Netflix, iPic agree for online and theaters to screen original movies simultaneously

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LA,NewYork,Oct5:Netflix Inc. signed a deal with luxury theater-chain iPic Entertainment to simultaneously screen its original movies in theaters the same day that they appear on the streaming service, the latest deal to expand Netflix’s theatrical ambitions.

Netflix movies in the next year will play in iPic theaters in Los Angeles and New York City, with the option of showing at iPic’s 13 other locations or independent theaters. Netflix has shown its movies concurrently in theaters before, but the iPic deal represents its first long-term commitment with an exhibitor.

Terms of the deal, such as how the companies would split ticketing revenue, weren’t disclosed. Netflix steadily has expanded its original-programming division in recent years, a move interpreted by Hollywood as a threat to movie theaters. In signing a deal with iPic, Netflix has joined with a high-end exhibitor that has broken with theater orthodoxy in the past.
IPic’s deal covers 10 films—a “substantial” portion of Netflix’s original movies for the year, Chief Content Officer Ted Sarandos said, and it may be extended.

For Netflix, the deal can bring additional box-office revenue as it contends with slowing growth in the U.S. While Mr. Sarandos played down the idea that it could drive significant subscriber additions, given Netflix’s existing 47 million U.S. members, he said it could help promote the brand.

“Putting it in a theater might create a shorthand for people to understand these are really big movies,” Mr. Sarandos said. “These are not ‘TV movies.’ ”

About 98% of iPic customers subscribe to a streaming service, a company survey found, and 84% of them had a Netflix account, said iPic Chief Executive Hamid Hashemi. He’s counting on consumers distinguishing between in-home and out-of-home spending, much as they do with food, he said. “You have a kitchen in your house, but you still go out to a restaurant.”

With the theater-distribution deal, Netflix is looking increasingly like a Hollywood studio—albeit with an eye toward shaking up the way movie business has been done. The streaming juggernaut wants to collapse the complex “windowing” business rules in Hollywood that result in consumers being able to watch movies in their house only months after they play in theaters.

“What defines a movie being a movie used to be it being on a theater. I think that’s a dying generational definition,” Mr. Sarandos said.

Netflix has found a willing partner in that fight with iPic.

iPic Chief Executive Hamid Hashemi in the Tuck Room, the restaurant accompanying the chain’s new dine-in theater in the Fulton Market building in Manhattan. ENLARGE
iPic Chief Executive Hamid Hashemi in the Tuck Room, the restaurant accompanying the chain’s new dine-in theater in the Fulton Market building in Manhattan. PHOTO: KEVIN HAGEN FOR THE WALL STREET JOURNAL
iPic is a relatively small chain of 15 multiplexes, with about 20 more in development, but Mr. Hashemi has cut a large figure for himself in the industry.

Part of that has come through litigation: He is suing some of the nation’s largest exhibitors over a longstanding movie-booking practice called “clearance” that has kept certain titles from his theaters.
The iPic chain also has gained notice for nontraditional programming and flourishes designed to banish the stereotype of sticky floors and stadium seating. He helped introduce in-theater dining and the oversize leather recliners now prevalent in the industry. His New York City multiplex, which opens Friday, will feature “pod” seating that creates a private enclosed area inside the auditorium.

iPic theaters, with lobster rolls on the menu and monogrammed blankets for certain members, is “what I’ve been saying theaters should be doing for years: differentiating the out-of-home experience,” said Mr. Sarandos. The chain’s ticket prices are higher than at most theaters and can approach $30.

iPic will start screening its first Netflix movie, “The Siege of Jadotville,” on Friday. The Christopher Guest comedy “Mascots” follows Oct. 13.