Netflix (NFLX) has set itself up for a showdown with the world’s cinema chains after announcing it will jointly produce the sequel to Ang Lee’s martial arts epic Crouching Tiger, Hidden Dragon with the Weinstein Company.
The deal means that Netflix’s 50 million subscribers across the world–spread across over 40 countries–will be able to watch Crouching Tiger, Hidden Dragon: The Green Legend on the day of its release at movie theaters, in a development that theater owners fear will badly eat into their viewer numbers.
Release is scheduled for August 2015.
It’s the second major coup in less than a month for Netflix, which sealed an agreement earlier in September for global distribution rights to Warner Bros. Hotly-anticipated Gotham series. The only catch is that it won’t be able to distribute the film in China, because it doesn’t yet have a service there.
Netflix needs exclusive content, among other things, to bolster new services abroad, having launched six new services in Europe last week, including in France and Germany. Netflix expects the cost of those launches to push its international loss up to $42 million in the current quarter, from $15 million in the second quarter.
In an interview with the Financial Times, Netflix chief executive Ted Sarandos said he expected “push back” from movie theatre chains but argued that this was just another example of tailoring the entertainment business to the changing preferences of consumers.
“There was a time when the internet was mostly for the lowest-quality content,” he said. “Deals like this turn that on its head.”