Netflix movies in theaters first: Why Ted Sarandos needs to consider

Netflix has never been in the theater business, but there are some very compelling (hello, Apple) reasons why that might change.

Hollywood loves stories that capture the imagination and this one would be great: Netflix, the number one streamer and nemesis of shows, is having a tough time with falling subscriptions. What could possibly save him? Only theaters, old fashioned outlets that provide word of mouth and real time revenue from people paying big bucks to get together, buy popcorn and sit in the dark .

This narrative emerged from CinemaCon in April, which took place days after Netflix announced its disastrous Q1 2022 results and the title took a dive from which it has yet to recover. Between theater owners exchanging verses of “Ding dong the witch is dead,” NATO National Association of Theater Owners President and CEO John Fithian gave his state address Of the industry.

“I represent movie theater owners, but Netflix? We love these guys,” he said. “[Netflix CEO] Ted Sarandos knows movies and TV better than anyone in Hollywood… Our doors are open to give Netflix movies a wider game. We would like to play more of their films.

There is poetry in this idea, isn’t there? Netflix, which has soared during lockdowns as theaters closed, is eating a humble pie and making peace by learning to live in harmony with theaters that desperately need more movies. As one multinational entertainment company likes to say, it’s a small world after all.

It makes sense that theater owners would turn to Hollywood’s most prolific content producer for product. The question is what makes sense for Netflix; inside the company, this is the subject of intense debate. Netflix Originals head Scott Stuber, who tried to negotiate for the 45-day streaming window before the release of Martin Scorsese’s $160 million “The Irishman,” is the agent of change. friendlier that pushes for improved theatrical releases.

“The Irishman”

Netflix and theaters couldn’t get along in 2019, but the 45-day post-pandemic PVOD window is now the industry standard. At Universal, that’s three weeks of theatrical exclusivity — and that’s also the number currently being discussed at Netflix. If Sarandos could see his way of endorsing advertising on Netflix, it stands to reason that similar acceptance could come for more robust theatrical releases.

Netflix has released films in theaters since Alfonso Cuaron’s “Roma” in 2018, an event film that played in cinemas around the world for months. “Marriage Story” played in theaters for four weeks. And last year Jane Campion’s Oscar-winning ‘The Power of the Dog’ played some 2,000 dates worldwide. However, these were rewards marketing pieces. What theaters want is to be part of an overall release strategy.

Theater owners would love to host upcoming Netflix movies ‘The Gray Man,’ a $200 million Ryan Gosling/Chris Evans thriller that will spend a week in theaters ahead of its Netflix debut on July 22, and Rian Johnson’s year-end star Daniel Craig’s “Knives Out 2,” which cost the streamer $450 million for two sequels.

Everything is possible ; Netflix continues to move into areas no one predicted, including Formula 1 live TV events, gaming and reducing password sharing. However, Sarandos never believed in the acting world. It’s acquired a few screens in New York and Los Angeles and works with other exhibitors, but it’s not about showing Netflix movies to paying customers; this is a filmmaker-friendly branding exercise for high-profile titles that will draw more people to the site.

“It’s a fantasy,” said a specialty distributor of Netflix moving further into theatrical distribution. “Ted Sarandos is still the boss and until Ted Sarandos decides to do it, it’s not going to happen. They don’t have an in-house marketing team, they don’t cut trailers. There’s a lot of things at stake, and he doesn’t want to get involved.

Netflix should have an infrastructure that resembles a traditional studio. Not only is money tight right now, but Netflix is ​​also being forced to invest hundreds of millions in another kind of infrastructure that will allow it to run ads and build a new set of AVOD subscribers, a source of income in which he can keep all the income rather than sharing it with an exhibitor.

Speaking of which, Netflix’s split would potentially be much more generous…for the exponent. Rather than the standard 60-40 split with the studio, Netflix talks to movie chains AMC and Regal — longtime Netflix holdouts — about a 25-75 split that favors the exponent. For now, Netflix is ​​doing business with independent cinemas and Cinemark, which has reserved Netflix’s “Army of the Dead” for wide release on May 14, 2021, a week before it premieres on Netflix, after limited print runs for movies like “Ma Rainey’s Black Bottom” and “The Midnight Sky.” Cinemark did it again in November with “Red Notice” and can’t wait to do more – with the right marketing spend. Adam Sandler’s “Hustle” is playing at a Cinemark theater near you.

"Hustle" Adam Sandler

“Hustle”

netflix

“Streaming services are going to do exclusive cinema windows, I’d bet on that,” IMAX CEO Richard Gelfond told IndieWire at Cannes. “For their biggest movies, the model of just streaming them doesn’t really work. A theatrical showcase increases the value of intellectual property.

Another reason why Netflix needs to reconsider cinema: others have already done it, with back-end revenue sharing, and it gives their competitors a clear advantage when it comes to wooing talent. This week, Apple and CAA brokered a groundbreaking deal with producer team Jerry Bruckheimer and Chad Oman and “Top Gun: Maverick” director Joseph Kosinski on an untitled Brad Pitt Formula One racing film. The deal sets up a broad theatrical release (theatrical distributor TBA) with a reasonable window, and pays the creative team via upfront and buyout fees plus a theatrical backend. Consider it a pattern, not an anomaly.

The Netflix model, on the other hand, buys out sellers based on estimated potential global revenue, with no back-end. Producers like Jeff Sagansky are worried about declining revenue share and with Netflix under financial strain, redemption fees could come down over time.

So far, Netflix will (briefly) release about 30 films in theaters this year, many of which are heading into awards season, including “Bardo,” AG Inarritu’s return to Mexico after 21 years; the adaptation by Noah Baumbach of “White Noise” by Don DeLillo, with Gerwig and Adam Driver; “Pinocchio” by Guillermo del Toro; and Andrew Dominik’s controversial “Blonde,” starring Ana de Armas as Marilyn Monroe.

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Alfonso E. Cramer