Sequel to martial arts hit will be released same day to Netflix customers worldwide.

The online launch in late August of the Crouching Tiger, Hidden Dragon sequel, The Green Legend, suggests cinema might lose its valuable place at the front of the queue for movie releases. The first Crouching Tiger movie in 2000 was a huge hit and The Green Legend is one of the most anticipated movies of 2015.

Its premiere will be significant in Auckland because a big part of the movie was filmed in the city's west.

It has American producers, with Chinese involvement, and the New Zealand Film Commission recently signed a co-production deal with China to attract companies to make films and spend money here.

Internationally The Green Legend is making waves. It's the first film to be released online before opening in cinemas, and at least four US cinema chains are boycotting it because it sets an unwelcome precedent.

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The movie has been made for Netflix, the global online media operation creating a service it hopes will one day offer the same titles everywhere in the world. The Green Legend will be available the same day to Netflix customers worldwide and to Imax theatre patrons.

In this country it's still not clear if cinema chains will accept a later release date, but it's being considered. Event Cinemas, which dominates the Auckland market, declined to comment on whether it would join boycotting exhibitors.

It would seem madness for cinemas not to show the sequel to such a big success.

For Netflix, the early release makes sense as a big promotion on its road to becoming a global entertainment behemoth. After House of Cards, this will be its next major step into the big time.

The issue is blowing up just as Netflix expands into Australia and New Zealand; a launch date some time next month should be revealed soon. And New Zealand may see more cases where movies are shown online before they screen at the movies.

Netflix is coming to Australia and New Zealand as part of a strategic push to go global rather than for the relatively small revenues, and at a time when video on demand is belatedly taking off.

In this field, Netflix will join Spark's Lightbox and Sky's Neon, as well as the longest running video on demand service, Quickflix.

Opening windows

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The Crouching Tiger row shows how Netflix and online entertainment generally are speeding up the relentless breakdown of the "windows" system which has long been the foundation of the industry.

By allowing movies to be released at different dates on different media, it has enabled studios and other distributors to make more money, by effectively creating lots of small markets for content. However, the rise of pirating and online communication is making the old system obsolete.

Big players like Sky and TVNZ will be able to secure core products, but there are signs that the split of some TV rights between Australia and New Zealand will be challenged. That could create an advantage for a multinational such as Netflix, working in both markets.

Andrew Cornwell is local chairman of the Motion Picture Distributors' Association and says he doesn't know for sure but expects New Zealand cinema chains to follow the lead of those in the US and boycott The Green Legend. He says cinema exhibition is expensive and, while Netflix is a big business, the studios are aware of the investment made by exhibitors.

That said, if 20 or 25 per cent of the box office for a movie is filtered off with online release, it would have a serious impact on exhibitors' profits, Cornwell says. Netflix is different because it is investing heavily in its own films and TV shows - and has had critical acclaim for series such as House of Cards.

Cornwell says that as studios have sought to avoid piracy, same-day cinema releases are now more the rule than the exception. Because of the timing of school holidays, some movies aimed at a younger audience are sometimes released here before going on show in the US.

As for the unfurling of the New Zealand video on demand market, he says consumers are confused about the offerings - for example, weighing up a one-off payment of, say, $7.99 for a newly released movie against perhaps $15 for a month for streamed TV programming made up from libraries of old content.

The availability of apps for different products on different devices is also complex.

Public money
The Green Legend has been made with huge and recently expanded taxpayer incentives to boost New Zealand film production. As well as taxpayer handouts, Auckland ratepayers are also boosting the industry.

The Herald reported on January 17 that Auckland Tourism, Events and Economic Development (Ateed) - funded by ratepayers - has commissioned Los Angeles consultants MBS3 and flew them to Auckland to look at alternatives for a new film studio being developed mainly for overseas production companies. The council is providing land as part of a joint venture with the private sector, but appears to be picking up other costs.

The firm reports back at the end of March. Asked about the cost, Ateed said it did not disclose the consultancy fees paid as it was commercially sensitive. Ateed's spending has been under intense scrutiny lately, with revelations that it has hired people for overseas postings. Its involvement in film infrastructure is also controversial, given the money lost by earlier studio ventures backed by local bodies.

Business training

There was an encouraging sign yesterday that business is putting money - initially about $500,000 - back into the screen industry, rather than waiting for public handouts.

Listed cinema software company Vista Group International started the Vista Foundation in partnership with the Film Commission to help film-makers learn the business side of film marketing.

Murray Holdaway.
Murray Holdaway.

Vista Group chief executive Murray Holdaway said the Vista Foundation received establishment funding from the founding shareholders of Vista Group, and funding support would continue.

"Being a professional film-maker is about great writing and directing skills, about design and production, but it's also about marketing and promotion, about maximising the return on investment in the film being produced," Holdaway said.

Roger Donaldson, producer and director of New Zealand classics Smash Palace, Sleeping Dogs and The World's Fastest Indian, is patron.

The commission's chief executive, Dave Gibson, said the foundation would play an important role that was not now being addressed.

The commission saw the new body as a promising sign about developing the business skills of film-makers - particularly producers who could be working with $20 million ventures, he said.