Netflix, Inc. (NFLX - Analyst Report) recently signed a deal with luxury theater iPic Entertainment to release its movies in theaters at the same time they are released online. The two entities have refrained from disclosing the financial terms of the deal.
Per the deal, Netflix’s upcoming original movies will be screened at as many as 15 high-end theaters (including New York and Los Angeles) of iPic. Initially, the contract includes 10 Netflix films for screening including “The Siege of Jadotville” and “Mascots”. Earlier this year, iPic had screened Netflix’s “The Little Prince” as a part of the trial run.
The Tiff between Theaters & Streaming Companies
This deal is the first long-term contract between a streaming provider and a theater, per media reports. The simultaneous release of movies online and at theaters has been debated for quite a while now. This is because the theater chains and the representing organizations like National Association of Theatre Owners (NATO) swear by the traditional release frame for movies that is a window of 90 days between the release in theaters and online for home watching.
In fact, NATO chief, John Fithian has already expressed his displeasure over the aforementioned deal stating “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.” He went on to say that “Simultaneous release, in practice, has reduced both theatrical and home revenues when it has been tried.”
Despite the conflict, the move is a positive for this streaming giant as it will not only get greater brand visibility but it will also open up the possibility of nominations for the prestigious Academy Awards. This is because a feature film is only eligible for an Academy Award after it has been screened at a theater in Los Angeles County (for seven consecutive days).
Netflix has been taking a number of initiatives to strengthen its position as a premium content provider,given increasing competition from players like Alphabet’s Google (GOOGL - Analyst Report) , Amazon (AMZN - Analyst Report) , Hulu and even non-traditional players like AT&T Inc. (T - Analyst Report) , which has been focused on strengthening its content and online streaming services following the acquisition of DirecTV.
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