Netflix's Exclusive Deal For The "Crouching Tiger" Sequel Is A Game Changer

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The new face of Netflix productions. Source: Netflix.

Netflix is making its first original movie. Well, not exactly.


There's a lot of innovation and "first ever" baked into this announcement from the video-streaming king, but it isn't Netflix's first exclusive movie, and the company has actually outsourced production to the Weinstein Co.

So it's more like, "For the first time, Netflix will have exclusive streaming rights to a full-length movie at the same time as its theatrical release." Doesn't have quite the same ring to it as "Netflix announces first original movie," but it's closer to the truth.

What's new?
The new title is a sequel to Chinese megahit Crouching Tiger, Hidden Dragon, which Viacom's Paramount Pictures and Sony produced in 2000. The luscious martial arts spectacular snagged four Academy Awards, collected more than 10 times its production budget in global box office sales, and launched Zhang Ziyi's career as a leading lady in action movies.

That title has been streaming on Netflix since April. Netflix must have liked the audience response since it led to this unique distribution deal for sequel Crouching Tiger, Hidden Dragon: The Green Legend, which was greenlit in spring 2013.

Netflix is notorious for slicing and dicing its unmatched library of real-world viewing data before pulling the trigger on a new deal. For award-winning political drama series House of Cards, it was the combination of hot-topic story treads, the star power of Kevin Spacey and Robin Wright, and David Fincher's visual storytelling style. The exact blend of magic ingredients in the Crouching Tiger sequel is unknown, but the original title's success surely played a part.

Source: Netflix.

The nuts and bolts of the Tiger sequel
The Weinstein Co. is handling production alongside a consortium of Chinese studios. The studio made the gutsy move to pair the theatrical release with a day-and-date appearance on Netflix streaming.

That's a first for wide-release titles with near-guaranteed blockbuster potential. Earlier day-and-date experiments have involved a variety of smaller documentaries and art house films. And most of them came before the arrival of high-quality digital streaming services. We're talking DVDs and VHS tapes here. More recent exceptions, like the crowdfunded Veronica Mars only saw very limited cinematic releases.

Offering this movie as a Netflix stream on the same day as its theatrical and IMAX release, that's certainly a new move.

Movie theater companies are uncomfortable despite longtime partner IMAX's involvement, and several major chains have threatened to dodge this release altogether. Regal Cinemas , for example, said that these accelerated release ideas are fit for direct-to-video titles, not for the big-budget movies you enjoy in the theater. But IMAX CEO Richard Gelfond hopes to see more of these day-and-date releases alongside Netflix and other digital movie services, and is pleading with the theater operators to reconsider.

After all, the premiere is slated for Aug. 28, 2015 -- in the slowest slice of the movie-going schedule, year after year. The chains don't have much to lose if the Netflix release steals a few viewers from the cinema. "What I am hoping is that it will be a proof point that the sky doesn't fall," Netflix content chief Ted Sarandos told The New York Times. "These are two different experiences, like going to a football game and watching a football game on TV."

That's another innovative approach.


Throwback-style Netflix production credits, as seen on in-house production Zach Galifianakis Live at the Purple Onion. Source: Netflix.

This isn't Netflix's "first original movie"
The Green Legend has plenty of innovation going for it, and I can't wait to see how the whole day-and-date release idea shakes out. But it's still unfair to call it Netflix's "first original movie."

Here's why: Netflix has run a movie production studio before.

Starting in 2006, with the DVD distribution of indie comedy The Puffy Chair, Netflix distributed 41 titles and co-produced 12 under the Red Envelope Entertainment umbrella.

Red Envelope productions included a few minor hits, including the Maggie Gyllenhaal vehicle Sherrybaby and Hollywood insider documentary This Film Is Not Yet Rated. The distribution of pure third-party productions touched on relationship comedy Puccini for Beginners and Jay Baruchel career platform I'm Reed Fish.

These titles were never megabudget blockbusters, but culled from the ranks of indie film and limited-budget documentaries. Netflix did snag distribution rights for Oscar-winning documentary Born Into Brothels, but that was before kicking off the Red Envelope division

Netflix always saw this venture as a hobby. Netflix CEO Reed Hastings said as much in a 2006 Wiredinterview"For [Ted Sarandos], it's as much about giving back to the film community as it is about growing the Netflix content base."

Red Envelope officially closed down in 2008, though Netflix honored the terms of a few distribution agreements in 2009 and 2010.

What's next?
This new effort isn't exactly the same thing. Way beyond the hobby stage, Netflix pumps big budgets into series such as House of Cards and Orange Is the New Black. Netflix and Weinstein are staying mum on The Green Legend's budget, but media analyst Tony Wible from Janney Capital Markets estimates Netflix's distribution investment to be worth about $10 million.

The Green Legend won't be the last of Netflix's exclusive movie deals. The company recently struck a pact with Adam Sandler and his Happy Madison production studio. This deal nails down four future Sandler titles for exclusive first-run distribution on Netflix's streaming services around the world. Sandler has never been popular with critics, but he carries plenty of popular appeal -- his movies have collected more than $3 billion at the box office.

Long story short, I think we'll see lots of exclusive movie distribution deals from Netflix. It's all about broadcasting rights at this point, but I wouldn't be surprised to see Sarandos and Hastings taking a serious interest in movie production as well.

Just give them a couple years.

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The article Netflix's Exclusive Deal For The "Crouching Tiger" Sequel Is A Game Changer originally appeared on Fool.com.

Anders Bylund owns shares of Netflix. The Motley Fool recommends Imax and Netflix. The Motley Fool owns shares of Imax and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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