Netflix and Amazon make Sundance their playground

Amazon and Netflix have built reputations as two of the industry’s premier streaming services. But the two are also gaining a foothold in Hollywood’s arthouse backyard, and it could change how we consume films that normally get limited theatrical releases (or not at all).

At the Sundance Film Festival in Park City, Utah, the two companies this week wound up securing exclusive VOD rights to some of the festival’s most talked-about titles—in many cases outbidding the competition by several million dollars. With growing audiences and a more aggressive approach to distribution, these services are putting their money where their mouths are, and proving media consumption is changing.

While these purchases are designed to fortify their growing libraries of original (and exclusive) content, it’s also a challenge, a very public display of power and confidence. There’s no question Amazon and Netflix still rely on licensing deals to draw customers in, but their ambitions go well beyond that. Both services have already produced Emmy-winning TV shows, and it won’t be long until their films are garnering the same recognition.

Even before Sundance began, Netflix set the stage by scooping up Tallulah, a film starring Ellen Page that tells the story of a drifter (Page) who takes a baby from a negligent mother; the film is described as a “dramatic comedy,” and you’ll only be able to watch it on Netflix after a limited theatrical run; no cable bundle, no lengthy break between theater and home. It’ll be on a service you (probably) already pay for. Netflix also purchased worldwide streaming rights to Paul Rudd’sThe Fundamentals of Caring, and Under the Shadow, a horror film likened to The Babadook.

These three films can still appear in theaters, as the rights are up for grabs. But by flexing its film-buying muscles, Netflix was able to secure streaming rights and strengthen its future content portfolio—regardless of what it licenses this time next year.

In the Amazon camp, Jeff Bezos’ online machine nabbed Love and Friendship, Weiner Dog and Manchester by the Sea, the latter of which will receive a traditional theatrical release and awards season campaign.

These services are suddenly providing smaller filmmakers without Avatar-level budgets the opportunity for their movies to be seen by millions and millions of people. Granted, not everyone who subscribes to Amazon Prime or Netflix will watch Manchester by the Sea when it starts streaming. But there’s a better chance of it finding an audience, especially those who don’t feel like going to the theater; or maybe there isn’t a theater nearby that shows smaller indie flicks.

In addition to giving these arthouse films a platform to be successful, Netflix and Amazon are also playing tastemaker. These services can quickly adapt to what people are watching, and then present that content to a worldwide audience at the same time. Not only that, but these services are all about choice—a subscriber can watch a particular movie on their time, not simply when it’s out for a limited time in theaters.

The promise of having your content on a worldwide network isn’t irresistible—at least not yet. Netflix made a reported $20 million bid for Nate Parker’s The Birth of a Nation, but was turned down in favor of a $17.5 million bid from Fox Searchlight, less than what Netflix was willing to pay. Although the service’s bid wasn’t accepted, its aggressiveness helped influence what became the biggest sale in the festival’s history.

Going to a big theater still has its allure, and perhaps it was for the best that a movie like The Birth of a Nation, about the 1831 slave rebellion led by Nat Turner, find a box office audience. But the winning bid was still driven high by Netflix’s deep pockets, and you can bet it won’t be the last high-profile film the service goes after.

The presence of Amazon and Netflix at such a big festival is also important because it shows the two services are open to ideas traditional studios might shy away from. Following Netflix’s release of Beasts of No Nation, director Cary Fukunaga praised the service for taking risks on content that isn’t designed to sell tickets. Both services, boosted by growing original libraries, are in a position that allows them to put out whatever they want. Just look at Adam Sandler’s The Ridiculous Six.

Netflix and Amazon will forever license content because big-budget popcorn flicks will never die; these are the kind of movies best experienced in big dark theaters, on big screens with big sound. But their presence at Sundance appears to signal a shift for critically-acclaimed indies that don’t draw a big box office audience. (Imagine if a movie like Steve Jobs hit Netflix at the same time it hit theaters; a lot more people would have watched it.)