Critics say Netflix is bad for movies — here's what they are missing about its strategy (NFLX)

At Cannes, Netflix has been pulled into a fight with movie traditionalists, who have pushed back against the way Netflix puts out movies — particularly that theatrical releases have taken a back seat.

But film purists should consider a crucial way Netflix is helping to coax the "mid-level" film market back to health.

When Netflix got two films into Cannes this year, Boon Joon-ho's "Okja" and Noah Baumbach's "The Meyerowitz Stories," it seemed like a big win and perhaps a step toward acceptance into the film world.

But that swung drastically the other way when Cannes decided to tweak its competition rules after this year as a result of the backlash toward Netflix titles. Going forward, films will qualify only if they have a theatrical release in France (it's unclear whether those two titles will).

"The establishment closing ranks against us," Netflix CEO Reed Hastings wrote on Facebook. "See Okja on Netflix June 28th. Amazing film that theatre chains want to block us from entering into Cannes film festival competition."

"Okja" is a perfect example of both the pushback Netflix has gotten and how Netflix has begun to help prop up part of the movie industry.

Last week, some members of the audience at the Cannes "Okja" premiere booed while others cheered when the Netflix title card flashed, expressing their distaste for the streaming giant. But "Okja," which got a four-minute standing ovation at a later showing, might not have been made if not for Netflix.

On Friday at Cannes, prominent producer Brett Ratner said that before Netflix, "Okja" had been pitched to traditional film distributors, which didn't want to back a $55 million film that was from a Korean director and didn't necessarily have franchise potential, according to The Hollywood Reporter. These kinds of mid-budget movies have become nearly impossible to make work, he said.

This echoes sentiments Netflix has been expressing for the past few years.

That trend has only strengthened since 2015.

Netflix has always argued that it is expanding the movie pie — making the industry bigger, not fighting over a static number of films.

If "Okja" would have never gotten made, would that have been a better outcome for those who care about the art of film?

The counterpoint to that line of argument is Netflix's main rival, Amazon. Though Amazon is a streaming service, all its films get theatrical releases because Amazon is willing to keep the movies off its online platform for the traditional length of time.

Why can't Netflix just act like Amazon?

The problem is that it is unclear how Amazon makes this work as a business model — if it even does. How value is created and passed among all the cogs in the Amazon machine is hard to parse out, and CEO Jeff Bezos seems to love Hollywood, so perhaps he's willing to lose some money there. Netflix's business is so wildly different from Amazon's, it doesn't make sense to compare them directly.

Netflix should be judged on its own terms.

So for those who believe Netflix is doing a disservice to films like "Okja" by de-emphasizing the theatrical release, these questions about artistic integrity, and what duty Netflix has to these films, must be balanced against the reality that some of them might simply not get made in a world without Netflix.

Critics say Netflix is bad for movies — here's what they are missing about its strategy (NFLX)

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