To outsiders, both Amazon and Netflix are major streaming players armed with massive budgets and high ambitions to make their mark in Hollywood. But their battle for power and prestige in the movie business highlights clashing approaches to delivering films to audiences: One is trying to rattle the long-established Hollywood model and the other is working within it.
Major film studios have relied on a system of showcasing a movie in theaters followed months later by the release of a DVD or a download. The “window,” as it's known in the industry, is a cash machine for Hollywood. During a theatrical release, audiences are drawn to the box office, since the next opportunity to watch a movie would not come until more than three months later. The window also ensures that sales of DVDs and pay-per-views don't directly compete with ticket sales, since their schedules are staggered.
For Netflix, the Hollywood window is an anachronism, an ancient system that serves the pockets of theater owners, distributors, and studios more than actual 21st-century, Internet-connected customers. Similar to the traditional cable TV package, analysts say, the window is a moneymaking apparatus on which a whole business ecosystem depends, but it’s also a model that hasn’t evolved along with massive shifts in media culture and consumer behavior. “The theaters are the next cable company,” said Ross Gerber, president and chief executive of Gerber Kawasaki, a wealth and investment management firm based in Santa Monica.
In 2015, Netflix released its $12 million film, “Beasts of No Nation,” which debuted in some theaters as well in homes at the same time. The approach angered some theater chains, which refused to screen the film. The Los Gatos, Calif., company plans to take the same approach with some of the 40 feature films it ambitiously plans to release by the end of the year.
“We are not anti-theater, we are anti-windowing,” said Netflix spokesman Jonathan Friedland.
“Beasts of No Nation” generated a lot of buzz and won several awards, but the movie made less than $100,000 at the box office.
In contrast, Amazon’s deference to the window was put on full display, on Hollywood’s biggest stage, during the 2017 Academy Awards. It was there that Amazon Studios, the video arm of the tech giant claimed two Oscars for “Manchester by the Sea,” a film whose rights the company purchased for $10 million. Unlike Netflix, which puts some of its feature films in select theaters at the same time they could be streamed, Amazon honors the Hollywood distribution model. Amazon allows its films to play exclusively in auditoriums, and only later releases them to subscribers at home. “Manchester” enjoyed a theatrical window of more than five months before it was available on Amazon. The film made more than $47 million in the United States.
(Amazon.com chief executive Jeffrey P. Bezos owns The Washington Post.)
Bob Berney, head of marketing and distribution for Amazon Original Movies, said giving films a theatrical run is critical for generating reviews, public awareness, and exposure and recognition for filmmakers. “These films become iconic out of the theatrical marketplace,” he said. In turn this buzz is what creates anticipation for audiences in theaters, and later at home. “We are finding that its important for our customers, the Prime customers, who really want to look for films that have been broadly released theatrically,” he said. Amazon does not have plans to do away with the window.
But even as Amazon appears to be playing nice within the Hollywood system, the half-a-trillion-dollar company is less reliant than Netflix on squeezing cash from the traditional film industry to grow and succeed. Amazon’s core business isn’t movies or video, it's online retail. Netflix, however, will live or die based on its content, and whether subscription revenue can support the streaming company's massive investment in movies and TV shows. Netflix plans to spend $6 billion on original content in 2017; Amazon will dole out $4.5 billion.
And Amazon’s pro-window stance can be seen as a way to undercut Netflix, some analysts say, since Amazon can offer filmmakers and other movie partners audiences at home, while also promising a traditional, splashy theater run for them. “By Amazon supporting the theater system currently, it hurts Netflix, because Amazon is doing anything they can to undercut what Netflix is trying to do,” Gerber said.