CEO Ted Sarandos poured water on hope the streamer might lean into multiplex releases
Ted Sorrandoes was asked point-blank in Tuesday’s quarterly earnings call about resisting Netflix’s current reluctance to give their films conventional theatrical releases, a stance that has now put the company at odds with most of their streaming competition. The short answer: Don’t stop a horse in mid-stream.
“The film division is doing great,” stated Sarandos. “They really are building out some great films. The success at the Oscars [like “All Quiet on the Western Front”] was great but even better than that [was that] the movies that won so big were also very popular with fans.” We’re really happy with the investment in film.”
The comments came as rival streaming companies, including Apple TV+ and Amazon’s Prime Video, reportedly made moves to invest around $1 billion each per year in theatrically-targeted movies. Alongside David Zaslav’s stated preference for theatrical titles, this makes Netflix an outlier in still prioritizing streaming premieres sans more than a token theatrical commitment.
“Remember there’s a lot of ways to create and collect demand for film,” he continued. “Driving folks to the theater is just not our business.”
Netflix’s reluctance to embrace theatricality for its feature films is slowly becoming a potential sore spot, both in terms of generating revenue and chasing awards season glory. However, going direct-to-consumer isn’t entirely illogical when you have a membership base as big as Netflix’s.
“It’s really it’s really leaning into an event and an advantage,” echoed Netflix co-CEO Greg Peters. “We have been delivering that value to our members. Because of our reach and our scale to have over 230 million paying members at our average revenue per member, it affords the opportunity to invest in these big movies.”
The biggest advantage that Netflix has over its rivals, along with being first on the block and having a company name synonymous with streaming, is the size of its relatively reliable viewership base. Its rivals chase just a portion of the marketplace and are mostly dependent on big-scale titles from their biggest IP, think the Talor Sheridan shows and “Star Trek” for Paramount+ or Marvel and “Star Wars” for Disney+.
“I think it’s tempting to make the comparison between the services,” Sarandos continued, “but the other services don’t have that scale… they don’t have the revenue base or the viewer base to support with a single window the way we can support even big budget films with a single window on Netflix.”
Netflix’s rivals depend mostly on theatrical titles — think “The Batman” on HBO Max or “Sonic the Hedgehog 2” on Paramount+, which in turn depends on an industry dominated by IP, marquee characters and previously successful franchises. Netflix can get massive viewership from star-driven originals like Adam Sandler and Jennifer Aniston’s “Murder Mystery,” Ryan Reynolds’ “The Adam Project” and Sandra Bullock’s “The Unforgivable.”
Nonetheless, if Netflix holds firm and becomes the only outlier, they could have more of a challenge nabbing high-level talent who still favor the awareness and prestige that comes with a theatrical release. Moreover, so many of Netflix’s biggest movies are either star vehicles from big-screen movie stars like Dwayne Johnson, Ryan Gosling and even Leonardo DiCaprio or, in the case of “Glass Onion: A Knives Out Mystery,” a streaming smash that was a sequel to a theatrical blockbuster.
It’s an odd disconnect, eschewing theaters for anything other than a brief promotional tool while capitalizing on actors, filmmakers and genres that became popular via theatrical exhibition. And that’s not even accounting for the slew of theatrical flops like “The Snowman” or forgotten blockbusters like “Bad Teacher” that tend to dominate the daily top ten. Netflix needs theatrical movies even as they forsake multiplexes for their own in-house approximations. Right now, Netflix doesn’t need theaters for top-tier viewership, but eventually, those who make films for them may want more than a couple of weeks’ worth of massive viewership.
Before joining The Wrap, Scott Mendelson got his industry start in 2008 with a self-piloted film blog titled "Mendelson's Memos." In 2013, he was recruited to write for Forbes.com where he wrote almost exclusively for nearly a decade. In that time he published copious in-depth analytical and editorialized entertainment industry articles specializing in (but not exclusively focused upon) theatrical box office. A well-known industry pundit, Mendelson has appeared on numerous podcasts and been featured as a talking head on NPR, CNN, Fox and BBC.