Remember when Netflix and big movie theater chains
hated each other?
Oh, how the tides have turned. One of those big theater chains, Cinemark, will now carry Zack Snyder’s Army of the Dead nationwide for one week starting on May 14th before the film hits Netflix on May 21st. While it’s only one week, this marks one of the biggest instances in which a Netflix film will play in theaters as part of a wide release. Previously, Netflix has run limited time releases in limited markets, meaning those in New York City, Los Angeles, Austin, and San Francisco, for example, might be able to watch The Irishman in theaters, but people in other cities and states couldn’t.
“Following the success of our limited-run in-theatre tests with Cinemark for films like Ma Rainey’s Black Bottom, The Midnight Sky and The Christmas Chronicles 2, we are looking forward to the wider theatrical release of Army of the Dead,” Spencer Klein, head of distribution at Netflix, said in a press release.
If Batman v Superman taught us anything, it’s that the worst of enemies can become the best of friends. They just need a great unifier (revenue split, talent support, good PR) and an even greater enemy (loss of revenue, talent woes, and bad PR).
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A long time coming
It wasn’t that long ago that Netflix and AMC, Regal, and Cinemark were willing to butt heads publicly. The chains refused to carry Netflix films because the streaming giant wouldn’t give in to demands for movies to play exclusively in theaters for roughly 70-90 days before hitting Netflix. That’s understandable from Netflix’s position! Netflix’s priority is always its subscribers. Asking them to spend $14 a month for immediate access to a highly anticipated film, and then forcing them to go watch said movie in theaters while still keeping their subscription, doesn’t make sense.
But then the pandemic happened, and “what makes sense” for entertainment businesses shifted. AMC, Cinemark and Regal were met by studios declaring their films would only play for a week, were delayed a full year, or were skipping theaters altogether. Universal, Disney, Sony (via sales to Netflix), and Paramount (also via sales to Netflix and Amazon) all shifted their films to streaming services.
Any power that major theater chains had — including AMC threatening to never play Universal films again — no longer existed. Theaters needed studios to give them whatever they could, and chains like AMC knew they were reliant on their distributors during the pandemic. Studios had the upper hand. They could use the pandemic to scale their streaming services, and then head back to theaters when it made sense to release their $250 million movies. See: basically everything WarnerMedia has decided around HBO Max between 2021 and 2022.
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Warner Bros. was always going to make its films available in theaters again at some point, but the pandemic allowed WarnerMedia to use new unconventional circumstances to make HBO Max more attractive to people stuck at home. That works for a specific period of time. But as the pandemic starts to subside and people venture out, why would Warner Bros. sacrifice $1 billion in box office revenue when the studio could release movies exclusively in theaters, now for a shorter period of time (like one month, the time period wherein a majority of films make most of their revenue) and then bring those titles to HBO Max?
This is a question that studios wouldn’t have posed pre-pandemic. Or rather, it’s one that wouldn’t have seemed plausible for several more years. The pandemic simply accelerated the timeline, and made it so that studios had enough ammunition to take on the biggest theater chains. Theaters don’t want to be left out of carrying big films (Marvel, Star Wars, DC, etc), and studios want to work with the chains to ensure their movies still generate the immediate box office revenue executives want.
Netflix’s entrance
Enter Netflix. Quiet, mindful, watching-everything-from-afar Netflix. There was no company better poised to use this moment of change to make the theatrical system work for future plans. Netflix isn’t changing its core business; the plan is always to put the subscriber first, but Netflix is using theatrical releases to accomplish a few specific tasks. This includes reaching new potential subscribers, playing to talent wants, and increasing its overall cultural footprint. The only thing that ever stood in Netflix’s way was the exclusivity window, as co-CEO Ted Sarandos has said.
“I did not want to hold back a movie for 200 million fans around the world so I could show them in a single theater in New York or LA for a week,” Sarandos said in an interview with The Hollywood Reporter’s Kim Masters. “That to me was the big disconnect…Out of necessity, people are more flexible and creative about windowing. If we can put them in screens to give people who want to go out and see a movie the opportunity to do that, that’s a great thing, as long as we can do that in a way that doesn’t interfere with the core business.”
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With theatrical windows effectively collapsing, Netlflix can approach Cinemark and other theaters and ask for a similar treatment as the other studios. Netflix is no longer the outlier. Big, blockbuster style movies like Army of the Dead are the type of films theater chains want. Even if it’s only one week, it’s not like multiplexes are overrun with offerings for audiences right now. Having Army of the Dead might be the type of movie that convinces people to return to theaters.
As theatrical windows continue to constrict, and as lines are redrawn to reflect the new normal, theatrical exhibitors want partners whose films will bring in audiences. Netflix has the power to offer just that, now on a national scale. As Sarandos told analysts on a recent earnings call, Netflix is making the equivalent of billion-dollar movies. It’s what exhibitors need. Take AMC, one of the largest theatrical exhibitors in the world. In its most recent quarter, AMC took in only $148.3 million, down from nearly $1 billion during the same period a year before. The company’s net losses also rang in at $567.2 million. Cinemark and Regal weren’t in much better boats.
This is why the partnership makes sense for Cinemark — theater chains need big budget, big star, splashy blockbusters. But why would Netflix want to be in theaters? The revenue take likely isn’t groundbreaking at just one week, and it actively delays subscribers from being able to watch at home the second it’s available. Remember, Netflix very publicly said in 2017 that “since our members are funding these films, they should be the first to see them.”
Two things have become more apparent for Netflix: subscriber growth in the United States has slowed and Netflix is actively courting directors who are fed up with studios they’ve worked with in the past.
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The first is harder to solve, but part of reminding audiences that Netflix is home to good or fun movies is reaching an audience of people who might not have Netflix (or chose to unsubscribe) on their own turf. Theaters are that space. Netflix already plays trailers before other movies in theaters to remind people about the streaming service, so why not get two bites out of the same apple? Add in that Netflix can say they’re doing this so movie lovers get to experience Army of the Dead whichever way they prefer, and it seems like an ultimate win.
Finally, and arguably the most important, it makes Netflix a viable partner for directors who covet wide theatrical releases. Christopher Nolan condemned Warner Bros. for its decision to release its 2021 films on HBO Max at the same time they premiered in theaters. Nolan has also called Warner Bros. home for nearly two decades. If the only thing holding Nolan back from looking elsewhere was theatrical releases in some capacity (again, that’s all changed in recent months) Netflix can promise nearly unlimited budget on a film and some form of a theatrical release. (As can Apple and Amazon.) It’s no secret that Nolan’s had issues with Netflix in the past, but signs like these, alongside shifts in the overall industry, might convince a director like Nolan to consider Netflix.
Same with Snyder. Army of the Dead is a movie that people may prefer to watch in theaters, and Snyder is the type of director to whom that may matter. Same with Martin Scorsese (The Irishman), Noah Baumbach (Marriage Story) and maybe one day Quentin Tarantino — plus a litany of other directors.
Netflix knows what it’s doing. Executives are aware of what movies to send to theaters, which directors to cater toward, and how to make it work so the streaming product is still first. Army of the Dead may be the first Netflix movie to get a national wide release, but it’s very unlikely to be the last. In fact, Cinemark is planning on more.
“We believe there will be several more,” Cinemark CEO Mark Zoradi said during a conference yesterday, as reported by Deadline, adding, “We think that there will be future movies to come.
“I would characterize it as a very progressive and positive relationship with Netflix.”
