Current debate across the film and business community has begun to assess the merits of a Netflix venture into feature film. The conversation has primarily focused on the comparison of Netflix’s conquest in the television landscape and how this can be translated to a triumph in the film industry. Subsequently, Netflix’s versatile platform has heightened concerns for movie theater sustainability. The question of sustainability for movie theaters hinges on whether Netflix can provide equal services. At first glance, one can see that both are primarily screens for film entertainment. However, movie theaters have become a fabric of American culture and can provoke feelings of nostalgia, something that Netflix does not claim to replicate. While Netflix has the ease of a click-to-stream, it lacks the excitement of a night at the movies.
At the movies people of all ages cross paths, from teenagers and lovebirds to families and elderly couples, sharing emotions ranging from joy and laughter to surprise and disappointment. It is the only place where popcorn is considered an appetizer, entrée, and dessert, a place where turning your cell phone off is an expectation, not a mere courtesy. A movie theater, simply put, offers a collective entertainment experience.
Instant streaming and internet-based entertainment options have remodeled the marketplace; while other forms of entertainment suffer significant market size and share loss, movie theaters continue to endure. In truth, the movie theater industry has come back to prosperity with sustained revenue and market share. According to a report published by the Motion Pictures Association of America, Theatrical Market Statistics 2013, the US/Canada box office markets grossed 10.9 billion in revenue, a slight 1% increase over the previous year and 3% from five years ago. However, Netflix’s recent announcement to enter the original movie business caused a dip in movie theater stock prices. As written by Ryan Vlastelica of Reuters, the stock price of the three major movie theater firms: Regal Entertainment Group, Cinemark Holdings Inc., and AMC Entertainment all fell with the release of Netflix’s new venture. Additionally, both AMC and Cinemark Theaters have publicly stated that they are boycotting Netflix’s first feature film. Additionally, Regal Cinema’s spokesman stated,
“We will not participate in an experiment where you can see the same product on screens varying from three stories tall to 3-inches wide on a smart phone”
Could this be an end to the classic movie theater business or just another obstacle to overcome? The industry has overcome the introduction of the home video, DVDs, Blu-ray players, and even the most recent financial crisis. Regardless of the stock market indication and the immediate response of major movie theater companies who instill a heightened level of fear in the market, a movie theater provides more to its customer than a viewing screen for a film. Most would agree that the movie theater is an experience, not only a venue. This is a distinct difference from Netflix’s proposed feature film. A movie theater might compete in the entertainment market on factors of cost and convenience, as does Netflix, however; theaters add a flare that Netflix does not claim. A trip to the movie theater is an event, everyone remembers going to see a midnight showing with their friends, going on a first date, family outings with the kids, dressing up for films like Star Wars, or being scared to leave after watching a film like Psycho. Movie theaters are in the business of more than showing a film, they’re in the business of creating a memory.
The recent stability of the movie theater industry, as showcased by 2013 gross revenue, implies a strong market for an entertainment experience still exists. The movie theater is an integral piece of the classic American film experience, ingrained into the American consciousness. Netflix competes on its competitive advantage of cost and entertainment convenience, but that does not provide a substitute for a movie theater experience. Netflix is an innovator in the realm of entertainment, but not a substitute for the classic.
Both Netflix and movie theaters will be competing for entertainment customers, but by providing different services. To this day, movie theaters sustain an alluring venue for entertainment that spans the generational gap and evokes the nostalgic experience of being lost in the magic of film. The feeling of fantasy may only last for the night, but the memory persists for much longer. That leaves one question to be answered, will Americans choose to continue going to the movies and make a memory, or stay at home to watch? History would suggest the classic movie theater continues to entertain, just as it has for over 100 years.