Theater Owners ‘Might Kill Movies,’ Warns Netflix’s Sarandos

Content chief calls for big movies to bow on Netflix day and date with theaters

Netflix chief content officer Ted Sarandos launched a blistering attack on theater owners for stifling innovation, warning in a speech Saturday that they “might kill movies.”

What’s more, the exec called on the owners to allow big movies to open via Netflix day and date with their release in theaters, in his keynote (see full video here, and above) at the Film Independent Forum in Los Angeles.

Addressing the ill-fated premium VOD model, Sarandos  said theater owners were  the problem.

“Theater owners stifle this kind of innovation at every turn,” he said. “The reason why we may enter this space and try to release some big movies ourselves this way, is because I’m concerned that as theater owners try to strangle innovation and distribution, not only are they going to kill theaters–they might kill movies.”

Sarandos was alluding to exhibitors’ resistance in previous years to any digital release of movies that would impinge on their own windows, as when Universal nearly changed the traditional distribution strategy for the 2011 movie “Tower Heist,” only to back down after considerable pressure. Studios have since largely disavowed premium VOD, though smaller independent films have been released day-and-date with increasing frequency in recent years.

But he stopped short of criticizing the studios. “I don’t blame the studios for what they’re doing and I don’t fault them, because the studios are always trying to innovate,” he said.

Sarandos turned to statistics from this summer’s box office, pointing out that though more movies with a budget of more than $75 million were released this summer than any summer before, theaters saw only a six percent lift in attendance.

Just days after indicating on Netflix’s third-quarter earnings call his interest in getting into the movie Sarandos went a step further today when he suggested releasing “big movies” on Netflix the same day they appear in theaters.

“Why not premiere movies on Netflix the same day they’re opening in theaters? And not little movies. There’s a lot of people and a lot of ways to do that. But why not big movies?”

“Why not follow with the consumer’s desire to watch things when they want, instead of spending tens of millions of dollars to advertise to people who may not live near a theater, and then make them wait for four or five months before they can even see it?” he added. “They’re probably going to forget.”

This comes after Monday’s third quarter earning’s call, where Sarandos, seeing the success of original series like “House of Cards” and “Orange is the New Black,” said Netflix expects to double its original programming spending in 2014 and include original movies. Though he couldn’t quantify how much original series helped boost business, he said “it definitely helped.” Netflix currently has more than 31.1 million customers.

Sarandos also hinted plans at a third season of “House of Cards,” which is currently in its last week of shooting season two.

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  1. Bill says:

    I propose that the movie studios release their films into the theaters. Then 30 days later have the movies available via Netflix, Itunes, Google Play, etc. for a rental fee of $15.00 to $20.00. That way the movie studios and movie theaters could receive their revenue.The movie studios could also receive their additional revenue from Netflix, Itunes, Google Play, etc.
    Movies that are independent features could have a smaller window of 2 weeks in order for them to be able to be nominated for various awards(Oscars, etc.) then they could be put on VOD platforms. As I read that a film needs to be shown in a movie theater in order to be nominated for various awards(Oscars,etc.).
    By having this new system it could allow the movie studios to not have to pay additional advertising fees when dealing with the additional advertising that is needed for when a movie is in the theater and then gets released on VOD and DVD/Blue Ray.
    The movie theaters would make money as they would have a 30 day window before a film is alternately released. Also if a movie under performs in a theater then they can replace it with another movie(either a new release or increase showtimes for a popular movie).

  2. I would love to see day-and-date option of purchasing the Blu-ray of a film at the same time it comes out in the theater–especially if it’s a 3D Blu-ray. The only reason I would even go to a theater is to avoid spoilers. Otherwise, the theater experience is usually over-priced and miserable due to inconsiderate patrons. Also, you need to get there early, and then need to sit through a bunch of spoiler-filled trailers for films you already know you are going to eventually see. For the cost of less than 2 tickets I can purchase the Blu-ray and own it and watch the film as often as I want–and I don’t have to worry about people chatting or using their flashlight of a cell phone in the middle of the movie. Watching at home is a far more enjoyable experience all around! I hardly ever go to the theater anymore–I just wait the 3 months for the blu-ray to become available.

  3. Theater owners can cry all they want (as can the President and CEO of NATO, John Fithian), but Netflix/Sarandos are not to blame for the tragically lousy in-theatre movie experience. Fix that, and streaming movies remain just one channel for getting content to the customers who, um, are dying for it to arrive in their lives in ways they can actually enjoy. Is that complicated? And are you listening, NATO? Fix the in-theatre experience. Fix the in-theatre experience. Fix the in-theatre experience. Nothing should be able to compete with the big screen when it comes to loving the movies. More in my open letter to Fithian/NATO here. http://bit.ly/1aw5p5z

  4. Sarandos IS a pompous prick, but that’s why he’s so successful. That said, he is absolutely right about the theaters. The last great holdout WAS AMC. Now that the Chinese consortium Wanda has taken over every AMC screen in the world, watch the quality of AMC Theaters take a nose dive too. It HAD been a classy operation under the King of Son of a Bitch’s, Stan Durwood even after his death. He’s still spinning in his grave from the sale, but the decline is a given. I was a great theater movie fan myself, but no more. Now I ONLY go to a theater for films like “Gravity”. As for the inferior quality of pirated movies, are you guys nuts or what? Camcordered flicks? You can download a beautiful 1080p print of almost any film made and enjoy it on your projection TV. Shit on the theaters. I’ll enjoy “Ten Years a Slave” in the privacy of my own home, on my 1080p projector and six foot screen. I make good popcorn too, and it tastes better than the 1700% marked up crap the theaters sell. So sad!

  5. Dave wolf says:

    You might as well close down the theaters ,why bother going let’s let the great Netflix have it all then a new movie will be history in a week.

  6. john Doe says:

    WHY DOESN’T NETFLIX SELL MOVIES DIRECTLY NEXT TO THE MOVIE DESCRIPTIONS???

  7. KC says:

    There are a lot of small, independent theaters that aim to give the best viewing experience possible and care about their audiences. People support these venues because they care about their community and value a shared experience. There is nothing like sitting in a theater and hearing a collective sigh, a stifled cry or full out laughter.

  8. Kell Anna says:

    Nothing will take away the experience of going to the theater to see a movie. The quality of the netflix stream is sub par to what you can see on the big screen.

  9. seandealflicks says:

    There’s always the push/pull between theaters and studios regarding the theatrical window (studios could possibly be open to VOD/EST the day after certain movies come out), but I don’t think they’d ever go for SVOD the day of/after. Ted Sarandos is simply way off the mark on this one.

  10. Jeremy says:

    Um…can you say cry baby? I don’t see anything here about the most important thing…making MONEY. So Netflix guy just wants theater owners to hand over customers? Netflix guy obviouy does not understand the value of a customer or the hard work and dedication it takes to retain one. Put your money where your mouth is Netflix. You’ve been in this industry what…10 years? Word of advise. Don’t beg, dont blame your competition, don’t point the finger and don’t complain…it just makes you look like a wimp.

  11. Charles J. Wesoky says:

    Sarrandos would rather have everyone seat in front of their second screens or TV’s and be unsociable. What an uneducated and unresearched why to be inclusive in an industry that thinks it knows how to make a new platform entertain more consumer by trying to kill a lucrative one. How many times do we have to hear from someone trying to put the last nail in the coffin of the cinema business?

  12. Joe Smart says:

    This guy’s comments are stupid and self-serving. Releasing indie movies for streaming day and date with theatrical release makes sense because indie movies only play in limited markets and in the markets where they do play only in one or two theaters. Releasing Hollywood movies on Netflix day and date with theaters will result in theaters going out of business completely within 6 months. People are lazy and if they can watch a movie at home they are not going to drive out to a theater. Hollywood won’t be able to make as much money off of streaming as theaters because they will be charging by screen rather than viewer–there’s no way to tell if you are watching a movie by yourself at home or with a family of five and the cost will be the same. That means with the new economics there will no longer be any big budget movies because it will be impossible for them to make back their money. Netflix is the one proposing to kill movies, not theater owners.

  13. Julienne says:

    Movie Stars are “Supposed to be” mysterious and appealing. But the second they open their stupid Political Liberal mouths and start telling us what to do, what to eat and when to eat it….they lose half of their base and it’s over.

  14. Movie theaters exist to create the “want to see” in the general public. The movie theater exclusive window is short (and getting shorter). This window provides the initial inflush of cash and sets the stage for marketing to all other platforms. You are dealing with the “we like it this way” attitude and that will not change.

    For those who would never set foot into the local megaplex there is always: http://online.wsj.com/news/articles/SB10001424052748704250704576005801366116290

  15. ..... says:

    They don’t love Emma Stone the way I love Emma Stone! Don’t let them do this too us, or lovely EMMA! That don’t fly with….

  16. KenD says:

    It is purely a shameless, self serving claim.Yes, theaters need to improve the experience, and most of them are doing so. But they’ve also just invested millions in digital conversion. If home availability is always day and date, the risk is enormous of killing their business model, and putting a lot of folks out of work. But if studios drop their demands of BO % to offset that, maybe they can talk, but that’s always like taking their first born. It’s a collective investment, but no one wants to share the risk.

  17. Peter H says:

    When Ted’s got money and a lifetime’s work invested in a theatre, maybe he’ll feel differently. He’s just a gun for hire, with no stake in the industry.

  18. harry georgatos says:

    If I could watch a movie in a cinema that would be great but there are so many distractions in a cinema that makes it unbearable. The high cost of a tickets, being stuck in a cinema with the audience from hell and projection has broken down numerous times when I’ve visited a cinema. Movies should be available on all formats at the same time. I would rather watch a densely plotted movie in the privacy and safety of my own home instead of watching heavily plotted films and visually complex films in a cinema! There’s rowdy patrons who don’t respect other patrons viewing pleasures and in those circumstances I rather watch these films in isolation within the privacy of my own home instead of driving to a cinema complex and find parking and stuck in an auditorium with people violently coughing from the beginning of the film to the end and cell phones going off in the cinema and late comers stumbling for their seats and the offensive smell of food. Under those circumstances I’ll rather watch movies on my digital home entertainment then been stuck in the costly cinema from hell. The problem is cinema owners and it’s time to tell cinemas to go and get stuffed!!!!

  19. People are going to watch how they want to watch when they want to watch it. I prefer going to the movie theater. I hate watching anything on my computer or TV at home, because I enjoy the experience of the theater, but not everyone feels that way. It isn’t a matter of this vs. that, it’s a fusion of the two. VOD and theatrical release are two pieces of the puzzle. If they could find a middle ground, it might benefit both side. Like any industry, we must evolve with technology, the economy, what have you. The unfortunate truth of the matter is most people would rather watch at home and most people can’t afford the price of a movie ticket on a weekly basis. I think the real issue here is piracy, but I don’t see how anyone can fight it. It’s a moral issue, more than anything. If you are okay with illegally downloading a piece of art, someone’s work, then I can’t change your mind. I am not okay with it, but it’s probably because I work in the industry, and you don’t. Film is meant to be seen on a big screen, but now that is a mere preference. We cannot erase the technological advances of home entertainment, but we can focus on making better art that people not only would rather see in theaters, but wouldn’t mind paying to see in theaters OR at home.

  20. Contessa46 says:

    There is no end to greed! Give the movie goers and the theater owners a break, there is no experience like seeing a movie on the BIG screen. This joker wants to cut out another middleman. Where will teens take their first date?

  21. David K says:

    i live in NYC and what annoys me is theaters without a matinee. When a regular film costs you 13.50 or 14.00, it’s outrageous not to offer at least one matinee showing. The AMC chain and City Cinemas do, plus there’s a few in Brooklyn too. But Regal Cinemas, the Angelika, and Landmark do not, so I absolutely refuse to patronize their cinemas. If something opens exclusively at one of those locations, i just wait until it expands.

  22. T. DeSantis says:

    Theater owners need to step-up their end users experience (better service, interactivity, improved 3D, more risk) and then realize going to the movies has been and always will be a social experience – people have a deep-seated need to escape and connect with others via a mall, club or movie theater (aka get out of the house!) Netflix premium VOD is here to stay and will only grow – customers like options. Innovate or die at your own risk.

    • Jeri B. says:

      I don’t know anyone who still has a deep seeded need to watch movies with a crowd of other people. People are becoming more used to bonding with their personal electronics, a solo experience. This is the cultural change that the movie industry must address, either with multi platform releases or, if they want butts in the seats at theaters, with a better theatre experience. Right now, the theatre experience is geared to one demographic: teenagers who don’t seem to mind big, noisy films that are driven by special effects. The rest of us aren’t too pleased with that and prefer the comfort of our home theaters, for which we’ve invested a ton of money.

  23. Ian Fisch says:

    Piracy.

    Right now, if you want to pirate a movie that’s in theaters, you have to resort to downloading low quality camcorder bootleg. It’s usually a pretty bad experience.

    If studios did the netflix plan, high quality bootlegs would be available, worldwide, whenever a movie released. Theater attendance would dropoff by a huge margin everywhere, and studios would lose that revenue stream.

  24. Naeem says:

    Your all missing the point having same day release will increase takings: those people whom want the BO experience will go to the theatre and those who can’t will watch on premium BO they have to pay extra money to watch won’t be part of netflix monthly subs but added extra on Netflix.This will increase money to distributors

    • Joe Smart says:

      No, if movies are released on Netflix day and date with theaters then movie theaters will all be closed within 6 months. People are lazy. They aren’t going to go out to a theater if they can watch the same movie at home.

  25. Nosmo King says:

    I went to a theatrical movie two weeks ago, for the first time in years. The movie I saw was Gravity. It was awesome. There is no way that a movie with that kind of visual scope can be enjoyed at the same level on a small screen. Theaters are here to stay.

    • David K says:

      I watched the Hobbit on my TV last night. Have to admit I was disappointed I missed it in the theater. Didn’t realize some of the visuals would be so good, they probably looked great up on the big screen.

    • Naeem says:

      It’s about giving the consumer a choice

  26. Jeri B. says:

    Movie theaters are in general a bad experience from the overpriced concessions; to the sound system that is so loud it causes actual pain; the need to get there very early and wait in line because most theaters still refuse to sell reserved seats online; the refusal of theatre chains to screen anything but tent poles and ignoring most independents; to the sticky seats, the dirty restrooms—there is no end to the list of reasons to stay home and watch movies anyway you can get them–Netflix, OnDemand, DVD, anything to avoid theaters.

  27. Rick C. says:

    A business model, such as Netflix and Redbox, which returns mere pennies per viewing to the content creators, is what might kill the movie business. The movie content which Netflix and Redbox exploit around the world and offers to their subscribers for a ridiculously low cost, could not even exist without first being profitable as a premium viewing experience, such as in a movie theatre.

    • and this is a bad thing? Business is supposed to follow where the consumer goes. If you are advertising for people who will wait to see it in DVD, You are wasting all that money when you advertise again. I love theaters however, I rarely have the time to go and one is a half mile from me. I do watch Netflix and HBO etc. I pay over $200 in media so Yes, first run on Netflix wold interest me.

  28. Michael Anthony says:

    Only 2 years ago Netflix was on the brink. Now they are big again. But for how long? Analysts say that soon they will have to raise prices in order to produce their series. Small and intimate films are OK on small screens. But ‘Gravity” and “Thor”? Doubtful.
    This man wants to destroy theaters to add to his bottom line, that faces problems in the years ahead. Netflix will be a thing of the past long before theaters.

    • Frank W says:

      You said it. Netflix is only interested in their bottom line to make this comment. Looking out for the consumer indeed! THEY are themselves a consumer who resells content they don’t pay to make!

  29. Nanny Mo says:

    Netflix is making an error here. Studio will someday release them straight to your big screen TVs via boxes like AppleTV. I can see HBO GO doing this very soon. I want to watch HBO shows? I could send the money straight to HBO or iTunes and bypass Time Warner and Neflix altogether.

  30. Michael Co says:

    Seriously? Why not just forget the movie theaters altogether, heck just skip Netflix too – go staight to DVD, drop the price to around $5, give it to RedBox and rapidly put everybody out of business. What a self-serving arrogant pompous jerk. If I was running a major studio I’d not only continue to avoid same day to VOD I’d keep my product from Netflix completely.

    • mattheww says:

      You hit the nail on the head. Theater owners provide something integral — definitional — to movies, a great big place to show and watch them. VOD is nice, but certain segments of the population will always need to get out of the house. Meanwhile Netflix provides, ummmmm….

  31. mattheww says:

    This guy wants exactly one thing: What’s good for Netflix. And the notion that day-and-date VOD is the only thing standing between movies and oblivion is just moronic

    • mattheww says:

      I actually meant to leave this under Nanny Mo’s comment just above. I mean, yours is smart too. Well, not brilliant actually. Anyway as everyone was.

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