The refusal of leading U.S. theater chains to show Netflix's "Beasts of No Nation" this weekend and Paramount's upcoming "Paranormal Activity" installment exposes a theatrical business fraught with worry and growing pains for the multi-platform release model.
This weekend major chains including AMC, Regal, Cinemark and Carmike declined to show Cary Fukanaga's African warlord drama due to Netflix simultaneously offering the film over its own service.
That effectively crippled the film's box office prospects and speculation was high over the effectiveness of the ban.
"Is it long-term solution? No," Exhibitor Relations senior analyst Jeff Bock told TheWrap of the decision. "Could it eventually make consumers resent (theaters) for standing in the way of progress? Probably."
"Beasts" made a paltry $50,699 from 31 locations this weekend - just $1,600 per screen - and Netflix has declined to release numbers of streamed downloads. The theatrical release will allow the film to be eligible in the Oscar race, a move met with disdain from the National Association of Theater Owners, which represents 32,000 screens across the country.
"Very few theaters will show 'Beasts' because frankly it's there for PR purposes. Maybe to get an Academy Award nomination," said NATO's Chief Communications officer Patrick Corcoran.
"[Theaters] are looking for a distribution partner who is serious and committed to supporting releases with exclusivity and marketing. It was clear Netflix was not being serious. We heard about this in a press release, not with them calling and saying, 'We have this idea,'" he said.
The case of Paramount's "Paranormal Activity: The Ghost Dimension" is less of a threat, as the studio will make the film available as video on demand 17 days after the theater count drops below 300. Theater chain AMC will share a cut of VOD profits for showing the film, but Regal Cinemas and Carmike won't play ball.
"Theaters worry that it's a slippery slope, that [this will happen] with every movie," said Rentrak senior analyst Paul Dergarabedian. "But the financials don't line up. It won't happen for the big blockbusters."
He added: "It's different for Paramount, they keep their budgets modest. They do an excellent job making movies that go viral. They are very inexpensive to produce so that makes total sense. If audiences want want to see it in the theater or at home, it makes sense."
But the collective snub of "Beasts," after the multiplatform release of "The Interview" last year in the face of theaters dropping the Seth Rogen comedy, sends the clear message that theater owners are resisting the encroaching day-and-date release model. And for those who aren't, they're saying it does not look like Netflix's handling of "Beasts."
"I question that it is modern," said NATO's Corcoran. "Simultaneous releases are for people who want to eliminate risk, it's for reducing costs. And when there is a simultaneous release, the theatrical run is truncated and limited. This decision has very little to do with the way consumers behave."
Todd Cunningham contributed to this report.