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Netflix isn’t killing movie theaters: The audience who steams more, also goes to cinemas more

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Netflix isn’t killing movie theaters.

Disney+ as well as platforms from Comcast, Warner Bros. and Apple.

“Our takeaway is that Netflix and the expansion of [streaming video on demand] platforms will have minimal impact on box office given the vast supply of content, plenty of which is ideal for theatrical release (and most talent fiercely and contractually objects to a straight-to-streaming release),” Michael Pachter, analyst at Wedbush, wrote in a research note Monday.

Last year, the domestic box had a record-breaking year, hauling in $11.9 billion, there was a 5 percent rise in the number of movie tickets sold and 263 million people — 75 percent of the population — saw at least one movie in theaters.

At its current pace, Pachter expects the U.S. box office will grow about 1 percent to $12 billion this year, another record.

“Everyone has a kitchen, but everyone still goes out to eat,” Charles Rivkin, CEO of the Motion Picture Association of America, said quoting Sterling Bagby, the late co-founder of B&B Theatres during a “State of the Industry” panel last week.

Rivkin said that with each new innovation in the entertainment industry, there has been worry that it will kill the movie industry. Talking pictures, technicolor movies, television, basic cable and smartphones were all seen as disruptors.

“And yet we’re still here,” Rivkin said.

Rivkin took the helm of the MPAA in 2017 and has embraced Netflix. The streaming platform was the first of its kind to join the MPAA and, with this member now sits alongside, Disney, Paramount, Sony, Fox, Universal, and Warner Bros.

“Both the theatrical and home entertainment sectors both grew strongly in 2018 and that’s great news because we are all part of the growth together,” he said.

In fact, according at a study by EY’s Quantitative Economics and Statistics group, the people who go to see movies in theaters more frequently, are also the people who consume more streaming content.

Still, there are tensions between Netflix and theater owners. Netflix has notoriously opted to for shorter window periods at the box office than movie theater operators typically expect.

Traditionally, Hollywood studios, and even Amazon, have adopted a 90-day theatrical release window, which means the film will run in theaters for that time period before being available on video-on-demand or on a streaming service’s site or app.

A wider window means more money for theater owners.

“The exhibitors were all very clear at CinemaCon 2019 that they are happy to continue working alongside Netflix as they have been, as neither has been negatively impacted by the other,” Pachter said. “Alternatively, the exhibitors would be happy to screen Netflix content should Netflix abide by the existing theatrical window.”

But, financial gain isn’t the only reason film makers and theater owners want movies to be screened at cinemas.

“We had to make a choice whether to tell ‘Crazy Rich Asians’ on a streaming service or theatrically. It wasn’t an obvious choice to some, but to us it was very obvious,” Jon Chu, director of “Crazy Rich Asians,” said during a panel last week.

“If we wanted to affect culture on a global scale, to become part of the dialogue that had to be had and urgently, we knew there was only one way to present our movie and that was theatrically,” he said.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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