DC Film Society: Adam's Rib May 2019

Netflix v. Theater Chains: Can’t We All Just Get Along?

Adam and Director John Lee Hancock
On April 23, after all the strum and drang, the Academy of Motion Picture Arts and Sciences Board of Governors announced that nothing had changed. Specifically, the Academy left intact Oscars Rule Two, which states that “to be eligible for awards consideration, a film must have a minimum seven-day theatrical run in a Los Angeles County commercial theater, with at least three screenings per day for paid admission.” The Academy added that “Motion pictures released in nontheatrical media on or after the first day of their Los Angeles County theatrical qualifying run remain eligible.”

Academy President John Bailey added that “We support the theatrical experience as integral to the art of motion pictures, and this weighed heavily in our discussions. Our rules currently require theatrical exhibition, and also allow for a broad selection of films to be submitted for Oscars consideration. We plan to further study the profound changes occurring in our industry and continue discussions with our members about these issues.” In Washington D.C., if you want to look like you’re doing something to address a problem without really doing anything, you propose studying the problem further. It’s good to know that way of thinking has spread to Hollywood.

Let’s rewind a few months. Alfonso Cuarón’s Roma entered the Oscars as the Best Picture favorite. Netflix provided much of the funding to make Roma and was the film’s sole distributor. As I noted in a column a year ago, Netflix generally uses the “day and date” distribution model, meaning that it makes its films available for streaming on the same date they open in theaters. Theater chains and owners, as you would expect, strongly object to this strategy, arguing it threatens their whole business model. A theater has a limited number of screens, so playing a film that audiences can easily see at home doesn’t make much business sense. As such, most Netflix films have little if any theatrical distribution.

More than a year ago Netflix considered Dee Rees’s Mudbound an Oscars contender. That film did garner four Oscar nominations, but did not win any. Conventional wisdom was that the “day and date” release, and the resulting paltry distribution, hurt the film’s chances with Academy voters. For Roma, however, Netflix altered its strategy, giving the film a three-week theatrical window before streaming. That was not good enough for the major theater chains, which require a 90-day theatrical window before a film is available on streaming or video. Nevertheless, Netflix was able to get Roma into arthouse theater chains, such as Landmark, and independent theaters. The film had a much stronger media and cultural impact than Mudbound. Netflix backed that up with a huge Oscar PR campaign.

Netflix’s strategy paid off, as Roma got 10 nominations, remarkable for a black-and-white foreign language film with no movie stars. As you might expect, Netflix’s success sparked grumbling in the films distribution world. Rival distributors objected to Netflix not abiding by the 90-day theatrical video, the PR campaign, and it not sharing box office numbers. The other distributors were on the same playing field, but not playing by the same rules.

In the time between the Oscar nominations and the ceremony, the battle between Roma and other nominees was portrayed as a battle for the theatrical experience itself. The major theater chains would not even include Roma in their annual Best Picture nominee showcase. Media outlets recirculated a 2018 Steven Spielberg quote: “Once you commit to a television format, you’re a TV movie. You certainly, if it’s a good show, deserve an Emmy, but not an Oscar. I don’t believe films that are just given token qualifications in a couple of theatres for less than a week should qualify for the Academy Award nomination.” Of course Roma did have more than a token distribution, and Spielberg was not exactly a neutral party. His company Amblin Entertainment produced Green Book, another Best Picture nominee.

On Oscar night, the battle between Netflix and traditional distributors could best be described as a draw. Roma won three Oscars, including Best Director for Cuarón. However, in a mild upset, Best Picture went to the Spielberg-backed Green Book. Unprovable rumors had it that more traditional Academy voters rallied to Green Book as the best chance to stop Roma.

The battle continued into March. Spielberg reportedly pushed for a change in Academy rules to mandate a longer theatrical release for Oscar eligibility. An Amblin spokesperson remarked that “Steven feels strongly about the difference between the streaming and theatrical situation. He’ll be happy if the others will join [his campaign] when that comes up [at the Academy Board of Governors meeting]. He will see what happens.” Filmmakers such as Christopher Nolan and Paul Thomas Anderson, while not specifically endorsing changes, were on record as saying that the theatrical distribution model must be protected. But other filmmakers supported Netflix. Ava DuVernay tweeted that “One of the things I value about Netflix is that it distributes black work far/wide... I’ve had just one film distributed wide internationally. Not Selma. Not Wrinkle (in Time). It was 13th. By Netflix. That matters.” Film executive Franklin Leonard, founder of The Black List, a website with unproduced screenplays, added that “I think we can all agree that the theatrical experience is worth protecting. I, for one, do. I also think we can all agree that it is more difficult for films by and about women, people of color, and myriad other communities to access the resources necessary to secure an exclusive four week theatrical window.”

The debate continued in Hollywood and online. Even The U.S. Department of Justice weighed in, sending a letter to the Academy that changing the Oscars eligibility rules to require a longer theatrical window could raise antitrust concerns.

Meanwhile signs emerged that maybe Spielberg was not pushing a rule change as much as initially believed. He was seen having dinner with Netflix executive Ted Sarandos in late March. In fact he did not attend the April 23 Board of Governors meeting, nor did he have a proxy propose a rules change at that meeting. According to some media outlets, he even contacted the major theater chains to ask that they include Roma for the Best Picture Showcase. He told the New York Times that “I want to see the survival of movie theaters. I want the theatrical experience to remain relevant in our culture,” but added that “I want people to find their entertainment in any form or fashion that suits them. Big screen, small screen — what really matters to me is a great story and everyone should have access to great stories.”

While the Oscars battle may be over for the time being, the larger issues remain and will only continue to grow. In many ways, Netflix has already won. Netflix has Martin Scorsese’s The Irishman coming out in the fall, for which it will make a major Oscars’ push. Also on the Netflix deck are Noah Baumbach’s untitled movie starring Scarlett Johansson and Adam Driver, Fernando Meirelles’ The Pope, David Michôd’s Shakespearean The King, Dee Rees’s The Last Thing He Wanted starring Anne Hathaway and Willem Dafoe, or Steven Soderbergh’s Panama Papers film The Laundromat, starring Meryl Streep and Gary Oldman.

The projects listed above illustrate how Netflix is increasingly attracting top-flight talent. It’s so culturally ubiquitous that people will say that they are going to watch Netflix without saying what show or movie they are going to see. It feels as though every phone or laptop has a Netflix app.

Netflix has also repeatedly tapped into its deep pockets when needed, and has shown less risk aversion than others in Hollywood. When studios balked at Scorsese’s $140 million budget for The Irishman, it was Netflix who stepped in. Last month, I attended a screening of the Netflix film The Highwaymen, followed by a Q&A with the director, John Lee Hancock. Despite a solid box office record, and directing Sandra Bullock to an Oscar ten years ago, Hancock had trouble getting financing until Netflix came on board. When asked about the Netflix/theaters debate, Hancock replied that he believes in the theatrical experience, but just wanted to get his film made. If you are making a movie with a budget too high for traditional indie financing, but isn’t a franchise film, Netflix may be the only game in town. As noted, Netflix also has a strong record with movies by minority filmmakers, unlike many other distributors.

The genie is not going back into the bottle. Netflix is not going anywhere. But, guess what, neither are movie theaters. Some believed that television’s arrival in the 1950s would spell the end for theaters. They took a hit, but kept going. Others believed the advent of home video in the 80s would be the death knell. Instead box office receipts soared. So forgive me if I am skeptical with gloom and doom predictions that Netflix and the like will destroy the movie theater business model. But for any system to survive it must adapt, which could mean a deal to settle the theatrical window issue.

Making a deal would be a win for common sense. The 90-day theatrical window has grown outdated in an age when people can access content instantly. Most films don’t stay in theaters nearly that long anyway. At the same time, no window at all would remain a nonstarter for the major theater chains. A 30-day theatrical window seems like a healthy compromise. That would give a chance for marketing and word of mouth to get people into theaters, but also allow Netflix subscribers who don’t or can’t go to the theaters a chance to see it without too long a wait. And please don’t tell me a month is too much. “Stranger Things” fans have waited more than 18 months for season three, and Netflix Nation has survived.

Keep in mind the 30 days would only be little more than a week longer than the theatrical run for Roma. A year ago I wrote that “Even for those who can’t make it to theaters regularly, theatrical distribution shines a spotlight on films, so you later have an idea what to look for on streaming.” That was certainly true for Roma. Many Academy voters likely saw it online, but the theatrical presentation was what garnered their attention in the first place. Netflix will likely have an even longer theatrical run for The Irishman. Wouldn’t that make sense for just a few more of Netflix’s prestige offerings?

If Netflix made this move, the major theater chains may just have to meet them in the middle. AMC, Regal and Cinemark passing on a black-and-white foreign language film with no movie stars, is one matter. But missing out on a high profile gangster movie starring Robert De Niro and Al Pacino is different. As would saying no to a film with the actors behind Black Widow and Kylo Ren. If Netflix had a few Oscar contenders available to theater chains, refusing all of them could be shutting themselves off to a sizable audience.

The future presents yet another reason to make a deal. In the fall, Disney will unveil “Disney+” its own streaming service. WarnerMedia will be doing the same at a TBD date. Both companies possess massive amounts of content, including extensive film libraries. Both companies will be taking their content off Netflix when their respective service agreements expire.

These new players will mean that Netflix will have much more competition than it currently has from Amazon and Hulu. It also means it will need to rely more on its own content and less on those from others. Without the Disney and Warners type of franchises one way to compete would be to continue and expand efforts to attract top-tier filmmakers. To do that it would need to offer Oscar consideration, and that would still mean a theatrical window.

On the flip side, would Disney+ or WarnerMedia streaming want a 90-day theatrical window? If it’s main competitor Netflix isn’t making its subscribers wait that long, these services trying to put their feet in the door might not want to either. Disney would be in a perfect situation to dictate a smaller theatrical window. The major theater chains might not like it, but would they want to risk antagonizing the providers of their next Marvel or Star Wars film? I could easily see the window shrinking for all but the biggest blockbusters.

With all the content available and upcoming, with all the money to be made, frankly it feels ridiculous to have the same Netflix/theater chain fight we had a year ago. A compromise seems tantalizingly close. Can’t we all just get along?

Adam Spector
May 1, 2019