This is the first time the three major U.S. theater chains have agreed to show a Netflix film. The box office of “Knives Out” exceeded 300 million US dollars. After the sequel was taken over by Netflix, due to the historical grievance between Netflix and the theater, the outside world was worried that the film would not be able to be shown in mainstream theaters in North America.
The end result is that the two sides have found a certain degree of balance. The theatrical release time is only a short week, but it is a full month earlier than the launch time on Netflix, and audiences have the opportunity to watch it in theaters in advance. In addition, Netflix announced that the film will be released in selected theaters in Canada, the United Kingdom, Ireland, Italy, Germany, Spain, Australia, and other regions around the world.
Netflix called the theatrical screening a “dramatic voyeur preview event”, and AMC Chairman Adam Aron said the screening was “meaningful for AMC and for movie lovers around the world.”
Since the outbreak, the global film industry has undergone a lot of changes. Cinemas have been hit hard in the past two years, but streaming platforms have grown substantially. According to the Wall Street Journal, subscription-based streaming services (SVOD), represented by Netflix, are expected to generate $85 billion in worldwide revenue by 2025. .
Against the background of the ups and downs of theater chains and streaming media, the settlement between Netflix and the three major U.S. theater chains this time can be regarded as the result of the two sides taking a step back and fulfilling each other in the long game and game.
However, “Knives Out 2” is just a small attempt by both parties. Whether the cooperation between streaming media and theater chains can continue in the future and whether it can have a long-term impact on the film distribution model requires longer observation.
long-standing rivalry
“As we often say, we believe that theatrical exhibitors and streamers can continue to coexist successfully.”
Although Adam Aron, chairman and chief executive of AMC, said so in the statement announcing the partnership with Netflix, a little knowledge of the industry shows that a few years ago, the theater was not the same as the streaming platform. So “friendly”.
Previously, the three major theaters in the United States, AMC, Regal, and Cinemark, had boycotted Netflix movies.
In 2014, these three theater chains refused to show Netflix’s first original film “Crouching Tiger, Hidden Dragon: The Sword of the Underworld”; in 2019, Netflix’s first best picture “Roma” continued to be rejected by AMC and Regal ; In 2020, even “The Irishman” and “Marriage Story”, which were nominated for best picture at the Oscars, failed to make it to the screen of AMC and Regal.
Netflix, which has been boycotted by mainstream theaters, can only choose some independent theaters in North America to release, and by maintaining a more than 20-day screening window in independent theaters to ensure its own movies are eligible to compete for Oscars.
It is not only Netflix that has been “targeted”, and the confrontation between streaming media and theaters does not only happen overseas.
In 2020, when Warner announced that it would simultaneously launch new films in theaters and streaming media in 2021, AMC severely criticized this move, and Adam Aron even revealed that Warner would be held accountable for the economic losses caused to theaters; in 2021, Disney The “Black Widow” was also sued by the director and the actors due to the simultaneous broadcast of the hospital network.
In China, when Xu Zheng suddenly withdrawn “囧 Mom” and sold the copyright to Byte for online screening during the Spring Festival in 2020, it also became the target of public criticism and was boycotted by 23 theater alliances.
It’s not hard to understand why theaters are so resistant to streaming: as streaming begins to become a new channel for movie distribution, the status of theaters’ “first window” has been impacted, and their interests have also been damaged.
The “window mode” commonly implemented in the distribution system of the film industry today has taken shape as early as the 1980s. Historically, the emergence of technologies and terminals such as paid cable TV, video recorders, and fiber-optic video-on-demand once also had an impact on the cinema chain. Therefore, in order to maximize the benefits that a film can obtain, a balance has gradually formed in the industry, that is, “movies can be authorized to be provided to different distribution channels, and the window period (release time) of each channel has a strict In chronological order, the price that consumers need to pay will be the highest in the first window period and will decrease after that.”
The premise of reaching a balance between the old and new channels in the last century is that the new channel will be screened at the wrong time after the cinema.
And the streaming media platforms with more advanced technology and stronger dissemination, their ambition is not only to become the second “DVD” or “CCTV6”, but what they want to strive for is to shorten the window period of the cinema and enter the window of online screening as soon as possible period, even offline and online simultaneous release.
It is difficult for the theater party whose interests have been seriously damaged not to “jump”.
Especially in the early days of the outbreak, theaters were closed, and a large number of movies turned to streaming media platforms. For example, “Mulan” was finally broadcast on Disney+, and “Love Birds” was changed to Netflix. More and more movies are either gradually breaking through the 90-day rule of the theater window period, or directly stepping over the theater, the once first window, to go online directly. A new balance between streaming media and theaters has not emerged. Before, disputes between the two sides were inevitable.
A compromise between tired parties
Waiting is not the answer, both sides always have to take an attempt.
A data from the Motion Picture Association (Motion Picture Association) shows that the global box office total in 2021 will be $21.3 billion, which is seriously lower than the $42.3 billion in 2019. Closures and mergers and acquisitions have become the end of most theaters. AMC has lost $6 billion over the past two years, Cinemark’s stock has recently fallen 5.04%, Regal filed for bankruptcy and reorganization last month…
Under the tragic situation, the theater has to rethink its relationship with streaming media. The two parties were able to reach a certain degree of reconciliation, two factors played a decisive role.
The first point is that for most films, the gradually shortened theatrical window period has a limited impact on the final box office.
Forbes box-office analyst Scott Mendelson once told the media: “So far, there has been little evidence that a shortened window will have an impact on the box office of big hits. Most blockbusters The majority of the box office has been made within the first 38 days of release, which is almost in line with the new window.”
In addition, after the window period of the cinema is shortened, the word-of-mouth effect accumulated by a film will be more easily extended to the next window. This trend will also help filmmakers save on publicity costs.
The second point is that in terms of movie content supply, the increasingly powerful streaming media platforms have made it impossible for cinema chains to ignore.
On the one hand, the production and production capabilities of streaming media platforms have been continuously strengthened, and the recognition of audiences and judges has increased year by year. In 2021, Netflix was nominated for 35 Oscars with 16 films and finally won 7 awards; in 2022, AppleTV+’s original film “Listening Girl” won the best picture Oscar, becoming the first streaming media to win the best picture platform; this time, “Knives Out 2”, which Netflix will release in mainstream theaters for the first time, also received a wave of praise at the Toronto International Film Festival not long ago.
On the other hand, some traditional movie distributors have also started launching their own streaming platforms and subscription services. Disney has Disney+ and Hulu, and Warner-owned HBO and Discovery have their own streaming platforms. This online and offline battle, the object of the theater line conflict, has been burned from Netflix to its own backyard.
In addition, the production of new films in the traditional film industry continued to decline after the epidemic. Warner Bros. has reportedly released just seven films this year, a record low in the company’s history. Therefore, many theaters struggling on the line of life and death hope to cooperate with streaming media platforms in the future.
According to the Financial Times, the chairman of the National Association of Theatre Owners, John Fithian, revealed that the association is discussing cooperation with streaming media platforms such as AppleTV+, Netflix and Amazon, hoping to play in theaters their videos.
“All three companies are looking at the possibility of expanding the theatrical release,” says John Fithian, who says the situation is more optimistic: “They are starting to realize that they can make some money in theatrical releases before they go online. “If the cooperation goes well, in the next 12 to 18 months, the film supply of the association will be even more abundant than before the epidemic.
For streaming media platforms, it is also a good thing to ease relations with theaters. Although it flourished during the epidemic, with the influx of giants and traditional film and television companies, the competition in the industry has gradually intensified, and each platform naturally needs to be prepared for danger.
Netflix, once the industry leader in the past, is also showing signs of weakness recently. In the second quarter of this year, Netflix’s $8 billion in revenue grew by only 8.6% year-on-year, the slowest growth rate in history, and at the same time it lost nearly 1 million subscribers. Therefore, this time, “Knives Out 2” was released in three major theaters and was only launched for streaming a month later, and Netflix may have also made concessions and attempts.
This cooperation is a symbolic attempt under the long-term confrontation between streaming media and theater chains, but it is obviously too early to truly achieve a balance.
In an interview with McKinsey, Stacey Sher, who has more than 30 years of filmmaking experience, believes that streaming and theatrical releases “give distributors and filmmakers more options.” This answer is somewhat ambiguous, but it is difficult for anyone to give an exact answer. After all, there are still many problems and details between theaters and streaming media that need to be resolved.
As an industry insider said: “Although a new standard for film release windows is emerging, we are not yet sure what this new standard will look like.”
Finding new optimal timeframes for each window is difficult after new channels emerge and tip the balance.
If we stand from the perspective of the film producer, we still aim at maximizing the overall revenue of the film, because the profit model of the theater chain is directly injected through the box office, while subscription-based streaming media such as Netflix provide fixed monthly subscriptions Therefore, the revenue loss caused by shortened theatrical show time will need to be compensated by more subscribers on the streaming media platform.
In December, analyst firm MoffettNathanson estimated that Warner Bros.’ decision to release both HBO Max and movie theaters in 2021 would cost the company $1.2 billion in lost revenue for the year, with HBO Max averaging $1.2 billion a month,media reported. With user revenue approaching $12, streaming will need to add 8.3 million new users this year to make up for the loss. However, the performance of different movies in theaters and streaming media is bound to be different, so it is difficult to predict how the specific distribution arrangements should be set.
If we stand in the perspective of one of the theater chains or streaming media and take into account the maximization of our own profits, then things will only be more complicated and continuously in a dynamic game.
Therefore, this handshake between Netflix and the theater may just be a mutual compromise between the tired parties. And what the future of cinema and streaming will be, only time will tell.