At least one major theater chain has finally warmed up to the idea of giving Netflix movies a wide release.
Cinemark, the third biggest cinema operator in the United States, will show Netflix’s upcoming zombie movie, Army of the Dead, in the majority of its 330 US locations, the company announced yesterday. The film will play exclusively in theaters beginning on May 14. A week later, it will debut on Netflix. Cinemark will still have the option of continuing to screen the film beyond that point, but it will lose the exclusive access. Army of the Dead will also be shown at a handful of other US theater chains, for a total of about 600 locations, Indiewire reported.
That’s easily the widest exclusive theatrical release for a Netflix film ever. The company has previously shown some of its films—mainly smaller-budget awards contenders—in a limited number of theaters in order to qualify for the Oscars. But despite years of trying, it’s never been able to give its more mainstream movies a wide theatrical release.
Until now, the major theater operators refused to show Netflix movies because it conflicted with their business model. Normally, a film would play exclusively in theaters for three months before becoming available on streaming or on-demand services. But Netflix wanted that window of theatrical exclusivity drastically shortened, so its streaming subscribers wouldn’t have to wait long to see a movie after it debuted in the theaters. The theaters wouldn’t budge.
Then the Covid-19 pandemic happened. With consumer habits shifting heavily towards at-home options, some theaters made deals with studios to shorten that window. AMC Theatres, the world’s largest chain, and Universal Pictures agreed last year on a historic 17-day window, shattering distribution standards that dated back to the 1980s. Since then, theater chains and studio have made similar arrangements, but the exact length of exclusivity varies.
How Netflix can benefit from movie theaters
So it doesn’t make sense anymore for theaters to shut out Netflix—especially since they are desperate for new content right now as US consumers re-learn how to go back to the movies. Netflix, though it has never wavered from its streaming-first core strategy, has always wanted a more robust theatrical presence for its big-budget movies.
“We’ve never had any issue with movies being in theaters,” Ted Sarandos, Netflix’s co-CEO and content boss, said on an earnings call (pdf) in January. “Our biggest issue has been that you had to commit to this very long window of exclusivity to get access to any theaters. So if those windows are going to collapse and we’d have easier access to show our films in theaters, I’d love to have consumers be able to make the choice between seeing it out or seeing it at home.”
At first blush, it may seem like theatrical releases could cannibalize Netflix’s streaming business. But they have several benefits. They offer the potential for a non-trivial new revenue stream: Lots of consumers would probably prefer to see big-budget action movies like Army of the Dead at a theater, if given the choice.
Theatrical releases also serve as free marketing of the Netflix brand to both consumers and artists. It signals to other filmmakers that working with Netflix doesn’t necessarily mean their movies won’t be seen in theaters. That could come in handy with directors like Rian Johnson, a huge proponent of theaters, who is developing two sequels to his box-office hit, Knives Out, for Netflix.
AMC and Regal Cinemas (the second biggest US chain), will not show Army of the Dead. And while 600 is a huge number of theaters for a Netflix film, it’s still tiny compared to a normal theatrical release for a big-budget Hollywood movie. Avengers: Endgame, for instance, screened in nearly 5,000 theaters.
Still, the agreement marks the start of a new era for both theaters and the world’s most popular streaming company. It’s a stark example of how the pandemic helped thaw a longtime entertainment feud and likely changed how Hollywood does business forever. In a statement, Cinemark and Netflix said they “anticipate there will be more to come.”