Netflix (NASDAQ:NFLX) is on a mission to start closing the yawning gap between the theatrical debut of movies and their availability for online streaming, forcing Hollywood to rethink where to release new films.
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With a sequel to martial-arts drama "Crouching Tiger, Hidden Dragon" and four Adam Sandler movies, Netflix will have brand-new content for subscribers around the world. That instant access is much quicker than the typical 7-to-18 months Netflix must wait to stream new releases from Hollywood studios.
Netflix has said it believes new and exclusive movies will help it build on its base of 50 million global customers. The company will release its latest subscriber numbers in its quarterly report on Wednesday, when it is expected to face questions about the original movie strategy.
Sandler's films will go straight to Netflix in the nearly 50 countries where the company operates. The international rights are key because many movie rights are tied up by other providers in overseas territories.
Janney Montgomery Scott analyst Tony Wible estimates Netflix will spend up to $40 million on production of each Sandler film. That cost would be similar to what Netflix pays to stream a single film from a Hollywood producer such as DreamWorks Animation months later, he said.
"The perk here is you don't have to wait nine months," said Wible. "You have something you have exclusive access to across the globe."
If it can convince more stars and directors to accept straight-to-streaming deals, Netflix could shake up movies as it did television. In the case of its original series like "House of Cards" and "Orange is the New Black," it has fueled binge viewing by releasing all episodes at once. Netflix also won the first major Emmy awards for a series delivered online.
With more original movie deals in the works for Netflix, Hollywood directors told Reuters they are weighing the pros and cons.
David Ayer, director of the coming World War II drama "Fury" starring Brad Pitt, said he "absolutely" could be lured by an online distributor for a future project.
"The screens we watch on are becoming handheld (and) portable," he said. "It's the future of the business."
Ayer said he was hopeful that an online platform would grant him the same artistic freedom that Sony Pictures did with "Fury." "That's what studios need to do in order to maintain access to the labor of love of a filmmaker," he said.
Others in Hollywood may resist going to Netflix first.
Ned Benson, a first-time writer and director, took an unconventional approach for his release of "The Disappearance of Eleanor Rigby," creating three separate films called "Him," "Her" and "Them."
While it seemed logical to release the three installments via video on demand for binge viewing at home, Benson wanted the films shown in theaters first.
"I really still believe in the theatrical model and the movie-going experience, even though we live in this day and age where you can stream and do things online via Netflix or VOD," Benson said. "I feel like we still have that option later."
The plan to release "Crouching Tiger, Hidden Dragon: The Green Legend" on Netflix in all of its markets in August on the same day the movie appears in select IMAX theaters has also raised the hackles of some theater owners. Chains AMC Entertainment (NYSE:AMC), Regal Entertainment Group (NYSE:RGC) and Cinemark Holdings (NYSE:CNK) are refusing to show the film.
It remains to be seen whether such opposition will deter other filmmakers from playing ball with Netflix in the future.
(Reporting by Lisa Richwine; Additional reporting by Piya Sinha-Roy; editing by Gunna Dickson)