Not coming first to a theater near you: four new movies starring comedian Adam Sandler and a sequel to the action blockbuster “Crouching Tiger, Hidden Dragon.”
Instead, Netflix said this week it will make the Sandler movies and release them to its online subscribers, with no plans to show them widely in theaters.
The move has the potential to disrupt the business food chain that has fed Hollywood for decades. First dibs on a big, splashy movie always went to theaters. After that, a film traveled through a rigid schedule of staggered releases on DVD, cable television and then online services such as Netflix and Amazon Instant Video.
Netflix is seeking to flip that formula by controlling the process, from the writing of the script to the consumer experience of the premier. That not only takes aim at the underpinnings of the movie business, but also could help Netflix’s quest to be counted among established movie studios. To date, no technology company has had the cachet to draw elite movie stars in Hollywood and the means to distribute their films directly to consumers.
Although the announcement involved just a few movies, the news immediately turned heads in the entertainment industry.
Theater companies sharply criticized Netflix this week, as well as the Weinstein Co., which swung the deal for the “Crouching Tiger” sequel. Several of them threatened to boycott any film that appears on Netflix first.
Regal Cinemas said it will “not participate in an experiment where you can see the same product on screens varying from three stories tall to three inches wide on a smartphone.”
“We believe the choice for truly enjoying a magnificent movie is clear,” said Russ Nunley, spokesman for Regal Cinemas, which operates 7,341 screens in 573 theaters in the United States.
Theater companies have long worried that improving options in the living room would keep consumers at home. But those technologies — television, VHS recorders, DVD players and big- screen TVs — haven’t significantly eroded ticket sales.
But Netflix and other video streamers have developed technology to reach consumers in new ways while evolving into studios in their own right.
Some moviemakers are embracing the rise of such video streamers, which gives them more distributors to bid for their content. As long as their films get out to the biggest audiences, the content producers say it doesn’t matter whether their work is viewed on a smartphone or a high-definition, 3-D screen with Dolby surround sound.
“The moviegoing experience is evolving quickly and profoundly, and Netflix is unquestionably at the forefront of that movement,” said Harvey Weinstein, co-
chairman of the Weinstein Co. His company is producing “Crouching Tiger, Hidden Dragon: The Green Legend,” to be released on Netflix and a select number of Imax theaters. The original made $213.5 million at the global box office.
Wade Holden, an analyst at media research firm SNL Kagan, said independent filmmakers and smaller studios will be open to direct distribution deals with Netflix, Amazon and other online services. They are struggling to get their films released in theaters that are dominated by massive franchise movies from Disney and Warner Bros., such as “Guardians of the Galaxy” and “The Lego Movie.”
“For content producers, these opportunities by Netflix and others are good for them. They want to see what happens on these platforms, and this is definitely a new way to get revenues,” Holden said.
The bigger studios, however, have benefited from their relationships with theater owners, he said.
“What’s interesting about ‘Crouching Tiger,’ though, is that it is a sequel to a huge title, which is something we haven’t seen done before by a company like Netflix,” Holden said.
Netflix executives said they pushed to produce films because they often had to wait up to 18 months after a movie’s release before they could buy the rights to put it in their library. Costs were rising for those rights, too.
“The existing business models for movies are hugely frustrating for today’s on-demand consumer,” Ted Sarandos, Netflix’s chief of content, said in a phone interview. “Everyone has a big stake in the status quo, and incumbents don’t like change.”
Netflix didn’t release the financial terms of its deal with Sandler, a comedian whose movies have been among the most watched — and repeatedly watched — in Netflix’s library, the company said. The company also didn’t provide details about the movies or their release schedule.
But Sarandos, who met Sandler through mutual friends, said the deal came together easier and faster than he expected.
“He connected with it right away; he was engaged and we moved quickly,” Sarandos said. “He knows home-watching of his movies has created a relationship with audiences. They go to the movies. They are watching at home and watching again.”
Netflix has been at the forefront of several shifts in entertainment — first taking down Blockbuster and other video stores and then roiling the television industry by giving consumers a good-enough alternative to expensive cable packages. With 50 million subscribers paying about $9 a month, Netflix has far more customers than the nation’s largest cable company, Comcast.
“Netflix has a lot of money to play around with, so it is no surprise that they are trying to generate more original content, including movies, because that puts them in the driver’s seat,” said Phil Contrino, vice president and chief analyst for Boxoffice.com, a movie research firm.
Sandler, 48, who will produce and star in the Netflix films, is the company’s latest celebrity-driven deal. Last year, it signed a deal to launch a talk show for Chelsea Handler this month.
Sandler’s reaction to the deal gave viewers a taste of what’s to come.
“When these fine people came to me with an offer to make four movies for them, I immediately said yes for one reason and one reason only. . . . Netflix rhymes with Wet Chicks,” he said in the Netflix news release. “Let the streaming begin!!!!”
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