Netflix Movies Kill Blockbuster, Movie Theater Industry Next?

Netflix movies and television streaming killed popular competitors like Blockbuster. Now the Video On Demand (VOD) service is looking to take down the movie theater industry.

Ted Sarandos, the chief content officer for Netflix, gave a keynote speech on October 26, 2013 at the Film Independent Forum in Los Angeles. In his speech, Sarandos challenges Movie Theatre owners, like Regal and Cinemark, by saying that they are actually killing movies. By limiting the access to movies through the “window release” strategy, they are limiting the innovative capability of the movie viewing experience. Sarandos said:

“Theater owners stifle this kind of innovation at every turn. 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 theater owners try to strangle innovation and distribution, not only are they going to kill theaters–they might kill movies.”

Based on the success of the Netflix original series House of Cards, Sarandos pointed to the potential of VOD streaming for movies. Imagine if you could go to the theater or just watch the movie at home, your choice! Even Kevin Spacey, star of House of Cards, recently got into the discussion. In a speech of his own, Spacey challenges the U.S. system of television release.

Sarandos’ remarks naturally drew a sharp rebuke from the main movie industry association. National Association of Theater Owners president John Fithian said in a statement, “The only business that would be helped by day-and-date 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.” The war is on.

If what Sarandos and Netflix are suggesting works, it would completely change Hollywood’s current business model. Studio “windows” releases typically go something like this: movie theaters have a 90 day window of exclusivity for the vast majority of films, and the rollout of on-demand, DVD and Blu-ray sales and streaming services is staggered based on a wide range of deals– Apple gets some things first, Wal-Mart other things, and eventually some of it will wind up on Netflix.

Realistically, Netflix is not destroying the Movie Theater industry anytime soon. But what many insiders predict Netflix is aiming to do is shorten that theatrical exclusivity window to 45 or even 30 days. Netflix movies and quicker access to the major blockbuster Movies? That sounds like a win for customers. The only question is, will it kill the Movie Theater? Will you stop going to the Movie Theater if Netflix releases movies the same day?