TV was just the beginning. Now, Netflix is gunning for film studios.

October 29, 2013

Taylor Schilling in a scene from Netflix's "Orange is the New Black." (Jessica Miglio for Netflix)

Not satisfied with shaking up the television industry, Netflix says it's seriously considering getting into movies.

Anyone who currently uses Netflix for movie streaming will be familiar with the service's lackluster selection. Finding new or recent releases on it is near impossible, thanks to the film studios who see more value in DVD sales than on-demand viewing. Yet Netflix's head of content Ted Sarandos not only wants to start releasing more movies on Netflix, but also more "big" movies — blockbusters, dramas, you name it — on the same day they come out in theaters:

“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?”

Sarandos doesn't elaborate, so we're left with two possible interpretations of his remarks. One is that Netflix intends to negotiate with Hollywood more aggressively over what movies it can offer, and when. It's hard to see how this strategy can work, given that the movie industry — backed by distributors and theater operators — already enjoys immense leverage over Netflix. The company now spends over $1 billion a year on content licensing alone. And every time Netflix renegotiates its contracts, Hollywood gets another opportunity to jack up the prices. This approach seems like a non-starter.

Another, more interesting interpretation is that Netflix might become a movie studio in its own right. This isn't totally crazy; we've already seen the company produce professional-quality content for television with "House of Cards" and "Orange is the New Black." Meanwhile Ubisoft, the video game maker, set a precedent for "transmedia" when it launched a Paris film studio in 2011, the better to capitalize on its lucrative Assassin's Creed and Splinter Cell franchises.

You'd think Netflix releasing its movies alongside others at the box office might split the theater owners from the film studios. But the National Association of Theater Owners is still staunchly on the side of Hollywood. The trade group's CEO, John Fithian, says Sarandos's ideas would "kill the movie industry."

Netflix didn't respond to a request for comment Tuesday; I'll post an update if and when I hear from the company.

It might not take much for Netflix to disrupt the film business. Even though dozens of films are produced each year, Netflix's experience with television suggests all it has to do is make a couple of great hits before people begin to notice. The real question is how the plan for film fits into context. Is Netflix getting into movies because its venture into TV is really paying off? Or is it happening because the TV strategy isn't working well enough, and producing movies might help bolster the bottom line?

Brian Fung covers technology for The Washington Post.
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