Netflix Content Officer Says Cinemas are Killing Films

Written by Jessica Hanlon.

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Next time he wants to go to the movies, it might be a good idea for Netflix’s chief content officer Ted Sarandos to skip the concession stand following the blistering attack he launched on theatre owners on Saturday night. Invited to be the key-note speaker at the Film Independent Forum in Los Angeles, Sarandos used the speech to warn movie owners that stifling innovation by failing to adapt to changing technology could lead to them “killing movies”. In his speech, Sarandos spoke of the changing business models in the film and television industry and urged movie owners to give audiences what they want in a timely and accessible fashion, or risk losing them.

Within his speech, Sarandos spoke at length of the success of the Netflix model, citing the original hit series House of Cards, Orange is the New Black and the long-awaited fourth season of Arrested Development as examples of the many ways in which TV is ascending film in both quality and attention. Following on in some ways from Kevin Spacey’s McTaggert Lecture, Sarandos pointed to the current studio and theatrical releasing model of “antiquated windows” as a catalyst for movies “becoming these cold spectacles that have to be sold around the world in order to recoup these huge marketing and production budgets.” Luckily we can access movies via other routes such as using to reach pirate bay, but he might have a point in that television productions are now becoming just as huge as film productions, which could mean that the popularity of film may soon dwindle.

In what was an interesting take on the issue, Sarandos addressed the ill-fated premium VOD model and blamed theatre owners as the problem. “Theatre owners stifle this kind of innovation at every turn,” he said. “The reason why we [Netflix] may enter this space and try to release some big movies ourselves this way is because I’m concerned that as theatre owners try to strangle innovation and distribution, not only are they going to kill theatres, they might kill movies.” By comparison, studios got off rather lightly. “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,” Sarandos said. Rather, he asserted exhibitors should move further towards digital release, even going so far as to suggest that ‘big movies’ should be released on Netflix the same day they appear in theatres.

ted sarandos speech2“Why not premiere movies on Netflix the same day they’re opening in theatres?” he continued. “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 theatre, and then make them wait for four or five months before they can even see it? They’re probably going to forget.”

In some ways, he makes a sound point. In support of his argument, Sarandos made reference 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, theatres saw only a six per cent lift in attendance. These figures however have been criticised by movie theatre owners as not only being false, but being skewed negatively in favour of the Netflix model.

In an exclusive interview with Deadline, NATO president/CEO John Fithin accused Sarandos and Netflix of being the real threat to the movie industry with their inflexibility to shrinking theatrical windows. “The only business that would be helped by day-and-day release to Netflix is Netflix,” Fithian said. According to him, the current system is still viable, with summer admissions up to 9%, contrary to Sarandos’ claims. “It makes absolutely no business sense to accelerate the release of the lowest value in the chain… his ideas on movie release patterns are simply crazy, and they would destroy the movie industry.”

In any event, the evolution of movie distribution models is an ongoing discussion, to which Netflix is just the latest party to join. However, with its momentous success this year, particularly with House of Cards, which is just about finished filming its second season, Kevin-Spacey-House-of-Cardsthere is certainly something to be said for Sarandos’ economics. In fact, in light of the success of House of Cards and Orange is the New Black, according to Sarandos, Netflix expects to double its original programming spending and include original movies. According to some insiders, this could threaten the movie industry even further, particularly given their estimated 31 million customers annually.

Likewise, from a movie theatre owner’s perspective, it is easy to see why they are not on board; same day digital distribution simply poses too much of a risk to their livelihood. There is also something magical about seeing a movie in the theatres. Sandaros himself even used the example of Ang Lee’s phenomenal Life of Pi, to illustrate just how special such an experience can be. Furthermore, the development of HDR 3D technology and other ground-breaking cinematography, which we recently witnessed in Gravity, certainly gives movie theatres some advantages viewers just can’t get from the comfort of the home, computer or tablet.

It is also important to remember that same day digital distribution doesn’t rule out going to the movies completely, rather it simply attempts to provide a way to broadcast to the masses. After all, in a time of technological evolution, where people have some of the fastest internet and download speeds in the world, it seems rather ridiculous that we are still being plagued with issues of poor distribution and syndication. Given the extent to which digital piracy exists, there is no doubt there is obvious market potential to be explored. Further, as Sandaros himself noted, “every new technology that was going to kill the movie business has grown the movie business.”

However, there is no guarantee that same day digital distribution would necessarily alleviate this problem. The issue, I suspect, lies more with studio and creative owners wanting to have control. Netflix, for example, doesn’t offer its new shows like House of Cards and Orange is the New Black on CBS the same day they debut the shows on its streaming service. Perhaps theatre owners should be asking Netflix to put their money where their mouth is by providing the service on their own Orange is the New Black first to see how it works out. After all, not everyone has Netflix.

Here’s Ted Sarandos’ full speech:

Sources: THR, Deadline

– J.H.