Movie theater insiders explain why Netflix's strategy for Oscar frontrunner 'Roma' proves it still has a lot to learn about the industry

• For the first time ever this year, Netflix decided to release some of its movies exclusively in theaters before they were available to watch on its streaming service.
• One of those titles is "Roma," Alfonso Cuarón's critically acclaimed movie that has become an Oscar frontrunner.
• But getting the movie into theaters turned out to be a major challenge due to numerous factors including the terms Netflix had for theaters to play the movie.
• Here's an inside look at how Netflix inched closer to playing by Hollywood's rules.

In Netflix's letter to shareholders in October about its third-quarter earnings, the streamer dedicated an entire paragraph to its continued mission of doing "day-and-date" releases for its original movies, meaning simultaneously showing them in theaters and on its streaming service.

"We believe in our member-centric simultaneous release model for our original films and welcome additional theatre chains that are open to carry our films to provide the shared-viewing, big screen experience to their customers who enjoy that option," Netflix said in the letter.

But about a week later, the company did an unprecedented 180-degree turn.

Trades like Deadline and Variety reported that the streaming giant would, for the first time ever, do an exclusive theatrical release for three of its movies before their streaming dates - "The Ballad of Buster Scruggs," "Roma," and "Bird Box."

Why would a company that had thrived on being the disrupter of the industry suddenly toe the line? Simple: Oscars.

Though the news was about three titles, there was one in particular that was clearly the motivating force for all of this: Alfonso Cuarón's critically acclaimed semi-autobiographical family drama, "Roma," which is a bonafide Oscar frontrunner for the streaming giant.

Netflix changed course to make its talent happy

Like most Oscar campaigns, Netflix kicked off its own for "Roma" at this year's Toronto International Film Festival in September. Following the movie's premiere at the fest, Cuarón could be found holding court at the after-party by a small table of hors d'oeuvres. Cuarón gave strong handshakes and said he was appreciative of the kind words about his movie. One person went up to the Oscar-winning director and told him that everyone needed to see his movie on the big screen. Cuarón looked the person directly in the eye and said, "Keep talking about that!"

There was never a doubt that Netflix would show the movie in theaters. But at that point Netflix had never given any of its movies an exclusive theatrical run. So the main topic that evening - after people recovered from the emotional rollercoaster the movie puts you through - was if the industry would recognize a movie that didn't play by the normal theatrical rules.

Though Netflix had just come off an Oscar win at the beginning of the year, it was in the documentary category ("Icarus," about the Olympics doping scandal linked to Russia, won the prize). Meanwhile, at that same ceremony, its rival Amazon - which releases its original movies with traditional theatrical runs before streaming them - took home the best actor and screenplay Oscars for "Manchester by the Sea" (it also got a best picture nomination).

Netflix has never been nominated in a major Oscar category.

Netflix certainly has had its chances, though. Its first original movie, 2015's "Beasts of No Nation," was an odds-on favorite to score a best supporting actor nomination for Idris Elba. It didn't happen. And many were shocked that "Mudbound" didn't get a best picture Oscar nomination earlier this year.

These snubs were certainly a factor in why Netflix suddenly changed course and decided to give "Buster Scruggs," "Roma," and "Bird Box" exclusive theatrical runs. But never underestimate the power of the talent. Cuarón made it no secret that he wanted his movie to have a life in theaters, and it certainly seems he finally convinced Netflix that if it played by the rules, "Roma" might bring home a best picture Oscar. That's something that would give the company huge bragging rights in the business.

With "Buster Scruggs" having a very quiet theatrical release in early November, "Roma" follows with a select run in theaters that started Thanksgiving Eve, and Cuarón couldn't be happier.

"Seeing 'Roma' on the big screen is just as important as ensuring people all over the world have the chance to experience it in their homes," the director said in a statement. "'Roma' was photographed in expansive 65mm, complemented by a very complex Atmos sound mix. While a movie theatre offers the best possible experience for 'Roma,' it was designed to be equally meaningful when experienced in the intimacy of one's home."

But selling theaters to make room in their schedules to show "Roma" in all its glory was not an easy task for Netflix.

Trying to get movie theaters to change their ways

The movie-theater business is stuck in its old ways. With the number of operating movie houses dwindling every year, those that are able to keep the lights on fight for every dollar, and that includes the biggest chains in the world.

AMC, Regal, and Cinemark all operate with studios and distributors with the understanding that the titles they are showing are exclusively theirs for a period of time. The standard is 90 days before movies can be available on video on demand, streaming, or home video. So when Netflix came on the scene touting a "day-and-date" model a few years ago, there was an immediate hard pass by the big three. That left Netflix working with the smaller chains.

Over the years, the company has been welcomed by the likes of Landmark, Alamo Drafthouse, and iPic Theaters, the latter of which for the first year or two was the only theater to play Netflix movies. Netflix has also booked its titles in smaller arthouses that have one location. But Netflix's ask to bookers to show "Roma" tested many of the relationships the streaming giant had built.

Numerous arthouses, including one of the most popular, Alamo Drafthouse, told Business Insider they passed on showing "Roma" because of the demands the streaming giant put on the theaters - which in some cases included playing the movie in 70mm and in theaters that have Dolby Atmos sound (elements most theaters outside of the big three chains don't have).

In the case of Alamo Drafthouse's Brooklyn, New York location, one of the few that can play movies at 70mm in the city, Netflix wanted to run the movie there for three to four weeks before its streaming date. But that would have meant for up to four weeks, the movie would have filled up the theater's biggest auditorium. With Netflix not budging on its requirements, Drafthouse passed, a source close to the negotiations between the chain and Netflix told Business Insider. ("Roma" is currently playing at a Landmark theater in New York City and the IFC Center. It is also playing at a Landmark location in Los Angeles. It will expand to other theaters in the weeks to follow.)

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And then there were some theaters that just couldn't place "Roma" or the two other Netflix titles because they were booked up with other movies.

The holidays are one of the busiest times of the year for movie theaters. Because of this, the big studios lock down releases years in advance. The smaller indie distributors like Sony Pictures Classics and A24 announce their dates in some cases a year in advance. And now Netflix was suddenly going to theater bookers to run their titles within the span of a month?

According to one source, independent distributors were also turning up the heat on theater owners, saying if they made accommodations for Netflix, which would cause other distributor's titles to potentially get fewer screens, those companies may be less accommodating with their titles in the future.

Another hard ask Netflix was pushing on some theaters was doing a one-to-three-week run with all three movies. For numerous theater owners Business Insider spoke to, that's just not a precedent they were okay with. Generally, theaters want to play popular movies for months. With Netflix asking that its movies play for a few weeks and then disappear, theaters were taking a major risk since it would open the door for Netflix dictating the terms of the release window moving forward.

"I won't be playing it," one theater owner located in the Northeast told Business Insider when asked about showing "Roma." "They offered us 12-14 day-and-date, I can't live with that. My booker has a client or two that wish to play it and he's been trying to convince them that it's very short sighted."

Business Insider also spoke to numerous theater owners and programmers who were ecstatic that they were getting "Roma."

A source at one theater in the Midwest said it had been trying to get Netflix titles shown since it played "Beasts of No Nation." Netflix had passed until "Roma." The theater will be showing it in December, once the movie is already available to steam on Netflix, for a one-week run.

iPic Theaters will be showing the movie at its Dobbs Ferry, New York and Fort Lee, New Jersey locations for one week in December. Its CEO, Hamid Hashemi, said his company continues to have a great relationship with Netflix, but admitted scheduling "Roma" was a challenge.

"It really gets tricky and much, much harder," Hashemi told Business Insider, referring to the time of year Netflix decided to do the exclusive theatrical run.

"I'm a little surprised that they did this, because they have been sticking to their guns that their philosophy is you should be able to see a movie whenever and however you want to," Hashemi said. "This is a departure and it's pretty obvious that they are doing it because they are trying to appease the talent. They are going after the big names."

It's clear Netflix is not going through all of this because of the added revenue it can take in at the box office. This is for Oscar gold and keeping the big-name talent happy. And this is just the beginning.

On the horizon, Netflix will have more big releases with huge talent, like "The Irishman" from director Martin Scorsese and starring Robert De Niro, Al Pacino, and Joe Pesci slated to come out sometime next year. Scorsese, like Cuarón, has always championed the theatrical experience. So expect the streaming giant to continue to tweak its approach to working with theaters to satisfy its talent.

This is something the theater business seems open to - if Netflix plays by the rules.

"The movie theater door is open to Netflix - to grow their revenues and improve their awards chances - if only they will give their best movies the time and attention they deserve, in cinemas," National Association of Theatre Owners CEO John Fithian wrote in a column in November. "Filmmakers and movie lovers will appreciate Netflix so much more."

Netflix declined to comment for this story.