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10 Things We Learned at CinemaCon, from Netflix’s ‘The Irishman’ Impasse to Windows Nailed Shut

The 2019 convention is dedicated to brick-and-mortar theaters, but streamers like Netflix set the agenda.

Cinepolis

Cinepolis

Cinepolis

Going into CinemaCon 2019, everyone knew the industry was in a state of upheaval; the question was, what would theaters do about it? “Of all the years I’ve been in the industry, it’s one of the moments of deepest disruption,” said Alejandro Ramírez, CEO of Cinépolis. As the head of the world’s fourth-largest theater chain, he controls 624 theaters and 5800 screens. Even so, he added, “movies have survived every new technology. Movie theaters have survived because they are out-of-home entertainment and because of the social and communal aspects of the experience. The main mission we have as a company is to keep alive the theatrical experience.”

No, theater owners are not in denial about the threat from streaming services like Netflix. Helen Mirren spoke for all of them when she said from the CinemaCon stage: “I love Netflix, but fuck Netflix!” (Her expression of support was far more entertaining than that droning mantra: “We love theaters.”) However, exhibitors are existentially terrified. But over four days at CinemaCon, I discovered, they are unified.

Here’s what I learned.

Cinepolis

One of Cinépolis’ luxury theaters.

Cinepolis

1. Theater owners love technology. 

Theater owners aren’t Luddites. They have always chased the latest tech in order to keep butts in seats. The smorgasbord of entertainment choices has forced big circuits to keeping spending on 3D, laser projection, Dolby Atmos, stadium seating, in-theater wining and dining, the recliner, the shaky-seat revolution, A.I. ticket and concessions ordering, and PLF (premium-price large format) theatres like UltraAVX, Dolby Vision and IMAX. MoviePass taught them a bunch about how to model their own data mining and subscription ticket services.

2. The current theatrical window will not budge.

Studios evolved their ancillary windows strategy to see as much revenue out of each title as possible; before Netflix, it worked beautifully. The Silicon Valley outlier wanted nothing to do with theaters until it saw the value of Oscar branding.

While Netflix has moved slowly toward a pre-streaming theater launch for high-end titles like “Roma” and “Bird Box,” mostly to lure A-list filmmakers, the service has no interest in abiding by the classic three-month window. That means Netflix has to four-wall indie theaters at substantial cost, and major chains will not touch them.

Even if Netflix only represents a few high-end movies a year, exhibitors want it to follow the same rules as the studios that do business with them week in, week out. They want Netflix to declare their box-office numbers, too. And clearly, as long as a company like Amazon Studios plays ball (most of the time), the theaters can be flexible with streaming windows; they do it all the time with indies, which often feature day-and-date releases. “Amazon premieres many of its movies in cinemas and will continue to do so,” said Ramírez. “I hope when Apple starts launching films, they will also do it in theatres.”

Exhibitors will not shorten the window throughout across the board, because they think people will not pay $9.11 (the current average ticket price) to watch a movie in a theater if it will soon be available on streaming for “free.” “With a subscription to Netflix, you don’t open your wallet every time you watch something to pay for it,” said Ramírez. “Shortening the window does not make any sense; the closer a movie’s theatrical release is to other platforms, the less people will be enticed to go to the cinema.”

Apple CEO Tim Cook speaks at the Steve Jobs Theater during an event to announce new products, in Cupertino, CalifApple Streaming TV, Cupertino, USA - 25 Mar 2019

Apple CEO Tim Cook speaks at the Steve Jobs Theater, 25 Mar 2019

Tony Avelar/AP/REX/Shutterstock

3. But there is a shift in the force. 

Some exhibitors are more flexible than others, and recognize that not every movie is made to last for months. If a movie opened on 1,000 screens, and plays on 100 four weeks later, why not let it move on to home viewing? What do theaters have to lose?

In theory, Netflix could book a movie, let it run its course in theaters, and then move it onto their platform. There’s an argument that a movie title established by theatrical play will do better on Netflix than one that isn’t. On the other hand, Netflix’s primary business is delivering value to their subscribers. Would they not announce a firm Netflix streaming date in advance, and quietly segue from theaters to their service? Hard to imagine.

Joe Pesci and Martin Scorsese on the set of "The Irishman"

Joe Pesci and Martin Scorsese on the set of “The Irishman”

Philip Vaughan/ACE Pictures/REX/Shutterstock

4. Netflix may have to open “The Irishman” via indie theater chains.

Of course, the big circuits would love to play the $175-million Martin Scorsese gangster epic — as long as it isn’t released by Netflix. Even Mexico’s Cinépolis refused to show the Oscar-nominated “Roma” — directed by favorite son Alfonso Cuarón — because Netflix would not respect the exclusive theatrical window. That means that no major chain will show the Scorsese, either.

That leaves Netflix going back to the 100 or so indie theaters it booked on “Bird Box” and “Roma.” In New York, “The Irishman” could wind up opening at the IFC Center. And in L.A., Netflix is in the process of acquiring and partnering with the American Cinematheque to program the venerable Egyptian Theatre. That would give the streamer a permanent weeknight venue for L.A. awards events and premieres all year long.

“Terminator” Dark Fate”

Paramount

5. Filmmakers keep pushing for must-see eye-popping effects.

Scorsese isn’t the only one lavishing millions on VFX to make his aging stars younger. So is Ang Lee, whose next fast-frame-rate movie “Gemini Man” (October 11, Paramount) co-stars 50-year-old Will Smith and his 23-year-old VFX-enhanced self. Why didn’t Paramount reveal more of Arnold Schwarzenegger’s T-800 in Tim Miller’s James Cameron-produced sequel to “Terminator 2”? Maybe the VFX masters are still tinkering with Schwarzenegger’s look. And Tom Hooper is layering digital fur onto his motion-captured stars, from Jennifer Hudson as Grizabella to Judi Dench as Old Deuteronomy, for Working Title/Universal’s “Cats” (December 20, 2019), his big-budget musical follow-up to “Les Miserables.”

The Walt Disney Company Home Page

The Walt Disney Company Home Page

Walt Disney Company

6. Studios could face a content shortage. 

As Disney ingests Fox and ramps up Disney+, the question remains: How many new Fox and Searchlight movies will be produced, and how will they reach customers? The net result could be fewer productions, with some siphoned off to the hungry maw of Disney+.

“Whatever model works best for their company is what they will do,” said one senior studio executive. “Apple might be free for a period of time, will excite and delight in a big way, and then they’d figure out how to bundle that offering with their products and services. The sky is the limit for them. Right before they launch in the fall, they will tell us.”

With Warner Media’s OTT service and Apple joining the fray, more streaming content will compete with people’s interest in going to theaters. However, theater owners believe that more streaming sites competing with Netflix is better than Netflix alone. “The Disney company is the largest supplier of content, they have a bunch of big movies,” said NATO president and CEO John Fithian. “They have no desire to change how they release movies at all. In fact we’re feeling good about the window right now, with the strength of the box office, and streaming is going to go all kinds of places.”

“There is nothing new with people producing content directly for the home,” said Ramírez. “What would be worrisome is in an age of more content abundance than in any other time in history, that theaters would wind up with less content, not more. I don’t see it materializing in the short run, or perhaps never, because some of the most influential players are very committed to the theatrical window. If you want to create public opinion and you want to have a major impact on the information cascade and word of mouth, you need theaters.”

Neon founder and CEO Tom Quinn agrees. “The best place to build cinema is in theaters. It’s a mystery why Netflix refused to embrace a movie like ‘Okja.’ [Netflix did book it for a few weeks of parallel release in a handful of theaters.] The largest percentage of movie watching on Netflix is still theatrical films. So they should embrace multiple models of distribution while still holding firmly onto a streaming model. It’s not news that the footprint to go day and date has been set for years in both commercial and independent theaters. They will all do it except for a couple of national chains. Netflix making a big deal about it doesn’t really benefit them. Plus the cloak and dagger of not reporting box office is silly. It’s much ado about nothing.”

Red Carpet Home Cinema

7. You can play brand-new Hollywood movies in your living room, if you’re rich. 

Former Warner Bros. distribution chief Dan Fellman and ex-Ticketmaster mogul Fred Rosen are launching rent-a-movie service Red Carpet Home Cinema. If you pass their credit check and pay to install their box in your living room, you can rent movies from Twentieth Century Fox, Fox Searchlight, Warner Bros., Paramount, Lionsgate and Annapurna for $1,500-$3,000 each, depending on demand for the title. (New Fox parent Disney, Universal and Sony are holdouts.) Prior versions of this idea failed to gain traction, but exhibition watchers wonder if this could be a baby step toward something that will become cheaper and more available over time.

8. Studios want a new Premium VOD window. 

For movies that consumers are eager to see at home right away, studios want to sell titles earlier via a new premium (PVOD) window, some three weeks after opening, for a premium price (from $20 -$35). This negotiation fell apart last year before Disney acquired Fox. Players like Netflix and Hulu mean that moviegoers already watch quality movies for nominal monthly subscription fees, so studios want to train consumers to pay a premium while they still have the chance.

AMC Theater

AMC Theater

AMC

9. Dynamic pricing is coming.

Other experiments are under way. In Europe, exhibitors are trying out airplane-style ticket pricing. Imagine: You pay more for a reserved center, aisle or leather recliner seat, and less for the standard issue rear or front row. So far, this has not reached the U.S.

10. A modest proposal.

One distribution marketing executive would like to see exhibitors agree to let each studio experiment with one movie a year of their choice outside the exclusive theatrical window. That way, they could all learn from a variety of models. What would anyone have to lose? Until they try, no one will know the results.

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