while the big theater chains refused to show Beasts of No Nation because of its day-and-date release, others had no problem with it. Tim League, CEO of Alamo Drafthouse, a small food and film theater chain, told Variety magazine, “I don’t look at myself as a competitor to Netflix. I think that argument is a little bit of a red herring. I watch a lot of movies at home, but there comes a time where I want to get out of the house. I look at cinemas as one of those options that compete with restaurants or baseball games or all of those things I can’t do in my living room.” Alamo Drafthouse showed Beast of No Nation, even while it was available to Netflix’s millions of subscribers for streaming.

A New Normal?

Will Netflix succeed in winning over theater owners, thereby making its movies more widely available? The fates of two soon-to-stream Netflix feature films will be a good test. On July 29, Netflix will begin streaming a film the company bought just before its debut at this year’s Sundance Film Festival. Tallulah, the story of a lost young woman who believes she is doing good when she kidnaps a baby from an irresponsible mother, is directed by Sian Heder (a writer on Orange Is the New Black) and stars Ellen Page and Allison Janney. Reviewers have praised the women’s performances, even if the remorselessness of Page’s character stretches credulity. Netflix has plans to show Tallulah at theaters in five U.S. cities, including New York (at Village East Cinemas) and Los Angeles. The day-and-date release will most likely not include screens operated by the large chains that have previously boycotted Netflix films.

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The Little Prince will be released in select theaters and on Netflix in the U.S. on August 5.

Next up for Netflix is a new 3-D animated adaptation of Antoine de Saint-Exupéry’s beloved children’s book The Little Prince. Netflix became a savior of sorts when, in March 2016, Paramount Pictures abruptly canceled its plans to release The Little Prince in American theaters. Seeing an opportunity, Netflix snapped it up. The film, which features the voices of Jeff Bridges, Rachel McAdams, Marion Cotillard and Benicio del Toro, had shown in festivals in 2015 and 2016 and was released in theaters in France, Canada, U.K. and other countries. In the U.S., The Little Prince will be released on Alamo Drafthouse movie screens and via Netflix streaming on August 5.

Many more Netflix feature films are on the horizon. Some, like War Machine with Brad Pitt and The Discovery with Rooney Mara and Robert Redford, might, with a traditional distributor, find wide theatrical success. But with Netflix, they will most likely be screened like Tallulah and The Little Prince, in a limited way. Does Netflix’s involvement with these projects somehow devalue them as cinema? Is their inaccessibility, caused by the large theater owners’ refusal to “innovate,” doing harm? Consider: If Netflix had been the company to distribute the record-busting Star Wars: The Force Awakens, would the theaters have capitulated? Would the public have stayed home to watch the movie premiere on Netflix? Or would they have braved the crowds, sticky floors and $11 popcorn in order to see the film on the glorious big screen?

As Netflix continues to push its theatrical window-smashing day-and-date agenda, the line separating the movies we want to see in the theater and the ones we are satisfied seeing exclusively at home will become better defined. Netflix is not going away, and theaters like Alamo Drafthouse believe there’s little downside to experimenting with the day-and-date release format. But we can also applaud the larger chains for wanting to go slow. Even if our homes are capable of hosting a near-cinema experience, there’s something magical about the communal experience of the movie house. There’s room for many in this industry. Here’s to not killing off movies, theaters or the $9.99 Netflix subscription.

Feature photo: iStockphoto