The Major Theater Chains Won’t Play Netflix, but Fathom Already Points to a Compromise

Fathom Events, owned by three theater chains, provides a model to follow for theatrical Netflix releases.
"They Shall Not Grow Old"
"They Shall Not Grow Old"

It seems like the battle that will never be resolved: Netflix wants to screen its best films in top domestic theater circuits. The chains say, “Never! Not until you respect the 90-day theatrical window!” And then Netflix says, “Never!” And so it goes on, and on.

What if I were to tell you that theaters already screen movies without regard to their streaming dates? That they already have the solution to this seemingly intractable issue? In fact, they already own a well-established company that’s uniquely positioned to resolve it: It’s Fathom Events.

Based in Greenwood Village, Colo., and jointly owned by AMC, Regal, and Cinemark, when Fathom launched in 2013 it focused on broadcasting opera, stage shows, and other “live” events onto some of the 20,000 screens that the chains control in North America. Today, Fathom increasingly shows movies. Sometimes they’re classics, like Studio Ghibli’s “My Neighbor Totoro,” but they also have a brisk business in screening otherwise unreleased titles that lend themselves to limited but elevated play in about 600-800 theaters.

Last month, Rob Zombie’s Lionsgate release “3 From Hell” showed September 16-18 in 667 theaters as a Fathom Event. It grossed $1.8 million, with a one-day encore in October bringing the total to $2.1 million. Then, on October 15 — 29 days after its debut — it could be rented on iTunes, Amazon, and VOD. October 21 saw the one-day release of Quentin Tarantino documentary “QT8: The First Eight.” On December 3, 43 days later, it will be available at home.

“Three from Hell”

So why not Netflix? What is different, beyond Noah Baumbach’s “Marriage Story” and Martin Scorsese’s “The Irishman” being far superior films (no disrespect, Mr. Zombie) that would generate significantly higher revenues? Theaters get to reinforce their position as superior, first-position movie platforms. Netflix gets exposure to a limited audience for their later showings as previews.

The issue, for both the theater and for Netflix, is how long they would want films to play. Fathom utilizes short-term previews — although Warner Bros. took the huge Fathom interest in Peter Jackson’s World War I documentary “They Shall Not Grow Old” and ran with it in later theatrical release. (The domestic totals for this came to $18 million, about $8 million from three separate Fathom dates.)

Fathom might want to limit further showings, with Netflix seeking awards season theatrical runs of close to normal play in New York and Los Angeles. Fathom events are often unique to their limited exposure. But this could be finessed easily.

Like any retailer, exhibitors are conservative and resistant to change. Three decades ago, in the early days of my long career as a film buyer, the owners of my Chicago-based specialty chain went to the head of Warner Bros. and suggested that theaters should become a place where consumers could buy and rent the then-new format of videos. Blockbuster Video and its competitors didn’t yet exist.

The response: “Interesting idea.” But when word got out to large theater chains, they rejected the idea out of hand. Video was a threat to their business; they didn’t want to do anything that would help it.

Some things never change. But that’s what makes the Fathom conundrum so confounding. Things have changed, and Netflix didn’t force the hand: Chains created Fathom for its own purposes. AMC, Regal, and Cinemark are already evolving to a new model that allows limited screenings of films that will soon be available at home.

Theater chains could give these Netflix titles the screens they deserve, with no loss of face. As a position, it’s forward thinking rather than petty and self defeating, denying consumers what they clearly want.

A later CEO of a company I worked for, who previously ran the dominant Boston circuit, told me his theory of exhibitor responsibility. He personally despised Andrew Dice Clay, who had some top movies in the late ’80s. He said he preferred not to play these films. But, his philosophy was that if his theater was the only one in town, he’d reluctantly play it. Maybe for a week, maybe putting up a sign suggesting people not see it. But he owed the public a chance to see a legitimate film and not deny it at least minimal exposure.

We need more of that. Fathom provides the way.

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