NETFLIX’S SARANDOS: EXHIBITORS ARE STIFLING INNOVATION

One week after announcing plans to begin producing feature-length motion pictures, Ted Sarandos, Netflix’s chief content officer, told an industry conference in Hollywood, “The reason why we may … release some big movies is I am concerned that theater owners are trying to stifle innovation.” Sarandos was referring to exhibitors’ longstanding opposition to early release of movies on the home-video market. Some studios require Netflix (and kiosk competitor RedBox) to wait 28 days after a film is released on DVD before making it available to subscribers. What the theater owners ought to do, he said, was “Give the people what they want. … Why not premiere movies on Netflix at the same time as they are premiering in theaters? Not just little movies — why not big movies?” He pointed out that studios spend tens of millions on marketing films that many people who don’t go to theaters can’t see for months. By the time it becomes available on home video, many people have forgotten about the advertising that may have made the movie successful to begin with. He said television syndicators were guilty of the same mind-set, releasing TV shows overseas months after they had been broadcast in the U.S. “These antiquated windows are probably driving global piracy,” he said. “What we’re trying to do is jam these windows and get as close as we can to the network premiere.” [NOTE: A reader recently reminded us that we reported in 2008 that Netflix had closed down a subsidiary, Red Envelope Entertainment, that for two years had invested in indie films. At the time the company conceded that it was doing so because it competed against the studios that it relies on for its main movie-rental business.]