In much the same way it ruffled feathers in the television industry by releasing an entire season of a show at once, Netflix Inc. is now challenging one of the longest-held norms of the movie industry – that blockbuster films should always make their debut, exclusively, in movie theatres.
This week, the on-demand Internet TV behemoth announced that it will, for the first time, team up with a major motion picture studio to release a full-length feature film. In a move aimed squarely at challenging the norms of the motion picture industry, Netflix and TWC will make the movie – a sequel to the wildly popular 2000 martial arts title Crouching Tiger, Hidden Dragon – available in theatres and on the Netflix platform simultaneously.
The film, titled Crouching Tiger, Hidden Dragon: The Green Legend, is being produced by The Weinstein Company. It will be released in theatres and on Netflix on August 28, 2015.
In many ways, Netflix's foray into the movie making world echoes its recent work in the TV show industry, where the company began to develop its own content in large part to sidestep the many hassles of working with traditional content providers – hassles such as regional restrictions, content expiry dates and release windows deliberately pushed back so as to not hurt DVD sales.
By producing its own content, Netflix not only avoids all these headaches, it also gets to put its massive store of consumer viewing data to good use – in effect making the kind of content that its viewership statistics indicate customers are likely to watch.
Forrester Research analyst James McQuivey points to the wealth of martial arts content currently available on Netflix – content that has likely produced viewership statistics to support an audience for a Netflix-backed movie of the same genre.
"It's clear that, if you were sitting on that data and seeing that people want to watch these movies, you think you ought to give them another one," he said. "When people make copycat movies in Hollywood, they base it on box office numbers … but Netflix knows you by name."
A Netflix spokesperson said there's no difference in strategy between how the company is approaching its first movie project and how it approached previous TV show productions. "This is all about consumer choice."
But there's little doubt that the strategy of releasing the movie in theatres and on-demand at the same time (a strategy known in the industry as a "day and date" release) has little support among many cinema chains. The movie will be shown on select Imax screens worldwide, but some theatres won't be playing along.
"We believe the theatrical window is an important component of the overall movie sales cycle," a spokesperson for the Cineplex Inc. theatre chain said. "Playing movies 'day and date' with the release to home entertainment is not part of our strategy. As such, we will not play any movie 'day and date' in our theatres with any other windows. This would include our Imax auditoriums."
Netflix plans to release several more movies in a similar manner in the coming years. As with its original TV shows, the Netflix-backed movies are unlikely to become the industry norm any time soon, but they at least give the company a means to avoid the many terms and conditions that come with traditional licensing deals – while producing original content in the process.
"It's the right time to experiment with this kind of model because everything is up for grabs right now," said Mr. McQuivey.
"Will it become the way a majority of films are made? No. But that said, it can still make a tidy sum of money in the meantime."
Editor's note: The Weinstein Co., not Netflix, is releasing Crouching Tiger, Hidden Dragon: The Green Legend in theatres.