Netflix Deal With iPic Secures Theatrical Foothold For Its Original Movies; NATO Urges To “Tread Lightly” – Update

UPDATED with NATO response: iPic Entertainment has decided to break ranks with other exhibition chains by agreeing to show Netflix’s original movies at the same time they’re available to the streaming service’s customers.

Major theater owners have refused to pick up Netflix’s releases in an effort to protect the industry’s exclusive access to new films. They fear that many customers, if given a choice, will choose to watch some releases at home.

But iPic says that it will show Netflix-produced war thriller, The Siege of Jadotville in Los Angeles beginning on Friday — the same day it becomes available online.

On October 13, iPic Fulton Market Building in New York will show Christopher Guest’s Mascots.

The deal with Netflix covers 10 films, The Wall Street Journal reports.

“We are very excited to announce this significant game changer for consumers and fans, paving way for a new frontier in shared experience viewing of Netflix entertainment,” iPic CEO Hamid Hashemi says.

Netflix Chief Content Officer Ted Sarandos says that consumer choice “is a pillar of our philosophy and the unparalleled level of comfort and hospitality offered at iPic made this a natural partnership.”

Most theaters balked in 2015 when Netflix proposed a simultaneous release for its first original film — Beasts Of No Nation — although several Landmark theaters showed it.

Films need to play in Los Angeles and New York theaters for a minimum of a week in order to be considered for an Oscar.

Boca Raton-based iPic has 105 screens in 14 venues in states including Arizona, California, Florida, Illinois, New Jersey, Texas, Washington and Wisconsin. It is accustomed to challenging industry norms: Last year it sued AMC Entertainment and Regal Entertainment for making clearance deals with studios that it alleged stifled competition.

iPic’s deal with Netflix now puts it at odds with other exhibition owners who see their status in the movie value chain under attack.

Last month Fox CEO James Murdoch told an investor gathering that “we have to think about these crazy hold-backs that theater owners put in place — these blackout periods…Our business rules are of no interest to families who just want to see the movie.”

The National Association of Theatre Owners responded that this is a matter to be negotiated between studios and exhibitors although “a period of exclusivity of theatrical release is important for movie theaters and the entire movie industry.”

NATO chief John Fithian echoed that view today in a response to the Netflix-iPic deal. Here’s his statement:

As always, individual companies make their own decisions about the appropriate release window for movies. The theatrical window is a longstanding industry practice that has benefited studios, theaters and moviegoers. We all should tread lightly and be mindful that over the years, the film industry’s success is a direct result of a highly successful collaboration between film makers, distributors and exhibitors.

Simultaneous release, in practice, has reduced both theatrical and home revenues when it has been tried.

Veteran theatrical distributors, like Roadside Attractions’ Howard Cohen – which released Arbitrage and Margin Call – have moved away from simultaneous release, in part because “The theatrical model continues to have a lot of value, especially because it means something to viewers when films play in theaters.” In his view, releasing films simultaneously in theaters and on video-on-demand platforms, streaming or otherwise, leaves consumers with a bad impression. “It has somehow become a signal that the movie isn’t any good.” (NY Times, Jan. 25, 2016: “So Far, Amazon and Netflix Are Sundance’s Top Buyers”)

Just as Netflix and its customers put a value on exclusivity, theater owners and their customers do too.

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