Netflix Doing Something That Was Basically Illegal Until Last Week

Illustration for article titled Netflix Doing Something That Was Basically Illegal Until Last Week
Photo: Marion Curtis (Netflix)

Netflix has saved a well-known movie theater in New York City from imminent closure, and that is ostensibly a good thing. But something much more devastating lies beneath.


The company that made streaming mainstream says it will rescue NYC’s Paris Theater. This comes on the heels of an announcement from the Department of Justice that it will rescind the so-called Paramount consent decree (it filed the official motion to kill it last Friday), which forbids the companies making the films from owning the theaters that screen them. In other words, Netflix is doing the very thing that eventually made early Hollywood a scourge for moviegoers and spurred government intervention.

The Paris Theater was the last single-screen theater in New York City when it closed earlier this year. The theater is located on West 58th Street in Manhattan, just shy of Fifth Avenue and square in the middle of Midtown. It opened in 1948, with Marlene Dietrich cutting the ribbon, and over the decades it became known for art-house and foreign-language films screened in their original languages. As streaming became more popular, and art and foreign films became more accessible via digital streaming services (like Netflix), the Paris Theater’s popularity waned. By August of this year, it was notable more for its longevity in a pricy location than the films it acquired for screening.

Netflix could be one reason why the Paris Theater died and movie theaters struggle to find new ways to appeal to audiences. The company’s bargain price for nearly unlimited movies and TV shows streamed directly into the home has helped make theatergoing a more burdensome way to watch movies. Theaters earned just over $12 billion in 2018 in the U.S. in tickets, according to Reuters—a minor rebound after 2017 saw the worst year in ticket sales in 25 years.

The theaters are struggling—even if they’re reluctant to note it out loud—and the ease of streaming is at least one contributing factor. And it’s a factor that will only continue to be exacerbated as Disney, Warner, and even Apple saturate the market with new, original, direct-to-streaming content.

Already, there’s a very public tiff between Netflix and theaters—with other streamers, like Disney and Warner, watching keenly. At the heart of the issue is the length of the window films screen in theaters before moving to streaming services. Netflix wanted a minuscule window—only a few weeks. Theater owners apparently balked at anything less than 90 days. For the theater owners, they needed films to stay in theaters longer so people will be more likely to see them there instead of just waiting for Netflix. Netflix, meanwhile, just needs to screen them long enough to satisfy contracts and the requirements set out by awards programs.

Now it has less to worry about! With the Paris Theater leased out, and rumors of its attempt to purchase the stories Egyptian Theater in LA, Netflix can screen however long it likes while thumbing its nose at the theater chains it’s very possibly been choking to death over the last decade. This would have raised eyebrows a few weeks ago, but it’s particularly glaring in light of the DOJ killing the Paramount consent decree, which was initially created to keep studios from owning the entire film production line, from inception to release.


With “new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” antitrust division chief Makan Delrahim told a meeting of the American Bar Association last week. It’s definitely cleared the way for something, but I’m not sure if that something is good.

Senior Consumer Tech Editor. Trained her dog to do fist bumps. Once wrote for Lifetime. Tips encouraged via Secure Drop, Proton Mail, or DM for Signal.



I wouldn’t go blaming streaming and Netflix for the failure of independent theaters and the struggles even the chains are having. Those problems have been on going for longer than streaming has been a thing. Fuck it was a major topic back when I was in college and Netflix had just launched as the DVD by mail service.

Theaters are being pressured primarily by factors imposed by movie studios. Some what ironically, given the supposed reasons for ending it, the Paramount rules have been pretty toothless for decades. While studios couldn’t directly own theaters, big entertainment companies long ago found less direct ways to control them. Parent companies for major movie studios own significant shares is the major theater chains. They use the exact same tactics the Studio system did to dictate which and what movies theaters will play. If you want the money making blockbusters gotta take xyz, controlling what is shown when and how many times on how many screens. The studios often dictate projection standards. Through the late 90's they forced theaters to update to digital projection, then 3d, then 60fps, higher resolutions etc on studio time lines but on the theater’s dime. Want the new Marvel? Drop 50k+ per screen, not do it again 6 months later. They basically forced any theater that wanted to stay in business to repeatedly replace their projection, before the previous replacement had even paid for itself. Then offered to “help” with that. Fuck Sony even manufactures the projectors, so sometimes the theater is basically buying the projector from the studio (technically it’s parent company).

The chain theaters and studios broke the projectionists union back in 90's, so now the only people qualified to set those projectors to contractually obligated, Studio issued standards work for the studios. Even if you got a guy who can do the work, you have to pay Disney to do it. Whenever they feel the need to do it. Strict control of digital distribution, and concerted efforts to buy up existing projection prints let the studios cut off repertory, 2nd and 3rd run theaters. Killing those business models and the bulk of small independent theaters along with them. And a theater like the Paris isn’t exactly going to be able to get the profitable movies, when the studios require a minimum number of showings on a minimum number of screens. Or require you to commit to showing more than one of their pictures at a time. And the Paris has just one screen. Those smaller and foreign films aren’t invisible at the theater because no one wants to see them in a theater. It’s because any theater that wants to pay the bills has the latest Nick Cage is a sad dog family picture stinking up multiple screens as part of a package deal to make sure they get the next Star Wars on favorable terms.

The independent stuff, and foreign films were never really something that paid the bills. But when theaters controlled their own slates, they could be offset with something that did. Either booking the occasional bigger or film, or often 2nd run or repertory showings. When the Studios precluded that, places started to shut down.

OH YEAH. And amid all this pressure the split of ticket sales has tilted so heavily in favor of the Studios that theaters seldom see a profit from showing even successful movies. They make their money off snacks. Which is why we have $25 popcorn. And the Studios have been pressuring for years to get a cut of concessions. So expect $60 popcorn soon.

Studios have basically stepped around the rules, controlling studios without actually owning them. And as a result we’ve seen the exact contraction in the market we did last time the studios controlled the theaters.

TL/DR: The thing these rules were meant to prevent happened already. Bout a decade before Netflix was even founded. Blaming it on streaming, or DVD, or TV, or Millennials is the dumb shit excuse the theaters have bought into. And the Studios love to sell it. Cause it lets them keep control of the theaters while no one’s looking. Kinda like how the “death of retail” is more to do with leveraged buyouts by Mitt Romney types than Amazon.