Netflix is working mightily to expand its reach worldwide, so far including Latin America, Canada, and the U.K., with Europe next up at bat. When Netflix is done, people in every part of the world will be its customers, and those customers will be able to toggle what language they want to watch a film in. This trend corresponds to the shrinking of the piracy window (the time between the theatrical window and the home video window), so by the time Netflix has a worldwide reach, it will also probably be available day and date with the theatrical release.
This trend will have a huge effect on how independent films are financed. Right now, independent filmmakers raise funds by selling their films through “pre-sales” on a country-by-country basis to local distributors, but a worldwide VOD reach will rip the heart out of these sales, because it will destroy the value of DVD and pay TV rights to the local distributors. The net result will be that independent films will be financed by pre-sales to Netflix, not the local distributors. Instead of going to the Cannes Film Festival, filmmakers could be going to Las Vegas for a digital convention in order to pre-sell VOD rights to Netflix. Indeed, Netflix will likely expand from creating original series to creating its own large budget films, with the initial premiere on-line. Netflix may be a vibrant, important source of new financing that disrupts the studio system and bypasses standard distribution channels.
This trend will also change how films are watched and how theaters compete. In order to compete against collapsing windows and high-def, surround-sound, home entertainment centers, theaters are going to have to offer a better experience, and a big part of this is going to be 4D seats, which move to match the film (where you feel like you are flying when a jet is onscreen), and 3D sound, which seems to come from different angles at different times around you, like raindrops falling near you. I have experienced both of these, and the results are astounding. Theaters are going to have to get on this bandwagon or be relegated to bowling alley locations.
