The Triumvirate of Netflix, IMAX and Weinstein: Ideas, Ideals and Theatrical Windows
(Originally published Oct. 20, 2014)
When legacy theater chains stand, the path of the movie industry remains in 1970. There is a relentless effort for theater chains to retain the status quo because obviously the biggest payoffs for them come from exclusivity and widened theatrical windows. The future of movies on the other hand is typically the other direction. Almost similar to electrical power supply, the powers of Generation, distribution and transmission have a lot to say about the future of the industry. Content distribution is still a potent issue based on the opportunistic ideas of cinema chains to place profits above real customer satisfaction.
We speak so much about driving the movie industry into the future but according to cinema chains, the future means larger screens, larger complexes with reclining and heat-warming chairs. ‘Experience’ is relative. The opposition of AMC to Crouching Tiger’s (sequel) release on Netflix next year has a lot to do with the definition of customer experience. If your experience is so great, it would not be a brainer for me to choose your service over Netflix. The definition of experience to some may be the proximity and cozy nature of viewing from a handheld device while to some others, it could be the presence of other movie goers, and to others it could be an IMAX experience.
The story is your story; my choice of experience is up to me. The element of choice has been eroded for so long and now that a different choice is palpable, the status quo rears its head. The mood amongst theater chain distributors is somewhat like “Video on demand is cool as long as my theatrical window stays in place or even gets longer”. The pedigree of Netflix in original programming distributions parlays them as the best partner for this risky investment in Crouching Tiger 2. The windowing system has become the key theme of success for movie chains but the fact is the fact, the boy or girl has to grow. When one attribute becomes the only key to your success as a chain, then it is evident you’re really teeing on a lifeline. The backlash from movie chains is highly understandable and this could serve as a key Harvard Business School case study. The pressing question remains, if you’re left with only one life-line, are you going to phone-a-friend or stall a generation.
It is an inherent fear of Netflix that would make theater owners to threaten content creators. Though viewership numbers may not be released, it is an obvious fact that Netflix has a wider scalable audience pool. The biggest truth is there is no loser from this seeming impasse. I would not want to watch Crouching Tiger 2 on my phone, I’d prefer to watch it on an IMAX Screen but if the movie is great, I’ll watch it for the 2nd or more time again on Netflix. Usually a second trip to the theaters is a hassle for me and I avoid it totally but availability on Netflix would actually serve as my second viewing experience.
The Weinstein Company is happy with this, Netflix is happy with this, but the Theaters are still upset.
An obvious truth can come from VoD being an easier route for content piracy. At the ease of a home, piracy has no obstructions. The controls in-place to check piracy in theaters are non-existent in the comfort of a home.
A pirate could just record the whole computer screen with a screen grabber for 2 hours, and there you have it, a downloaded copy of Crouching Tiger 2 available for duplication and distribution via torrents. This is not even an issue for theatre operators, the operators are just bothered about their theatrical windows. The risks on both sides are enormous but never has anything in history been achieved because the risks were present. Netflix is taking a huge gamble, the Weinstein Company is taking a huge gamble, IMAX’s reputation is taking a huge gamble and it is only considerate for the theater chains to work the future.
This new release model is what the future of content distribution is all about and it is better to accept it with equanimity and search out ways to extract value from the offerings. It is not the end of your business, its two partners growing in a changing world. Either theater chains adapt or we’ll be having a Live, Die and no chance for Repeat.
IMAX waived its right to program screens for the Crouching Tiger sequel. This means they won’t be controlling the sort of programming played through their devices. This deal with IMAX is typically a deal with the intangible asset in a brand name. This shows what this is all about, an experiment of which theater chains shouldn’t cringe in fear about. Currently, Crouching Tiger only has 5 confirmed theaters which are the screens owned and operated by IMAX. Regal’s 86 IMAX locations and Cinemark’s 14 are currently embargoed by their respective management.
As much as this is an experiment, it is still a business with the aim of profit for the four parties involved. The questions linger, what would happen to regions with no Netflix and no IMAX Theaters, for example Nigeria. If only 5 IMAX chains commit, would that kill the experiment or would that be too small a sample size to make any judgments from. Would the international market be the focus as opposed to the domestic box office?
The challenge going forward is that a change in the system could take the cinema chains into a downward spiral. The cascading effect is chains closing down, job losses and a total departure from the traditional way of doing things. Yes this current experiment could prove the house won’t fall down immediately but the first crack would lead to the next then the next. Or it could prove the house could be expanded with more floors. It won’t be the end of cinema chains but the fact is cinema chains are going to have to evolve to be competitive and the first evolution is in a departure from windowing reliance. As an aside, theater chains could also think about Premium Video on Demand. The future is calling, answer it. The windowing system would keep getting shorter and the traditional release model for films is keeping the world leashed in the eighties.
Cinemark, Regal Entertainment and AMC Entertainment are getting the concept all wrong. Window shortening won’t make consumers stay home, a good story with great marketing would always draw you out regardless of the viewing platform. We believe the choice for truly enjoying a magnificent movie is based on the consumer’s preference and not on Regal, Cinemark or AMC.
Anyways, this is the story of an experiment with truth. The release date for Crouching Tiger 2 is set at a lackluster period in cinema releases where movie studios hold back on new releases usually due to heavy indirect competing activities. The action from the theatre chains is striking in the least as anticompetitive and as an extreme case of stifling customer choice. Digital encroachment on the theatrical windows does not directly translate to revenue reduction. If the cinema chains are so confident in their premium experience, then reducing the theatrical window should not be a problem.
This whole issue is akin to Employers joining forces to say Online MBA Graduates would no longer be hired because they didn’t dine on campus. Well sort of, the reasoning of the theater chains is in parts. Tower Heist SVOD was scrapped and Veronica Mars release was stifled. Would innovation hinge at 1980 because cinema chains are looking out for themselves at the expense of consumer experience. It’s just a matter of time till cinema chains wake up into reality, video-on-demand is here to stay and the evolution does not stop at House of Cards.
The cinema chains are hoping to be forever young, but they forget that the blueprint for the future lies with the consumer’s perception of experience. Don’t define that for the consumer.
Written by Jide Rotilu.
All views and opinions expressed in this article are those of the author and do not necessarily reflect the views of his employer.
Jide Rotilu is a former Management Consultant with a Big 4 Firm and now runs his startup; TBCA.ng , an Ondemand Consulting platform connecting global clients with Africa’s quality Independent Consultants for Ondemand projects focusing on Human Capital Consulting, Admissions consulting, Strategy, Technology, Cybersecurity and other professional services.
Originally published at www.facebook.com on October 20, 2014.
