If Martin Scorsese Can't End Netflix's Battle With the Movie Chains, Who Can?

Famed director Martin Scorsese has a new three-and-a-half hour crime epic coming this fall and it’s got everything: Robert De Niro, Al Pacino as Jimmy Hoffa, and Joe Pesci in his first film in nearly a decade. Helmed by a filmmaker nominated for eight Best Director Academy Awards, it’s said to have cost $159 million to produce. On paper, it’s slated for both Oscar glory and box office success, and yet, you might have to make a serious effort to catch it in theaters.

That’s because Scorsese’s new film, The Irishman, will be distributed by Netflix. News broke on Tuesday that Netflix, despite months of negotiations, couldn’t reach a deal with the major movie chains AMC, Regal, and Cinemark for a wide theatrical release. It isn’t Netflix’s fault, per se; even though the company is a streaming service first, it tried to broker deals for a 30-day window. The major theater chains balked at the idea, though, preferring instead a traditional 90-day window that allows for maximized profits. It also protects them from losing out on ticket sales from viewers content to wait a few weeks for a digital release.

Netflix will still show The Irishman in some smaller, independent theaters, starting Nov. 1 ahead of its streaming release on the 27th, ensuring the film will still qualify for the Oscars. It’s the same strategy Netflix took with Alfonso Cuarón’s Roma, which took home Best Foreign Language Film at last year’s Oscars. And it’s a strategy that Netflix looks poised to expand upon, with Steven Soderbergh’s The Laundromat, the Timothee Chalamet–starring The King, and director Noah Baumbach’s Marriage Story all seeing a limited theatrical release before streaming online this fall.

This approach makes sense in the short-term as Netflix increasingly pursues prestige trophies. It gives the platform’s movies a chance to win Academy Awards while also keeping a short theatrical window before turnover to Netflix’s main priority: its paying subscribers. But there is a looming danger in continuing this approach. How many filmmakers of Scorsese’s stature will be willing to make movies for Netflix knowing they will see little placement in the cinema, or none at all?

“From the creative side this can be trouble,” says BoxOffice Chief Analyst Shawn Robbins. “Someone with [Scorsese’s] reputation and accomplishments… if his work isn’t the push to compromise it makes one wonder how many more directors will think, ‘Am I making theatrical movies or TV movies?'”

Prominent directors have already spoken to this point. Steven Spielberg went on a high-profile crusade against Netflix in a quest for “the theatrical experience to remain relevant in our culture.” And Netflix missed out on box office and pop culture phenomenon Crazy Rich Asians because director Jon Chu and the book’s author Kevin Kwan wanted “an old-fashioned cinematic experience, not for fans to sit in front of a TV and just press a button.”

Netflix would perhaps concede to the theaters more often if the demand for a three-month window wasn’t so stringent. Most movies after all make the majority of their money within the first few weeks, on par with Netflix’s request for 30 days. Avengers: Endgame, the highest-grossing movie of all-time, made $741 million of its $858 million domestic total to date by week three. The three-month window hails from a time before instantaneous digital availability, and so in that regard Netflix’s attempt to compromise at 30 days seems reasonable as the times change. But it’s a tough sell for the theater operators who have seen video stores and record stores wiped out by digital disruptors. Reducing the theatrical window by two-thirds is just a risk the big chains apparently aren’t willing to take.

Technological innovation may eventually win out. But, ironically, the innovation that has seen Netflix become one of the world’s foremost names in entertainment increases the pressure for something to give in this stalemate. Disney+ and HBO Max will arrive next year with alluring original content, increasing the competition. In a battle to win subscribers, Netflix will need to continue to push out top-tier content as frequently as possible. Waiting for theaters to get their share until it later arrives on Netflix is not good for business.

At the end of the day, Netflix lives and dies not off of Academy Awards or box office revenues, but its subscribers. “They demand the movies as soon as possible,” says Jeff Bock, a senior box office analyst at Exhibitor Relations. “They don’t want to wait months after the movie’s in theaters, that’s not what they signed up for for.” Could Netflix and the theater chains compromise in the middle of their demands—perhaps two months? “I don’t think Netflix subscribers are going to go for that,” Bock says. Not with Disney, Warner Media—and let’s not forget the new Apple TV+ and Amazon—waiting in the wings.

And so Netflix remains, for now, stuck in the middle between the people who make its content and the people who consume (and pay) for it. The company will certainly continue to make big movies with big stars and small cinemas will continue to screen them for Oscar eligibility. But for Netflix to truly take the leap to filmmaking powerhouse, the kind that releases cinematic events and wins Best Picture, its relationship with the movie chains will have to change—otherwise, it might not get another Martin Scorsese to make its movies.