Netflix Wants to Buy Movie Theaters

A surprise move that could be ripe for success.

Last week, the L.A. Times reported that Netflix is considering buying movie theaters. So far, it seems like the initial interest is primarily for locations in L.A. and New York. Expanding their aim beyond that would certainly be affordable, considering their plan to spend $8 billion on content this year, and also a great idea.

A big part of Netflix’s ethos is wrapped up in worldwide day-and-date releases. They want everyone to have access to the film at the same time. This causes problems for the company when it comes to awards consideration with Cannes and the Oscars. Therefore, the immediate value of the endeavor would allow them to control the terms of their own theatrical release.

But that’s so limited.

While I am deeply interested in Netflix’s ongoing duel with the arthouse and awards arenas, this piece of news is particularly fascinating and relevant to the future of the theatergoing experience. There are a couple of threads I’d like to pull into the conversation.

When a major blockbuster film comes along, they push hard to own all the screens they possibly can. Disney’s Star Wars: The Last Jedi held more than 4,200 screens in the United States. Do you think theater chains fought to keep spaces for other films? At least, that is, films for which they weren’t contractually obligated to provide a certain number of screens?

While Disney slugged it out for screen real estate, they also demanded higher splits on the ticket sales. Instead of the industry range of 40% to 55%, they wanted a 65/35 split. Hey, that means more for everybody, right? More screens. More seats sold. The biggest studios with the biggest blockbusters have a lot of clout. And it doesn’t get bigger than Disney right now.

That said, it seems awfully rare to enter a theater where literally all the screens are owned by the weekend’s reigning blockbuster. Netflix could certainly aim to screen blockbuster films to help drive their own theater attendance. But, control of the screens would allow them a protected bubble for their own original content.

Disney’s blockbuster franchise model really does have quite a bit of pull in today’s market. In fact, between those films and SVOD companies like Netflix, there has been a major disruption to the business of cinemas.

The New Republic recently had a chat with Ben Fritz, whose book “The Big Picture” dug into the impact of SVOD and film franchises on the film industry. In that conversation, Fritz argues that a specialty market in some areas for non-blockbuster films will likely persist. That is, if you live in a big enough city. However, most people won’t have that type of access.

Fritz discusses Children of Men as an example:

“I don’t know what its budget was — $80 million maybe. It’s not cheap to make that film. You’re making a film that’s really worth seeing on a big screen. But there’s no ‘Children of Men’ cinematic universe. There’s no franchising. There are no tie-ins. There are no sequel possibilities. That’s a one-off film, and that’s the type of thing that won’t get made anymore. It’s also the kind of thing that’s tough to replicate for a streaming service. It’s the kind of movie we’re losing, and that’s a bummer.”

What does the future hold for mid-to-small budget films? Whether we’re talking theatrical releases or simply whether they get made, they are certainly in decline. And, yeah. We all love movies for the art, but it’s still a business. Whether we’re talking arthouse films or franchises, it’s all about the money. And frequently the smaller productions simply don’t have enough left to market their film properly.

That’s the beauty of Netflix running a theater chain. Yes, they could still play blockbusters and hold screens for their own content. But, they would also have a dedicated audience for their own trailers.

In fact, there are niche-market, smaller theater chains already doing business under a similar model. For example, the Alamo Drafthouse has overlapping ownership with Neon, which has recently distributed films like The Bad Batch, Colossal, I, Tonya, and Borg vs. McEnroe. The Alamo Drafthouse typically has a minimal number of major trailers. However, they show trailers for all of the films distributed by Neon.

They’ve found a way to market small to mid-budget films and make sure an audience is aware they exist. That’s the point that Fritz was making, right? So much gets lost in the shuffle. Well, if you live near an Alamo and you go to their theaters, you absolutely knew about every movie listed above. There’s a market for these types of films if the message reaches the prospective audience.

Look at a film like A Quiet Place. It’s a fresh story, distributed by a major studio, with a box office gross easily 10 times what was spent on the movie. But, why did it succeed? A new perspective. The film features a young woman who can’t hear as the central character. All of its storytelling is via sign language. And, it is god damned thrilling. These are the types of non-blockbusters to be on the lookout for in the future.

This also holds true for many of the smaller films winning awards at the Oscars. It’s no wonder movies like Moonlight are garnering so much attention. One, they’re phenomenally well done. The Shape of Water is a beautiful story from the perspective of The Other in a world dominated by white men. Get Out is an insanely impressive feature debut that showcases the best of what a horror film can do.

Success stories like A Quiet Place or Get Out make me unsure that SVOD and day-and-date releases have evolved that mid to small budget theatrical movie demand out of existence. Or, for that matter, that the mighty franchise has outmoded them.

This brings us back around to Netflix.

Netflix getting into the theater business might not be the craziest thing it’s ever thought about doing. With its acquisition of films like The Cloverfield Paradox, the company has expressed an interest in mid-budget films. Whether you dug it or not, the value of the gauge of film is there. People will go out to the movies for mid to small budget films that interest them. So long as Netflix makes interesting choices with their projects, they probably could profitably run a niche-market chain of theaters.

Regardless of their move, I’m still optimistic about the future of the theater. Even if it is an uncertain time for the future of that experience. If Netflix were to brand it as something more ambitious and less cynical than simply installing a couple of theaters in two of the biggest cities in the United States to help qualify for the Oscars, they could really be onto something.

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