Inside the Debate Between Netflix and Big Theater Chains Over ‘The Irishman’

LOS ANGELES — Netflix and the owners of the major theater chains could have made a lot of money together, if only they had seen eye to eye on the release of “The Irishman.” And people across the country could have seen the film, Martin Scorsese’s gangster epic, the way it was meant to be seen, on the big screen, in the dark, with tubs of popcorn on their laps.

That is, essentially, the message from the big theater-chain owners to Netflix, the company that financed and produced the $159 million movie starring Robert De Niro and Al Pacino.

After negotiations between major chains and Netflix ended in a stalemate last month, “The Irishman,” opening Friday, will have a 26-day run in a limited number of theaters before it starts streaming on Nov. 27. A sticking point in the talks was how long the film would play in theaters before being made available to Netflix’s 158 million subscribers.

The major exhibitors typically insist on a 72-day period of exclusivity for the films that play on their screens. During the monthslong talks with Netflix over “The Irishman,” representatives of two major chains agreed independently to lower that number to around 60, according to two people familiar with the negotiations who were not authorized to discuss them publicly; Netflix signaled that it would not go above 45. And that’s where it ended.

“It’s a disgrace,” said John Fithian, the president of the National Association of Theater Owners, a group that works closely with, and represents the interests of, chains like AMC Theaters, the largest in the United States, and Cineplex, which has 1,600 screens in Canada.

“The Irishman,” which has received mostly rapturous reviews, is opening on eight screens in New York and Los Angeles. Netflix sent a bouquet to cinema lovers on the coasts by placing it in two grand venues, the 1,015-seat Belasco Theater, a Broadway theater in Manhattan, and the historic Grauman’s Egyptian Theater in Hollywood. Starting Nov. 8, the run will expand to include select independent and small-chain movie houses in the country’s top 10 markets.

That is a long way from what theater owners had envisioned when they learned that the director of “Goodfellas,” “Casino” and “The Departed” was returning to his hit men and mob bosses.

[Read A.O. Scott’s review of Scorsese’s latest.]

“It’s a very big disappointment that Netflix and the leading theater owners couldn’t figure out a way to put a significant movie from Martin Scorsese on a lot of screens,” Mr. Fithian said, speaking publicly for the first time about the negotiations. “This is a major director, a cinephile, who has made all kinds of important movies for our industry. And ‘The Irishman’ is going to play on one-tenth of the screens it should have played on, had Netflix been willing to come to an understanding with our members.”

Mr. Scorsese has made his recent films, including “The Wolf of Wall Street” and “Silence,” at Paramount. If he had made “The Irishman” under the auspices of a traditional Hollywood studio, it would have been business as usual, and the film would most likely be playing at a theater near you. But Paramount declined, because of the hefty budget for the decades-spanning film.

Netflix was the only company willing to take a risk on the project — a film that moves at a measured pace in its three and a half hours as it tells a tale of how organized crime was intertwined with the labor movement and government in the United States across the last century.

Netflix has little time for the old theatrical business model. It is devoted to keeping its subscribers happy, meaning that most of its movies make their debuts on the streaming service itself. Last year, Netflix tiptoed into the theaters, offering Alfonso Cuarón’s “Roma,” which went on to win three Oscars, a 21-day exclusive release at independent and small-chain theaters before it started streaming. The film eventually played on roughly 1,100 screens around the world, roughly 250 of them in the United States.

“The Irishman” will move on to more theaters domestically and internationally after its initial expansion on Nov. 8, but its run will fall far short of a major release. Two films that came out last month, “Joker” and “The Addams Family,” have each played on more than 4,000 screens in the United States.

For Mr. Scorsese, Netflix tried to work out something more robust than the 21-day exclusive theatrical release it had arranged for “Roma.”

Netflix’s negotiating effort was led by Scott Stuber, the company’s head of original films, who was previously the vice chairman of worldwide production at Universal. Two major exhibitors, AMC and Cineplex, offered what they believed was a reasonable compromise with the 60-day plan, according to the two people familiar with the talks.

Ellis Jacob, the chief executive of Cineplex, would not discuss specific numbers, but said, “I thought it was a very credible offer, and so did some of the people on the Netflix side. We worked quite hard to try and make it work for all of us.”

If Netflix had agreed to an exclusive 60-day run for “The Irishman,” other studios would have most likely demanded the same for their films. A new industry standard would have been set in a business that has clung to the belief that you close the theatrical window at your peril.

Mr. Stuber, who joined Netflix in 2017, has tried to bring peace to the two sides. “We do believe in box office,” he said in an interview. “We do believe in the consumer getting to see a film how he or she chooses. That’s what I’m trying to build toward without it being an all-or-nothing model.”

But the gap proved too wide for the two sides to bridge, and “The Irishman” is headed to venues content to show films that may be available on streaming services at the same time as their big-screen runs.

Mr. Fithian seemed flummoxed by Netflix’s stance. He wondered aloud why the company would not want to add a revenue stream — box office — given the competition in streaming that’s on the way from Apple TV Plus, Disney Plus and HBO Max, among others.

“Netflix is leaving significant money on the table,” Mr. Fithian said. “Think about ‘The Departed,’ in 2006. That Scorsese movie made $300 million globally. It garnered Scorsese the best director Oscar. It won best picture. It played for a long time in theaters and made a ton of money. Why wouldn’t Netflix want to monetize that before it went to Netflix? It can still be exclusive on Netflix. It can still draw subscribers. It would still be the only place you can see it at home.”

Mr. Fithian and Mr. Jacob, of Cineplex, said a theatrical release would provide a marketing boost that a traditional advertising campaign cannot deliver.

Mr. Stuber said he was not persuaded by that argument. “For ‘The Irishman,’” he said, “it was important for us to give it that theatrical run, to put it in big houses where people could congregate and have the opportunity to see it that way. But I also think people are going to love it just as much on Netflix.”