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Netflix's Warning to Theater Owners, Owners Fight Back

Posted by: , 22:10 AEDT, Thu October 31, 2013

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Netflix says theater owners are stifling innovation and killing the movie industry, theater owners says Netflix are the ones responsible
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Netflix content guru Ted Sarandos used his keynote address at the Film Independent Forum to launch a broadside at theater owners for stifling innovation, and warned that their actions could kill the entire movie industry if left unchecked.

Sarandos was referencing the failed premium VOD experiments, which provided movie lovers with the option to watch movies on-demand at home during the film's original theatrical run. As expected, theater owners reacted strongly to the plans and put pressure on Hollywood studios to nix their plans.

Sarandos's speech pulled no punches when it came to assigning blame.

"Theater owners stifle this kind of innovation at every turn," he said. "The reason why we may enter this space and try to release some big movies ourselves this way, is because I’m concerned that as theater owners try to strangle innovation and distribution, not only are they going to kill theaters–they might kill movies."

Sarandos even went as far as suggesting "big movies" should be made available to Netflix subscribers, who only pay $7.99 per month for the service, on the same day as their theatrical release. 

"Why not premiere movies on Netflix the same day they’re opening in theaters? ... 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 theater, and then make them wait for four or five months before they can even see it? They’re probably going to forget," Sarandos added.

Theater owners did not respond positively to Sarandos comments. Instead of accepting the criticism that they may be to blame for the movie industry's possible demise, the head of the National Association of Theater Owners (NATO) said that Netflix was the bigger threat to the movie industry.

NATO CEO John Fithian says that services like Netflix has already "killed the DVD business", and that self-interest is what is driving Netflix's latest remarks.

"The only business that would be helped by day-and-day release to Netflix is Netflix. If Hollywood did what Sarandos suggests, there wouldn’t be many movies left for Netflix’s customers or for anyone else. It makes absolutely no business sense to accelerate the release of the lowest value in the chain," says Fithian.

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