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Netflix: Should the Major Streaming Service Make its Theater Debut?

· Netflix,Enterntainment,Consumer Trends

Netflix: Should the Major Streaming Service Make its Theater Debut?

Netflix, the monster streaming service, has illuminated the success of subscription services in film and show broadcasting. Since then, many cinematic theaters have found similar success in their renditions of subscription services that include perks to the traditional movie-going experience, along with the online convenience aspects that have made Netflix successful.

As theaters have incorporated aspects from Netflix in their traditional, cinematic renditions of subscription services, Netflix could conversely pull off their own take on traditional theaters and make a debut in the world of cinematic theater.

Specifically for prominent theater chain AMC, the franchise has found success in their “Stubs A-list” subscription program. An A-list subscription provides the convenience of reserving seats for three films a week and guaranteed access to previously-viewed movies, in addition to other perks, all at a monthly fee of around $20.

The convenience of these theater subscriptions mirrors the aspects of Netflix (aside from at-home streaming) that appeal to consumers: personalization to subscribers’ interests and the ease of movie selection. These Netflix-inspired provisions have opened a new channel of profit for AMC, as their subscription program has brought in over 900,000 subscribers in the span of just 18 months.

Conversely, Netflix could do the same, and more, by putting a Netflix-spin on cinematic theaters. This idea may seem retroactive, with Netflix’s platform emphasizing a film-watching experience from the comfort of its subscribers’ couches. However, the successful streaming service could successfully expand its business by reaping the benefits of the very form of cinematic experience that it currently neglects.

Currently, Netflix is faced with competitive streaming platforms that house prestigious film studios, such as Disney. Many licensing agreements between Netflix and films not owned by the company are non-exclusive, meaning that other streaming services can offer the same films in their library. Having similar film selections with its competitors puts Netflix at a disadvantage, as consumers no longer see a Netflix subscription as a “must-have”.

In an effort to remain a top competitor in the streaming realm, Netflix has invested a large sum of money in its Netflix Originals. Despite paying its participating directors the same as any other large production company would, Netflix is still able to make a large profit off of its films through its licensing exclusivity.

Additionally, Netflix’s tendency to stray away from brand partnerships allows its directors to have as much creative jurisdiction over their work as they desire, which heavily appeals to top-notch Hollywood directors.

By enticing high-profile directors to work with the company, Netflix is able to provide high-quality content to their subscribers. Thus, in an effort to become more competitive, Netflix’s acquisition of its own theater franchise could further establish the company’s film studio status and distinguish it from its top competitors.

However, in order to produce high-quality films, Netflix must make compromises with their top-level directors, who are often reluctant to release their film on the streaming platform before a 12-week theater-exclusive release window. As such, there is some hesitation on Netflix’s end, The Verge states.

Netflix agreeing to a theater-exclusive release window would inevitably cause conflicts with its subscribers. If someone pays a Netflix subscription fee every month, why should they have to wait 12 weeks for a Netflix Original to appear on their home-screen? Because it is one of the top streaming services, Netflix is also reluctant to have a reputation of completely heeding to the terms of directors and theaters.

If Netflix did step foot in the ring of theaters, many of these issues would be easier to address. More of the best Hollywood directors would willingly collaborate with Netflix, as Netflix theaters would be able to better fulfill their desires for theater-exclusive release windows. Additionally, Netflix theaters would allow the company to increase its monthly subscription fee so as to include theater perks, thus increasing Netflix’s subscription revenue in addition to the profits from its box office earnings.

While Netflix theaters may be an expensive investment, they do have more potential for growth than traditional theaters. Traditional theaters, such as AMC, have fewer opportunities to exponentially expand their businesses.

Even with the Stubs A-List addition to AMC’s empire, the competition from online streaming services and other theater subscriptions has already diluted its target consumer demographic. Additionally, their revenue sources and investment opportunities remain limited. Other than providing some perks to its consumers, nothing necessarily paints AMC, or any other theater, as the “must-have” or “go-to.”

Netflix, on the other hand, are able to invest a lot of their money on Netflix Originals, keeping their content exclusive to the company and generating lots of buzz from collaborations with Hollywood’s best directors.

These features allow Netflix to attract new subscribers, and keep existing ones too. They seem to have found the distinguishing factor that makes them impressively stand out from its competitors. At this point, further investment for Netflix to make an appearance in the realm of theaters provides an even more profitable and expansive promise.

If Netflix were to expand its platform and potentially make a breakthrough in traditional cinema, the perfect time to do so would be the post-COVID era. With quarantine and stay-at-home orders, the public exhibits an unmatched sense of yearning and nostalgia for worry-free public activities, including seeing a movie at a theater.

In fact, a recent EDO study found that 75% of moviegoers expressed desires to return to movie theaters if appropriate guidelines are put in place. Now imagine how many people would want to return to theaters post-COVID. And after what has been a tremendously difficult time for the industry, Netflix also has the potential to save the cinematic landscape that has immensely faltered due to the pandemic.

There is not doubt that the emergence of competitive streaming services has definitely jeopardized Netflix’s cushioned leading spot. With Disney Plus, Hulu, and Amazon Prime Video continuing to develop and increase its subscriber base, Netflix needs a new form of development unique enough to completely distinguish itself from its competitors. The theater industry might just be the way to do it.

Written by Christine Lee

Edited by Adele Su Yan Teo, Zachary Ostrow, Jack Argiro, Michael Ding & Calvin Ma

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