Netflix CEO Reed Hastings: Movie Theaters Haven’t Innovated Beyond Popcorn

Reed Hastings Netflix
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Asked about his company’s relationship with major theater chains, Netflix CEO Reed Hastings didn’t pull any punches on Thursday. “How did distribution innovate in the movie business in the last 30 years? Well, the popcorn tastes better, but that’s about it,” he quipped.

Hastings made these remarks during a Q&A session with reporters at the company’s headquarters in Los Gatos, Calif., where he suggested that new distribution models could do for movies what cable networks and online services have done for TV shows.

“What Netflix wants to do is to unleash film,” he said. “It’s fundamentally about growing the movie business.”

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Netflix has come under fire from major theater chains as well as organizations like the National Association of Theatre Owners for not sticking to the traditional release window model, which lets movies debut in theaters months before they transition to home video.

On Thursday, Hastings pushed back against the notion that the company aims to bypass theaters. “We are not anti-theater,” he said. “We just want things to come out at the same time.”

Shunned by major theater chains, Netflix last fall struck a deal with iPic Entertainment, a small chain with 15 theaters. Under that deal, iPic will show 10 Netflix movies day-and-date with their online releases. This won’t give Netflix movies a huge theater audience, but the deal does allow the company to qualify its titles for the Academy Awards.

Hastings also used the Q&A to comment on a wide range of other issues, including net neutrality. He didn’t seem too concerned about policy changes in this area, despite the new administration’s intent to repeal rules that require internet service providers to treat Netflix’s traffic equal to that of other streaming services. “The culture around net neutrality is very strong,” Hastings said, arguing that consumers would still expect equal access.

Asked once again why Netflix doesn’t release any ratings for its shows, Hastings joked that withholding data would give his company “mystery and intrigue.” He added: “We haven’t released ratings in 10 years, and it hasn’t held us back.”

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  1. Evgeny says:

    When Netflix starts saling popcorn labeled “Netflix”?

  2. Rudy Mario says:

    What this guy is saying has elements of truth but there is more to it.

    Every output outlet think they can just keep jacking up prices which simply does not reflect reality of the paying public’s situation:

    Theaters keep jacking up ticket prices. I don’t have to tell you what a bag of popcorn costs.

    Cable companies kept screwing the public so bad now pulling the cable or cutting off cable has become a mass movement

    Enter companies like Netflix. Already they have increased premiums. Plus consumers have to pay for days from other companies who also keep increasing prices.

    So this Netflux guy better watch out. Six months from now he will be struggling to save himself and his business.

    • SLY says:

      they’re dropping Billions into content; as long as access is affordable to consumers and pimped by media outlets, NFLX isn’t going anywhere.

  3. Bill B. says:

    I really don’t know how the movie industry can ultimately survive with the cost of tickets always increasing. At the rate they are going, perhaps someday movies in theaters will only be for the rich. Five people paying $15 is the same as one paying $75. Being a film buff, I used to go to the movies 3 to 5 times a week! I don’t see more than 5 to 7 movies in a theater in a year now. I miss the experience, but one gets used to it after a while though my enthusiasm for film has slowly declined due to the lack of the film experience in a theater. Film in theaters can be an event. On TV, after a while they are something to do.

  4. elric301 says:

    With the current 90/10 share of profits, theaters don’t make money off of the movies. They have evolved to largely a food selling service. That’s why so few offer 4k projection, or Dolby Atmos. The overpricing of new technology pus them in a position of asking what will increase attendance and concession sales. Pretty much the basis of most any business wanting to keep up…will it increase my profits?

    • GoBucs says:

      What is this 90/10 split you speak of? Theaters keep about 50% of total ticket sales (call it 35-40% on massive movies like BATB. They don’t pay to produce or advertise the films, nor do they even advertise for their own establishments (when was the last time you saw a commercial for a movie theater?…you never have). Neither would I if I knew the consumer had no other option but to see the product at their local cinema. They then charge ungodly markups on soda and candy that the studios don’t see a dime of…

  5. Jay says:

    Tickets prices are too high. Netflix is the People’s Choice right now, but only because it’s inexpensive compared to the movie chains.

  6. Paul's Boutiquge. says:

    This is a stupid comment by Hastings. Movie theaters have evolved. They are almost all using digital projection nowadays. Luxury seating. They are constantly innovating. Reed is just trolling.

    His company has a really bad track record of releasing movies . Amazon has a much better record of releasing movies properly. Netflix’s movie Beasts of No Nation didn’t get any nominations because no one got a chance to see it because of its piss poor theatrical release. Netflix’s movies are essentially made for TV movies that you can only get with their service. It’s similar to what the networks did in the 70’s and 80’s with their “made for TV” movies. Netflix is not really as innovative as they think.

    Netflix is headed for a collapse eventually because they won’t release their ratings. What are they hiding? Could it be that hardly anyone is actually watching their programming, and they are lying to keep the capital flowing? Wouldn’t be the 1st time a company was a paper tiger.

    • Chris Hall says:

      Paul’s post contains a quite glaring factual inaccuracy relating to the Beasts of no Nation film. At the time of the posting the film had received 32 awards and 50 nominations from a broad spectrum of awarding bodies from the Golden Globes to the Venice film festival.

      Source: IMDB

  7. Micheal Espinola says:

    As someone who is tired of asking people to be quiet or to turn off their phones during a movie on opening night – I welcome more movies being distributed directly to my home. Because I’m going to kill someone eventually.

  8. Hans Dieter Ulrich says:

    You should remember that Napster was going to “grow the music business beyond belief” by “unleashing music” and making it free for everyone so that now that everyone could get music for free, the labels could build a real business by??????? Actual result – 65% decline in music revenue. New records released worldwide down 50%. Prerecorded music a dying industry in most countries outside the top 6. New stadium filling artists who built careers on the internet WITHOUT a label – zero. Amazon was going to make book publishing an explosive growth industry by selling books below cost. Actual result – every bookstore closed. Book sales off 50% New books published off 70% New best selling authors hatched by online publishing – zero. Netflix would explode studio revenues by competing with the antique business of video. Actual result – 100% loss of video income ($10bn per year to the studios) with NO replacement, all video stores closed. Then Netflix began to cannibalize free TV sales net result is a 45% decline in post-theatrical revenue for the studios, a drop they have never recovered from.

    It is fatuous to say movie theaters haven’t evolved – from B&W to color, to surround sound to digital sound to stadium seating to IMAX to 3D to digital cinema to ultra-hi Def cinema — plus handicap access, aid for hearing impaired and expanded food offerings, dine-in theaters, ultra-luxury theaters etc. Theaters have continuously innovated. What he’s really saying is that you still need to go to a theater to see the movie which is like saying you have to go to legit theater to see a play, or a football stadium to experience a live football game. To say plays haven’t evolved – you still need to go sit in a theater to see them — is as fatuous and simple minded as it is a complete non sequitur. Going to the playhouse, or the movie theater, is the central proposition to the product.

    A movie seen on Netflix for the first time is a TV movie. We’ve had them for years and many of them have been great – HBO made TV movies an art form. This itself is not a new idea and I’m certain Netflix with their larger budgets will be great at it.

    But to those who would surrender the theatrical window to Netflix, remember the example of the music business, the video business, the book business. If you think the movie theaters can’t close you just don’t remember history and are engaged in massive exercise in wishful thinking. If you somehow think they won’t close you don’t know basic retail economics.

    Now for those who just want to rail against the studios and call for them to die – have at it, maybe they should die, or maybe they should just buy your project, hard to tell what you’re railing against some times. Want to rail against the labels – go ahead rant on, but don’t think the internet has been good for music, musicians or music companies because it most definitely has not. The argument that a Netflix premiere and losing the movie theater is somehow GOOD for the movie business is as idiotic and short sighted for you to believe as it is brilliant for Reed Hastings to sell.

    • Electric D. Jugband says:

      Ridiculous to suggest the internet hasn’t been good for music or musicians. Access all over the world to all of our music is unparalleled today compared to recent history. From celtic inspired pirate themed black-metal to Mongolian throat singing, it’s all spreading and being created at an amazing rate.

      And for musicians? Any child growing up with this tech can use free resources and video tutorials to become a classically trained expert with any instrument they choose. And then if they create something they can distribute it to the whole world at a cost of nearly zero. That’s success baby.

      Boohoo, the age of the Rockstar is ending. Music itself has never been healthier.

      The same will happen to film, its not an if but a when.

      And no one is ever going to stop making film or music just because we’re cutting out the middleman.

    • Albert Einstein says:

      Thank you, Paid Shill for the Theater Industry and/or Theater Owner Representative. I’ve rarely seen a response so lengthy and desperately argued that wasn’t someone’s job. Nice work “Hans”. Oh, wait. This is the internet and everyone is who they say they are. ;)

      • Jake Laser says:

        The internet has been good for music and musicians??? Are you insane??? Maybe for kids who want to turn loops into songs that 12 people hear on youtube. The entire record business was decimated by the internet, digital technologies and digital platforms. The internet allows people to steal music very easily. If the Internet provided people the ability to steal houses for free, then sellers of houses wouldn’t be too happy. Musicians are sellers of music and their product is one of the most stolen products in the history of the world. If they aren’t stealing it, they are paying a fraction of what they used to for it. Musicians wages have taken staggering plunges. Songwriter royalties have plunged. Some of the greatest musicians the world has ever known are lucky to get $200 per song to record these days. The whole industry has basically shrunk to next to nothing. Labels are a fraction of what they used to be. Real recording studios basically don’t exist any longer. Artists and photographers who worked in the music business are basically all out of work. Did drum machines help drummers? Do sampled string sections help violin players? It is virtually impossible to break bands these days. Obviously there aren’t record stores anymore. But most of all, did this democratization and commoditization create better music? There is simply no way anyone can make the claim with a straight face that we are making better music today than in the past. People stand in line to get on American Idol? 90% of singers now don’t play an instrument and don’t write songs? Digital technologies ruined the record business just like they did the book industry, newspaper business, magazine business and photography industry.

      • lailaagaev says:

        Sorry I meant to reply to the poster above you :(

      • Haily says:

        What’s the problem with bookstores closing, video stores closing, and music stores closing? I mean for those of us who don’t own one.

        They close because people don’t want to use them anymore because they have better ways to get the same stuff. There’s still plenty of book stores where I live, but yeah they’re not doing as well because they have more competition. Nothing wrong with that.

        If they’re failed business models there’s no reason to mourn their passing any more than we are mourning the horse and buggy industry because now everyone drives cars. These industries making less revenue is not the consumer’s problem. If there were a lack of books or music or movies on the market, people would come and write books/record music/shoot movies and sell them. They don’t because people don’t need this stuff enough to pay much money for it. Nothing wrong with that.

        That said, movie theatres are unlikely to disappear because people go to the movies for the experience of a huge screen, it’s not reproducible at home.

        And when he talks about theatres not innovating he’s talking about distribution and display of content at the theatre. He means that the idea of a movie being first in theatres then on DVD then ending up on streaming sites is outdated and he’s right. It’s just another way for studios to try to squeeze more money out of consumers by putting up unnecessary barriers to access.

        Unfortunately for media producers people have so much choice in entertainment they no longer need to tolerate any bullshit business practices that inconvenience the consumer to make more money for the producer. It means that companies have to start competing again, which is good.

  9. Jason says:

    Says Netflix which is just Youtube without copyright violations.

  10. harry georgatos says:

    It’s time the Hollywood studio system bypass the cinemas and deal directly with the householder. With the sophistication of home entertainment the cinema experience has become obsolete. The only place cinemas have to go is the IMAX experience of heavy-duty blockbuster experience. Who wants to drive to a cinema and find expensive parking, purchase expensive sugar-infested junk food and be stuck with an audience that is disruptive while trying to follow a densely plotted movie. People should be able to watch first run movies in the privacy and safety of their homes.

    Hollywood has to cut out the middle man in cinemas and deal directly with the householder. Home digital tv’s can provide a cinema experience at home.

    I live in Sydney Australia and pay an outrageous $25 for a standard adult ticket. Cinemas should become a distant forgotten memory.

    • laurence207 says:

      I understand your complaints and all but I for one love the theater experience, morons and all. Of course, home viewing is nice too and is the future. I just strongly disagree with you when you theaters should become a distant, long forgotten memory.

  11. dave b says:

    Speaking as a consumer, who has no interest in the industry, I love Netflix. Movie theaters suck, and the other people in the theater suck. They talk loud, their phone screens are on and bright, they get in the way.

    Why should I drive to a theater, pay $20 for a ticket, and another $20 for overpriced popcorn and candy? I’ll just wait a few months and watch the movie at home, on my giant screen, with my excellent surround sound system, on my comfortable couch.

    I get the company of my choice, the beverage of my choice, and the pause button when I need it.

    • Albert Einstein says:

      Yes. The question that comes to my mind whenever I go by a movie theater is “How have they NOT closed yet?” The Hollywood movie industry has the same stupid issues that Cable TV suffers from. Consumers already know they don’t want it, but due to collusion/monopolies, a complete lack of vision and massive fear of revenue loss, they can’t get off their butts to change their horrible distribution models. Channel packages for cable TV, and movie theaters for Hollywood. They do everything they can to hinder change while change continues to happen around them anyway. They’re both basically anti-consumer, revenue teat-sucking arrangements.

  12. Eric says:

    ATTENTION WGA MEMBERS:

    If you decide to strike, you will be handing the reigns over to people like this. New Media could care less about the Guilds and their members. They will continue to make content with non-union writers, crew and actors if need be.

    Don’t forget that there are a lot of hungry people standing outside the gate who would and will happily take your place. The fate of the industry is up to you.

  13. blOwen says:

    This guy is doing to cinema what Trump is doing to america.

  14. LOL says:

    There is such a bullish confidence at Netflix, you sorta have to admire it. They are determined to shake things up, and perhaps even go down for it, if that what it takes to be all-powerful.

    What they did (or are doing) to STX vis-a-vis The Irishman is pure gangsta in itself, bro.

  15. brian says:

    Dear Reed:, 1) Digital Cinema projection; 2) Digital multi track audio; 3) Stadium seating; 4) on line ticketing…

    “We are not anti theater,” he said. “We just want things to come out at the same time.”

    Wrong… You just want theaters to be around so you can get AA qualifications, but if anyone would want to go to one, that is one less customer for you. Been drinking the California Koolaid of “aren’t we all great and why can’t everyone else see how cool we are? Not much common sense here Reed.

    Feature films were meant to be seen in a dark room with lots of other people and on a big screen.

  16. Popcorn works. I don’t see you making a better suggestion. Buy your bucket of popcorn. Sit down and enjoy the movie.

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