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Netflix CEO Reed Hastings Blasts Theater Owners as ‘Strangling’ Movie Business

Exec also says streaming provider's entry into China 'doesn't look good'

Netflix CEO Reed Hastings: Theater Owners
REX Shutterstock

Reed Hastings fired back at cinema chains Friday, with the Netflix chief accusing theater owners of “strangling the movie business” by refusing to budge on windows to allow streaming of films soon after release or even the same day.

Hastings, speaking at the New Yorker’s TechFest 2016 event, claimed that movie studios want to “break the oligopoly” of the major theater chains but that they “don’t know how.”

Theatrical distribution, of course, represents the biggest chunk of revenue today for movie studios. And last year, domestic box-office revenue hit a record $11.1 billion. But Hastings and other Netflix execs have maintained that the industry stands to generate more revenue and gain better efficiency on marketing spending if films were available simultaneously on services like Netflix when they’re released in theaters.

Hastings’ comments come after Netflix announced a pact earlier this week with iPic Entertainment, a luxury theater operator with 15 locations, to screen 10 Netflix original movies starting in New York and L.A. locations. That will begin Friday, Oct. 7, with war thriller “The Siege of Jadotville” at iPic Theaters Los Angeles followed by Christopher Guest’s mockumentary “Mascots” on Oct. 13 at the new iPic Fulton Market in Manhattan.

The deal raised alarm bells for the National Association of Theatre Owners, the trade group representing U.S. theater chains, which cautioned that moving to day-and-date simultaneous film releases would disrupt the ecosystem.

“Simultaneous release, in practice, has reduced both theatrical and home revenues when it has been tried,” NATO CEO John Fithian said in a statement. “Just as Netflix and its customers put a value on exclusivity, theater owners and their customers do too.”

The fight over theatrical-release windows has been a years-long issue. It goes back to cable VOD experiments with premium-priced early-release dates — well before Netflix’s move into original films — which exhibitors pushed back on, wanting to preserve the roughly 90-day window of exclusivity for new releases.

Netflix’s push into the film biz, starting with its announcement of the acquisition of the sequel to “Crouching Tiger, Hidden Dragon” in 2014, has been met with a boycott by major movie chains like AMC Entertainment and Regal Entertainment.

Also at the event Friday, Hastings said that the chances of Netflix’s entry into China, the largest market in the world, “doesn’t look good,” per Bloomberg.

“We’re focused on the rest of the world,” Hastings said. He noted that both Disney and Apple, who have a strong track record in the country, both had their movie services shuttered by Chinese authorities.