Theater Owners Express Concerns Netflix-Warner Bros. Deal Could Further Disrupt Cinema Business
LOS ANGELES – theater operators are voicing anxieties that Netflix’s planned acquisition of Warner Bros. will exacerbate existing challenges to the traditional cinema model. The deal raises fears that fewer films will have extended theatrical runs, potentially impacting revenue for movie theaters already grappling with a shifting entertainment landscape.
Some industry figures believe that once Netflix operates a studio with a significant library including franchises like “Batman,” “Ocean’s 11,” “The Lord of the rings,” “Harry Potter,” adn “The Conjuring,” the streaming giant will recognize the potential revenue from longer cinema releases.
“It could be a big win for us,” predicts Tim Richards, founder and CEO of Vue Entertainment, Europe’s largest privately owned cinema operator. “Once they’re releasing movies like ‘Barbie’ or ‘Minecraft’ that are making a billion dollars in theaters, they’re going understand that our business model can make them a lot of money, while also driving interest in movies when they go on streaming.”
Exhibitors where already facing a shortage of compelling content before the acquisition proclamation. A reduction in studio output, coupled with Disney’s 2019 purchase of 21st Century Fox-resulting in one fewer major studio-has contributed to the problem. The acquisition of Warner Bros., which currently holds the No. 1 market share, is notably concerning, having released hits this year including “Sinners,” “A Minecraft Movie,” “Superman,” and “weapons.”
“This is very consequential,” says Acuna. “Warner bros. had seven movies open to over $40 million this year. That’s never been done before and they’ve done a fantastic job of making a lot of movies across many different genres.”
During an investor call, Netflix’s Ted Sarandos highlighted that the company has already released 30 films in cinemas, stating, “It’s not like we have this opposition to movies into theaters.” However, these releases typically debut on hundreds of screens, rather than the thousands characteristic of wide releases, often to qualify for Academy Awards consideration.
Currently, netflix typically retains only 35% of ticket sales, a lower percentage than the 50% to 60% taken by major studios on larger releases.
Some exhibitors speculate that the debt Netflix is assuming to finance the Warner Bros. purchase may incentivize the company to explore additional revenue streams, such as extended theatrical windows.
“My official position is, I hate this, and I want this to not happen – but I’m not in full freakout mode,” says Randleman. “Money is still money. You can only raise prices so much on your subscriptions. How do you pay for your $80 billion investment? Well, ticket sales can definitely help you make a dent.”
