The latest news of theaters’ refusal to show Netflix’s new movie “Crouching Tiger” is good news for Netflix and its shareholders. This war against Netflix is a momentous war for Hollywood. Except this time Hollywood’s Major studios are not the ones splashing ashore from the landing craft to secure victory, but the ones who are being attacked.


Why do I think so? Because Hollywood only would bother to fight what provokes or upsets them.


Let’s review the story up to this point: Netflix started producing television series such as “House of Cards” and “Orange Is the New Black’ as part of it’s’ strategy to differentiate itself from its competition in the on-demand streaming content industry. Netflix decided to break the rules with “House of Cards” and offer all the episodes at once. This went against the conventional network practice of broadcasting an episode each week or each day. Those days are about to end.


When “House of Cards” launched it was the first time an entire season (thirteen episodes) was released all at once, for viewers to watch at their own pace. Younger audiences’ habit of consuming content fast, at once, is changing the industry. Netflix recognized this trend and assumed adults (“House of Cards” main audience) also would prefer to decide when they could watch the program. So Netflix completely bypassed the television ecosystem, a.k.a Hollywood. For years, Hollywood’s major studios knew how to work closely with the networks to help them make money from television advertising.


And now Netflix is doing it again with plans to release a sequel to “Crouching Tiger Hidden Dragon,” called “Crouching Tiger, Hidden Dragon: The Green Legend.” By offering the option to watch it at theatre at the same time as on television, Netflix is disrupting the ecosystem — again. The new feature movie will be released via the Netflix platform, a subscriber-based video streaming service. It also will be released in some IMAX cinemas. That never has happened before. The “release windows” distribution system (Theater – DVD and Pay-Per-View/Video-On-Demand – broadcast television) is the best way for Hollywood studios to ”squeeze the lemon,” , selling the same content that is already produced (a sunk cost) to different buyers who pay for it all over again. The consumer ‘meets’ the movie a couple of times but the cycle is pretty long (12–18 months), so it might makes sense to pay twice for the same movie. But what will happen if a feature movie is sold directly though all channels? At the same time? Houston, we have a problem.




Netflix is aiming directly at Hollywood’s business model, the one that has worked so well. Until now. Now wonder why top theater chains in the United States strongly resisted the new idea. They should. How many people will continue paying movie tickets prices for the new “Avengers” movie when they simply can watch it on their iPad the day it is released? Probably not so many. But Hollywood’s influence on theaters is pretty strong and it can force Netflix to back down some of its plans — for now.




Netflix’s new idea, releasing a movie directly to theaters and its own streaming platform, is not an easy one to digest. Since Netflix is the producer, the decision is solely theirs. “Crouching Tiger, Hidden Dragon: The Green Legend” isn’t “The Avengers,” a movie people still will run to the theaters to see and whose opening weekend sales still will be high. And while it’s hard to imagine Warner Bros. or Paramount thinking the same way and cannibalizing their own revenue stream, as time goes by we only can assume Netflix will continue producing more hits. The company has done this before with “House of Cards” and it probably will succeed in producing a mega-hit, soon.


Once it does, Netflix can control the release date and can harm any premiere. The company will have a secret weapon, one that Hollywood cannot afford. At that moment, the day Netflix has the “House of Cards” of featured movies, will be tipping point, the D-Day of the industry.