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Netflix: Watch out, movie theaters, you could be next

​After busting up the norms of TV programmers and cable giants, Netflix CEO Reed Hastings paints cinemas as the next dinosaur ripe for extinction.

Netflix has struck a deal to distribute its original films in theaters purely for Academy Award qualification, CEO Reed Hastings said.
Makeitstranger.com/Nelson Cash/Screenshot by CNET

Don't start sweating yet, cinema chains. Netflix doesn't need to destroy you, for now.

Speaking at the New Yorker Tech Fest, Netflix CEO Reed Hastings saved his harshest words of the day for the theater industry, calling its business model a "tragedy" and saying "movie theaters are strangling the movie business."

Film studios risk revolt by theater chains that would ruin a movie's release, if studios attempted to sell that film directly to consumers at the same time it were on screens, he said Friday at the New Yorker conference in New York City. That model has stifled sales growth and innovation for 50 years, he added.

Luckily for cinemas, Netflix's strategic interest in getting on their screens is for one reason only, and it's pretty specific. Hasting had a single explanation: "Academy qualification," he said in an interview on the sidelines of the conference.

To be in the running to win an Oscar, films must be exhibited in a commercial theater in Los Angeles County for at least seven days. This week, Netflix secured a partnership with an upstart 15-screen chain iPic to screen at least 10 of its films in its Los Angeles and New York cinemas.

Last year, Netflix rankled major theater chains by pushing for so-called "day-and-date" delivery both online and on screens at the same time. The effort sparked an outcry by theater owners, seeing it as a threat to the traditional "windowing" release schedules that help get people into cinema seats. The four biggest chains -- AMC, Carmike, Cinemark and Regal -- boycotted Netflix's most high-profile release to date, "Beasts of No Nation."

But consumers in the future won't need to go to the movies anyway, according to Hastings. New, top-end televisions eclipse the picture quality of the cinema in the comfort of your own home, he said. "It's significantly better than what you get in the movie theater," he said onstage.