The Movie Deal Netflix Wants to Make — And It’s Not Day-and-Date

Netflix Day and Date Bomb
Gary Niell

Ted Sarandos wants to secure rights to films hot on the heels of their theatrical bows

“Why not premiere movies on Netflix the same day they’re opening in theaters?” Ted Sarandos posited in a keynote speech at the recent Film Independent Forum.

The streaming service’s chief content officer stopped short of saying he was actually pursuing such an arrangement, but make no mistake, this was no hypothetical. Sarandos is actively seeking a deal to secure financing for at least one, if not an entire slate of films budgeted well above indie levels, according to sources.

While releasing those titles day-and-date with cinemas would be a tall order, Sarandos wants them 45 days or even 30 days after their theatrical bow.

Netflix declined comment.

That may be a tough get, considering exhibitors are not likely to relax their long-held hard line against anything that encroaches on their exclusive release window, which enables theaters to play movies for at least 90 days before they can be seen on other platforms.

Sarandos clearly understands that, and isn’t happy about theater owners’ intractability. He accused them of stifling innovation, warning that “not only are they going to kill theaters — they might kill movies,” a broadside that is drawing an equally vociferous response from exhibitors.

“It’s my opinion that if we do not keep the windows as they are, theaters won’t have a chance,” said Larry Allen, president and CEO of Allen Theaters, a 108-screen circuit based in New Mexico. Sarandos’ proposal would “put us out of business,” he added.

A week after floating the day-and-date notion, Sarandos struck a very different tone on the idea, though he still held out the possibility of getting into the theatrical game.

“I wasn’t calling for day-and-date with Netflix,” he said in an appearance at a Bloomberg event Nov. 4. “I was calling to move all the windows up to get closer to what the consumer wants.”

While insiders say it’s unlikely Netflix could surmount the significant obstacles that stand in the way of altering traditional windows, they acknowledge it’s not impossible. The streaming service may represent the best hope for reviving what’s been called premium VOD, a prospect that is starting to seem newly enticing after an overcrowded summer hurt the longevity of pictures like “World War Z” and “Man of Steel.”

Sources privy to Sarandos’ thinking say he is encouraged by how original TV programming has moved the needle for Netflix, and frustrated by the lack of demand on the service for movie titles supplied through various output deals with companies like Relativity and the Weinstein Co. He’s hoping that by accelerating the windows on certain titles he can work the same magic with movies that he has with TV hits like “House of Cards.” It’s unclear whether he intends to charge Netflix subscribers a separate fee on top of the $7.99 a month they currently pay.

In his original speech, Sarandos suggested going day-and-date on a “big” movie, though how expensive a production he’s really talking about is another murky matter. While indie films often go the route of VOD day-and-date release — and in many cases, even pre-theatrical release — “big” to the Netflix chief likely means movies that are in the $15 million-$30 million range, where the proceeds from foreign pre-sales alone can considerably mitigate risk.

Given its own reluctance for deficit financing even with its TV properties, Netflix would almost certainly have to partner with a secondary source of financing that shares the company’s appetite for risk-taking to leverage such a plan.

Collapsing release windows continue to be such a hot-button topic in Hollywood that studio executives are loath to address it on the record for fear of offending exhibitors, their longtime partners in shared box office revenue. John Fithian, the president of National Assn. of Theater Owners, refused to be interviewed for this story.

Major studios don’t have reason to engage in conversations with Netflix yet, but Netflix may need a studio on its side in order to gain leverage and credibility on the issue. If the streaming service were to go forward and produce films on its own, movie theaters likely would balk at showing them. Larger chains such as AMC Theaters and Regal Cinemas don’t show films that are released on VOD the same day as theatrical.

“I think there would have been a better chance at that prior to (Sarandos’) keynote address,” quipped Tim League, CEO and founder of Alamo Drafthouse Cinemas, an indie chain with screens in Texas and New York. “If it were a good movie we thought we’d have an audience for, we’d play it. We’ve had great success with some VOD titles.”

But some studio execs are privately cheering for Netflix even as they concede the company’s odds are slim of gaining traction on shrinking windows.

The studios feel that Netflix may be the best partner available for premium VOD, because while pay-TV distributors’ VOD platforms play second banana to their linear channels, Netflix has a proven ability to drive eyeballs to an on-demand attraction.

Some say they saw all along that Sarandos was talking a big game on day-and-date, and add he might really be aiming for getting a title after 30 or 45 days in theaters, the latter period reserved for hotel-based VOD, where top titles can go for $20 per rental.

While exhibitors don’t want the time new releases spend exclusively in theaters curtailed, a 45-day window would also inflame outlets that typically get the homevideo window to themselves, whether that’s Walmart or Apple’s iTunes.

Since the studios have never been willing to experiment, there’s no research on the effect a more compressed window would have on a film’s lifetime cume.

According to Doug Stone, president of Box Office Analyst, 96% of theatrical box office for wide release films this year has come from the first six weeks (or 42 days) of a movie’s wide release, up from 93.9% in 2006. The average window is still 120 days, and many agree with Sarandos that there’s no good reason to keep films away from consumers’ homes for so long.

“Whether (the 90-day window is) worth fighting for is still a question in my mind,” says Stone. “Everybody predicted the doom of theatergoing when videotapes were out and permeating the market. What happened is box office kept increasing, and there was more funding for the production of films.”

In the end, Netflix may just make a theatrical deal by going the traditional route, said Stone, debuting new movies in theaters like everybody else. “This is a business,” he added. “It’s not a philosophical argument.”

(Andrew Stewart contributed to this report.)

Filed Under:

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 28

Leave a Reply

28 Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

  1. Not the public’s problem that a better service will put an antiquated one nearly out of business. You have no right to have a business be successful. It has been going on as long as time. Recently, streaming music > CD’s > tapes > records.

    Advice, create a system where the movie available for streaming is significantly more expensive than the theatre’s playing it and people will still come to the theatre. And maybe try to not sell a bottle of water for 6.00. You’re monopoly is in decline.

  2. angel says:

    So Netflix wants to stream new movies, but when I want to watch a movie that is older than dirt I cant seem to find it. Even finding a T.V. show that is old is hard to find on there. If they have a hard time getting rights for a movie or show that is old, how do they think they can get the rights to something almost brand new?

  3. rickster534970 says:

    Yes, the movie theaters would be out of business if they agreed to day-and-date. But the filmmakers and studios would get their hands on a very much bigger pie, in my opinion.

    Most everybody and their dog (with exceptions) would prefer seeing a movie on large-screen home theater with loved ones rather than on a crowded hall with strangers.

    Day and date VOD would entice a lot of people who are not going to the theaters to purchase just released movies online, worldwide, including me.

    Plus, if the VOD platform is a studio owned one, they get to keep 100% of the revenues, not 20%-50% or less.

  4. This is the same fear that reared it’s head when the lawsuits over tape rentals started in the 70s and when Netflix began offering the subscription model. Let’s get more turnover in the theaters, more movies getting in, and closer windows. Smart exhibitors will partner with VOD / download providers to allow consumers to purchase while the iron is hot. #InnovateOrDie

  5. Wesley says:

    Kevin Smith would be a perfect fit for this kind of deal. He would bring a ravenous fan base and could easily work within the confines of a $15-30 million dollar budget.

  6. David K says:

    Netflix has a poor movie selection on Instant. It’s all TV. TV’s “Golden Age” is showing signs of wear so of course he’s worried. I did appreciate some of the Weinstein’s foreign films coming up so quickly on the site after their (extremely limited) theatrical runs, but would never pay a separate fee for this type of thing.

    • Steve says:

      True, since the Starz deal lapsed the shelves are filled with low quality assets. Why? Because high quality assets cost a lot of money…and the SVOD biz model Netflix has is totally broken, doesn’t give them the cash needed to license the top quality assets. They really lucked out with the Starz deal, paying about one-tenth what Comcast, TWC (et.al.) were paying for those movies…which is one reason that deal did not get renewed.

  7. Rayn says:

    MOS & World War Z weren’t hurt by too many big films. They were hurt by not being very good overall.

  8. Marko says:

    The future is all movies, all series, all content available directly, wherever you are. If it goes on the cinema on friday, you can watch it at home the same day. And people would pay, people would pay plenty for this possibility. Those who cant handle change, they die.

  9. Ashley says:

    I think this is about the fight to preserve the culture of movie-making. They make movies expecting you to seem them in a theatre with great sound and screen, and film them according to this. A movie isn’t really fully experienced unless it’s in the theatre and is the main focus of our attention. Let’s face it, the average home theatre will never be able to recreate the movie theatre.

    • Steven says:

      Which is exactly why moving the window should not affect the theaters much. People go to a theater for the experience, not because they can’t wait a few months to watch it at home. Technically, movies are available on the internet the same day they are released in theaters anyway, but only for pirating. Many pirates would pay for the movies if it was an option. That is simply lost business.

  10. murphss says:

    netflix US is a joke. don’t waste your time. download the hola app and switch to the uk version from the corner.

    you’re welcome

    • Kevin says:

      I get the very distinct feeling that you have no idea what is and what is not available on Netflix in the US, or Hulu for that matter. Your own country has broadcasting rights restrictions that we across the pond do not. Netflix US outperforms Hulu for two big reason: Quality and Variety.

    • jon says:

      do you mean hulu? and what system is this app on and what corner is this switch in?

  11. Hans Dieter Ulrich says:

    You can get all the programming you want without waiting for a theatrical window – it’s called TV. No one needs to ask anyone for permission from the theaters – just do it. If Ted wants to release $50-100m “movies” day and date with theaters – just do it, it’s called television and its been around for a long time. The theaters can book them or not – as Amy says, its should be a free market and they can choose …. freely. If theaters are meaningless to movies, then why do you even care what the theater owners say? Just do it – it’s called television….wait, that’s what Netflix is already doing. So why is this even a controversy? Netflix needed no permissions to air House of Cards and they need none to air their $50-100m “movies” when they produce them — just do it already. It’s called television and as an industry it dwarfs the film business so why does anyone care what the theaters say or do?

    • Makayla says:

      Netflix MADE House of Cards. They can’t just air anything they want. All of those movies require licenses from the companies that own the movies. Netflix can’t air without permission without being sued since it breaks copyright and ownership laws. You have no clue what you’re even talking about.

  12. sara says:

    yeah…believe this when they streaming becomes something other than B movies and “new” movies from 2 years ago.

    • Kevin says:

      And the vast majority of HBO, Showtime, Starz, Cinemax etc is garbage movies too. Welcome to premium entertainment services in the world of patchwork exhibition/streaming rights.

    • Makayla says:

      New movies are on all the time, and good ones. No, you’re not going to get EVERYTHING. If you wanted to get everything right away as soon as it comes out then you need to BUY the movie, or invest in cable television.

  13. Joey Simpson says:

    They need to get Starz back

  14. Anne DeAcetis says:

    Absurd the blustering over the suggestion to reduce or eliminate (antiquated) theatrical windows. Fithian is incensed, but all Sarandos is doing is daring NATO to compete by innovating, like everyone else. I can order dinner from restaurants to be delivered to my house every day. Do I still go out to restaurants? Yes. Because the service is better, the atmosphere is more stimulating, the food is hotter/fresher, the experience is premiere. NATO can cry that doing away with theatrical windows would kill movies, but that’s only assuming the cinema stays exactly as it is now…crappy and unimaginative. NATO can fight modernity or they can focus on improving the tragically lousy in-theatre movie experience and innovate. If they follow what I consider friendly advice from Sarandos, they should be able to offer something that Netflix could never rival through access alone. See my open letter to Fithian on this subject here: http://bit.ly/1aw5p5z

    • Makayla says:

      I agree with you. Currently, going to the movies isn’t a great time. Everything is over priced, people talk and use their phones through the movie. As is, I would MUCH rather watch from home.

  15. bob says:

    but, you have to wait 1-2 months to see some dvd titles – how can they explain that – same day service for theatrical releases but, a 1-2 month delay on disc rentals

  16. Amy says:

    I don’t think it would kill movies to retain the exclusivity but I remember the days of standing in line for hours to get tickets to premiere night — that doesn’t happen anymore that I can see. Plus, as a parent of a young child, I find that I typically have to wait for the release on another platform anyway. Charge more for it via other platforms while it’s still in theatres, if it’s a reasonable increase people would pay.

  17. denise says:

    would love that!!!
    who goes to theatres any more….

    • sara says:

      I do and so do a lot of other people

      • Makayla says:

        @Robert maybe for some people. I prefer movies in the comfort of my home. If you can’t sit still and pay attention through a movie at home, then you can’t do it at the theater either.

      • Robert says:

        “Who goes to theaters anymore?” Millions of people per year, that’s who. The first comment hit it right on the nose. At home you’ll be distracted, cell phone, while on facebook, while kid is running around. Bad idea. Sounds good, but it will not go over well. There’s something about the silver screen that brings the movie to life in a way your 50in plasma can’t. No one wants to make a movie with your 50in plasma in mind.

More Biz News from Variety

Loading