Netflix, iPic Entertainment Agree to Screen Original Movies in Theaters, Online Simultaneously
October 04 2016 - 11:40PM
Dow Jones News
Netflix Inc. signed a deal with luxury theater-chain iPic
Entertainment to simultaneously screen its original movies in
theaters the same day that they appear on the streaming service,
the latest deal to expand Netflix's theatrical ambitions.
Netflix movies in the next year will play in iPic theaters in
Los Angeles and New York City, with the option of showing at iPic's
13 other locations or independent theaters. Netflix has shown its
movies concurrently in theaters before, but the iPic deal
represents its first long-term commitment with an exhibitor.
Terms of the deal, such as how the companies would split
ticketing revenue, weren't disclosed. Netflix steadily has expanded
its original-programming division in recent years, a move
interpreted by Hollywood as a threat to movie theaters. In signing
a deal with iPic, Netflix has joined with a high-end exhibitor that
has broken with theater orthodoxy in the past.
IPic's deal covers 10 films—a "substantial" portion of Netflix's
original movies for the year, Chief Content Officer Ted Sarandos
said, and it may be extended.
For Netflix, the deal can bring additional box-office revenue as
it contends with slowing growth in the U.S. While Mr. Sarandos
played down the idea that it could drive significant subscriber
additions, given Netflix's existing 47 million U.S. members, he
said it could help promote the brand.
"Putting it in a theater might create a shorthand for people to
understand these are really big movies," Mr. Sarandos said. "These
are not 'TV movies.' "
About 98% of iPic customers subscribe to a streaming service, a
company survey found, and 84% of them had a Netflix account, said
iPic Chief Executive Hamid Hashemi. He's counting on consumers
distinguishing between in-home and out-of-home spending, much as
they do with food, he said. "You have a kitchen in your house, but
you still go out to a restaurant."
With the theater-distribution deal, Netflix is looking
increasingly like a Hollywood studio—albeit with an eye toward
shaking up the way movie business has been done. The streaming
juggernaut wants to collapse the complex "windowing" business rules
in Hollywood that result in consumers being able to watch movies in
their house only months after they play in theaters.
"What defines a movie being a movie used to be it being on a
theater. I think that's a dying generational definition," Mr.
Sarandos said.
Netflix has found a willing partner in that fight with iPic.
iPic is a relatively small chain of 15 multiplexes, with about
20 more in development, but Mr. Hashemi has cut a large figure for
himself in the industry.
Part of that has come through litigation: He is suing some of
the nation's largest exhibitors over a longstanding movie-booking
practice called "clearance" that has kept certain titles from his
theaters.
The iPic chain also has gained notice for nontraditional
programming and flourishes designed to banish the stereotype of
sticky floors and stadium seating. He helped introduce in-theater
dining and the oversize leather recliners now prevalent in the
industry. His New York City multiplex, which opens Friday, will
feature "pod" seating that creates a private enclosed area inside
the auditorium.
iPic theaters, with lobster rolls on the menu and monogrammed
blankets for certain members, is "what I've been saying theaters
should be doing for years: differentiating the out-of-home
experience," said Mr. Sarandos. The chain's ticket prices are
higher than at most theaters and can approach $30.
iPic will start screening its first Netflix movie, "The Siege of
Jadotville," on Friday. The Christopher Guest comedy "Mascots"
follows Oct. 13.
Previous Netflix movies have done little business upon
simultaneous release. "Beasts of No Nation," playing in about 50
locations, made only $90,000 when it was released last year,
according to comScore Inc.
Netflix and iPic tested their arrangement earlier this year with
the Netflix children's movie "The Little Prince." "Nearly every
seat was sold for the entire length of the run," said Mr. Sarandos,
declining to provide further details.
Netflix has written big checks to lure A-list talent for its
movies. Brad Pitt is starring in and producing the Netflix comedy
"War Machine," and Angelina Jolie is making "First They Killed My
Father," a film based on a Cambodian refugee's memoir.
The new Manhattan location was especially important for
Netflix's awards ambitions. For a film to be eligible for an Oscar,
it has to play for at least a week in New York and L.A.
Write to Erich Schwartzel at erich.schwartzel@wsj.com and
Shalini Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
October 04, 2016 23:25 ET (03:25 GMT)
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