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NATO Chief Says Streaming Services Benefit From Theatrical Releases

CinemaCon, the annual exhibition industry trade show unfolding this week in Las Vegas, has threatened to be overshadowed by ongoing tensions between theater owners and Netflix.

Without mentioning the streaming giant by name, John Fithian, head of the theater business’s main lobbying firm, argued in public remarks that the two business models can be complementary, not cannibalistic. Netflix has been flirting with releasing its movies in theaters, but most major chains are refusing to show the films because they debut on the streaming services within a few weeks of their premiere in cinemas.

That’s a mistake, argued Fithian, the CEO of the National Association of Theatre Owners (NATO). He said that theatrical exhibition raises the profile of films from Netflix or any other streaming service.

“We understand that some movies will continue to go straight to the home and skip theatrical,” Fithian told an audience that was primarily comprised of theater owners and exhibition executives. “There is nothing revolutionary about that idea. All we ask is that powerful movies in all genres, made by content creators who want their work on the big screen, be given the time to reach their full potential in theaters before heading to the home. Theatrical exhibition is the keystone of this industry, and there is no replacement — both artistically and commercially — for the impact of a break‐out hit.”

The debate will likely intensify as companies such as Disney, Comcast, and WarnerMedia launch their own streaming services in the coming months. They hope to tap into the growing audience for digital video and to curb Netflix’s explosive growth by providing subscribers with more alternatives. At the same time, services such as Amazon, that once deployed traditional theatrical releases, are flirting with releasing movies direct-to-streaming or with more truncated runs in cinemas. Fithian suggested that approach was flawed.

“As large media companies look to establish direct relationships with consumers through streaming platforms — and the options in the home grow — competition for directors and stars who want their work seen on the big screen will only intensify,” he said. “In this new climate it’s important to ask: how does any given movie stand out among endless choices in the home? Everyone in this room knows the answer to that question: a robust theatrical release provides a level of prestige to a movie that CANNOT be replicated.”

Fithian said that research indicates that consumers who enjoy streaming movies also buy tickets to see films on the big screen. NATO conducted a study with Ernst & Young that found that people who attended movies in theaters more frequently also tended to consume more streaming content.

“For every race and age demographic, average streaming hours per week was higher for respondents who visited a movie theater nine times per year or more compared to those who visited a theater only once or twice,” said Fithian. “Streaming and theatrical don’t just co‐exist, they reinforce each other.”

Even as Netflix continues to grow in size and influence, theatrical revenues reached record levels in 2018. Attendance is more or less flat, but revenue has increased due to higher ticket prices. Fithian also argued that the business is benefiting because studios are making movies such as “Black Panther” and “Captain Marvel” that are centered on protagonists who are female or people of color.

“Diversity in front of — and behind — the camera was a key driver,” said Fithian. “Moviegoers sent a clear message that they want to see themselves represented on the big screen by characters that are realistic and well‐rounded. While there is still room for progress, we are encouraged by how studios and content creators continue this mission with exciting projects set to open in 2019 and beyond.”

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