The internet is finally going to change the movie business, and it could cost theaters billions

Technology has upended most of the media industry, but one thing that hasn’t changed is the new movie business: If you want to see most films when they’re released, you have to go to a movie theater to watch them.

That is finally going to change, says MoffettNathanson analyst Robert Fishman, in part because the movie studios want and need it to change, and in part because Netflix is going to push the industry forward whether it likes it or not.

That is probably good news for you, a person who wants to see movies wherever you choose to watch them. That is bad news for the movie theater companies.

The studios are pushing for a new “window” which would let you see a new movie at home, for an extra fee, before the standard 90-day waiting period after it opens in theaters.

And Netflix doesn’t want you to wait at all. It has started aggressively building up a straight-to-streaming library of movies, which could theoretically compete with ones that are in the theaters.

Figuring out what that could mean for the theater operators involves a lot of guesstimating, because it hasn’t happened yet. But Fishman is convinced it is finally coming: He does some back-of-the-envelope math and figures the two moves could cost theater owners up $3.6 billion a year in annual revenue, and as much as 20 percent of their profits.

That has prompted Fishman to downgrade two of the largest theater chains, Cinemark and Regal, to “sell”; both stocks seem unaffected by the call today.

That may be because the future of movies isn’t here quite yet. Hollywood studios have been trying to push for earlier windows for years, without success (R.I.P. “Tower Heist”), because the theater owners have had enough clout to push them back. This year they’re talking about it again, but have yet to actually announce a new plan.

But Fishman thinks this is the year the studios finally do it, because they need something to replace their home video business — which not only exists but is huge for them — before it shrivels away, courtesy of the internet.

Meanwhile Netflix, which started making its own TV shows four years ago, is now getting serious about movies, hiring talent like Brad Pitt, Will Smith and Martin Scorsese to make stuff for them.

Netflix has yet to find the out-of-the-gate success with movies it had with TV shows — GQ gave Pitt a nice profile and weird photo shoot to promote “War Machine,” his Netflix movie that debuted last month, but most everyone else is politely ignoring it — but Netflix is going to keep plugging along. It’s talking about ramping up to 40 or 50 movies a year.

It’s going to make it happen, eventually, says Netflix CEO Reed Hastings. “Ultimately, consumer choice is a very powerful force,” he said at this year’s Code Conference, where we spent time discussing the company’s movie ambitions.

You can see the full Code interview with Hastings below, or listen to it via a Recode Media podcast:

This article originally appeared on Recode.net.

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