Netflix is taking on more than just cable television distribution. With their latest movie deal, Netflix wants to compete with movie chains as well. The New York Times tells us that following their move to premiere its first feature film through The Weinstein Company, Netflix has signed a deal to distribute the next four of Adam Sandler's films through his Happy Madison production company. "Netflix declined to comment on specific terms of the deal, but said the films would have the characteristics of theatrical releases, with similar-size budgets."
While recent films from Sandler have not been hugely profitable, he has a large following. And his older films continue to delight audiences. His reach seems to fit the market demo that Netflix wants to serve and Sandler's films tend to have a family enjoyment factor, like "Grown Ups" and "50 First Dates". This arrangement between Netflix and Sandler looks to be a strong strategic fit.
HBO and other premium cable nets have been producing original features for a while. Movie chains cannot afford to sit back as Netflix further disrupts their business model. Today it may be one or two deals, but more will certainly be on their way. Chains can compete by making the experience of going out to the movies that much more enjoyable. Larger screens, better seating, improved refreshment offerings, etc. And yet, at home viewing continues to improve as well. And when cost is a factor, the home experience is a winner. Movie chains must continue to adapt or face some extinction from alternative distribution offerings.