Netflix Threatens to Withhold Films From Cannes Festival (Exclusive)

The move comes as a response to a new rule banning movies from the official competition that don't have theatrical distribution in France.

A dramatic showdown between Netflix and the Cannes Film Festival is brewing, with the future of the film industry in the crosshairs.

Sources tell The Hollywood Reporter that Netflix has threatened not to bring any titles to the world's largest movie event after festival director Thierry Fremaux said last month that he won't screen any Netflix films in competition. The situation is said to be fluid, and a final decision won't be made until Cannes announces its official lineup Thursday.

If Netflix carries through on the threat to pull its movies, the move could impact a number of high-profile filmmakers. Netflix titles have figured in the speculation about films that could screen at the festival, although it is not clear which may have been formally submitted. Among them are Paul Greengrass' Norway; Jeremy Saulnier's Hold the Dark; and Orson Welles' The Other Side of the Wind, the newly completed version of a project the late director filmed in the 1970s.

Netflix declined to comment on its Cannes plans, but such a move would be seen as retaliation for a new rule, first announced after last year's fest, banning any films from competition that do not have a French theatrical release. Since Netflix titles don't play French theaters and instead appear directly on the digital service, that rule effectively has barred them from the competition lineup.

While Fremaux has said he would consider scheduling Netflix titles out-of-competition, that option is considered less prestigious by many filmmakers, in effect reducing them to second-class status.

With the fest director putting the final touches on the schedule that will be unveiled next week, the situation at the moment is considered delicate, with conversations taking part between the festival and the streaming service in an effort to resolve the impasse.

Many in Hollywood will be watching how this plays out. While Netflix has become a huge player in the film business, investing millions in big-budget projects with A-list filmmakers, the company has drawn the ire of some for its strategy of putting films directly on its service rather than offering a theatrical window, as streaming rival Amazon has done.

Cannes' new rule came in the wake of an uproar in some quarters over the fact that Netflix had two films in the Cannes competition for the first time last year — Boon Joon-Ho's Okja and Noah Baumbach's The Meyerowitz Stories. Many traditionalists, especially in France, which has strict rules protecting theatrical distribution, complained about the streamer's inclusion in the fest given its online-only distribution practices.

Netflix declined to comment.