Netflix Wants Movies Upon Cinema Debut - Trick or Treat?

By Bob Wallace October 31, 2013

Netflix’ desire to air new movies on its OTT service the same day they hit cinemas is hardly surprising given past initiatives by stakeholders along with the greatly diminished value of first-run movies when they finally make it to premium “movie channel” that viewers pay extra for monthly.

Cable kingpin Comcast has been airing movie festival flicks on pay VoD BEFORE they reach debut in theaters. The cableco and Universal Pictures ditched plans in 2011 to release Tower Heist to a half million Comcast customers three weeks after it hit theaters because some theaters threatened not to show it at all.

Netflix content chief Ted Sarandos said in a keynote speech over the weekend, “What we’re trying to do for TV, the model should extend pretty nicely to movies. Meaning, why not premiere movies on Netflix, the same day they’re opening in theaters? And not little movies — there’s a lot of ways, and lot of people to do that [already]. Why not big movies? Why not follow the consumers’ desire to watch things when they want?”

The Answer: Treat

It’s merely a matter of time and money for the aging theater-first-then-forever process to collapse under its own weight. Movies already finish a distant third to live sports and original programming series as the most coveted content and as such are a weak draw to pay-TV subscribers.

By the time “new” movies get to the premium movie channels subscribed to, they are gathering dust and already available from kiosk renter Redbox for $1.20 and streaming OTT services for a minimal monthly rental subscription to the larger offering. Both are cheaper than cable pay VoD.

Why do subscribers pay for premium channels like HBO, Starz, Showtime and more and again to rent a newish movie on cable pay VoD? The answer for those that do is for original programming series that OTT services have – and continue to add.

Worse still, movie studios spend their big promo bucks before the movie hits cinemas and then some more when it comes out on DVD. The longer after the movie is viewed, the more diminished or forgotten the message becomes.

Content Realities

I doubt content strategists at HBO, Starz and Showtime would want to have their networks referred to as “movie channels” given their increasing focus on creating and aggressively promoting (in some cases months in advance) original programming series that have consumers talking on and offline unlike movie lineups.

There are clearly issues that have to be worked out in the movie ecosystem but to dismiss Netflix CEO’s day-and-date movie release option is to deny evolution in an industry here change is a constant. Take a moment to remember when Blockbuster reigned supreme, when people watched premium cable channel for movies and sports and when folks rushed out to buy/own movie DVDs. Don’t forget streaming and mobile device with super tiny screens barely useful for texting.

Movie studios and the few remaining theater chains (and broadcasters) have largely (initially) fought approaches that change the way content is delivered. It started with ad-skipping technologies and products, then with cableco efforts to launch network-based DVR services and has extended to big broadcasters fighting upstart Aereo over streaming of over-the-air TV programming without compensation.

That’s a quick back to the past. Now let’s get back to the not-too-distant future.

Fearing Change?

How can you say Netflix getting movies when they debut in theaters can’t/won’t happen? The OTT streamer is said to be in talks with cablecos about being part of their pay-TV offerings (as Netflix has already done with Virgin Media in the U.K.). This sounds more like frienemies than bitter enemies. Cablecos have already embraced streaming as part of their TV Everywhere customer retention strategies.

Cablecos stay up at night concerned about large numbers of cord cutters and perhaps thinking longer-term more than we know about cord-nevers, hoping to find a way to stem departures while concurrently exploring fresh opportunities for near and long-term customer growth.

Would day-and-date movie release option on Netflix (and others) hurt cinemas? Of course, but remember that the evolution of movie viewing has evolved and brick and mortar facilities with expensive ticket prices and snacks have hurt themselves badly. Add in big screen TVs deployment and it’s not so much evolve or die, it’s more can theaters (even the 15-choice monsterplexes) evolve beyond premium-priced seat-side food and alcohol service in comfy chairs?

That’s exactly why theaters forced Comcast and Universal Pictures to abandon an innovative plan to release Tower Heist to customers shortly after it hit cinemas.

The Bottom Line

If you’ve been tricked into thinking that cinemas will be the only channel in which to get movies when they debut, you’ll be treated to a huge surprise when it becomes a reality.

Perhaps no other industry has seen as much change/evolution/adjusted business models as the video industry, in terms of content consumption opportunities and trends. Those in the ecosystem can be disruptors or the disrupted .

Because change is a constant in this space, sticking to age-old or challenged business/revenue models is a recipe for trouble. What seems unfathomable today can soon become reality.

Who foresaw telcos such as AT&T and Verizon getting into the TV business waybackwhen? Who thought they had a prayer? And who’s smiling and fretting now? And what about OTT services? Remember rental king Blockbuster? The distribution channels change.

Stay tuned and enjoy your candy.

VP of Content

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