It’s a streaming world, and we’re just living in it.
With a majority of the globe’s movie theaters closed due to Covid, and Hollywood studios scrambling to figure out new distribution models, Netflix has already been experiencing the roaring ’20s with close to 204 million subscribers taking in the service worldwide and the company’s market cap at $221.7 billion. Netflix announced that they will debut 70 films during 2021 (the top 5 studios in pre-pandemic times can release as many as 90 theatrical titles combined), and working in their favor, it looks like we’re all going to be staying at home for a while as we wait for incoming President Joe Biden’s 100 million vaccines in his first 100 days to take effect.
With Netflix having already made a deal with Cinemark to show some of their movies on a shortened window (granted, on a film by film basis) –unthinkable for a major chain to agree to before the pandemic– Co-CEO and Chief Content Officer Ted Sarandos was asked by Barclays media analyst Kannan Venkateshwar during the streamer’s Q4 earnings video if a new revenue stream was at hand for the company at the box office (the implied assumption being that AMC and Regal would agree to play Netflix fare on a shortened window).
“Potentially,” answered Sarandos.
“We never had an issue with movies going into theaters, it was that you had to commit to this very long window of exclusivity to get access to theaters. That has been the biggest challenge. So if those windows are going to collapse, and we have easier access to show our films in theaters, I’d love to have consumers be able to make that choice to be out or see it at home, which has become the norm during Covid,” explained Sarandos.
And rather than throw mud at WarnerMedia streaming service HBO Max, Founder and Co-CEO Reed Hastings gave what sounded like a thumbs up to his rival’s distribution plan of releasing movies in theaters and on HBO Max simultaneously day-and-date during 2021. But with an asterisk.
“Hopefully with Warner Bros-sort of Covid move, what we’ll see post-Covid, like the second half of the year, is that people go to the theaters in significant numbers, and watch their films and they’re premiered simultaneously on HBO Max, and that will really set a path for simultaneous; it’s good for the film, helps both online and streaming and also in theaters. But we have to wait post-Covid to get a clean read of that,” said Hastings.
As far as making Netflix a PVOD outlet for studios looking to release their movies on a premium basis, Sarandos said “We’re not saying it isn’t (an attractive model), but this one has been the most attractive model, both for consumers and our own business” about the streamer’s one price, all-you-can-consume, ad-free model.
He added that Netflix has been able to take big swings in what they program, i.e. a foreign series like Lupin, as consumers open their minds to content, particularly those who may have avoided subtitled series. Essentially consumers’ dollars aren’t at risk, like it is on a per title basis at the cinema, hence it’s risk-free for them to try.
Venkateshwar also asked Sarandos whether the streamer’s grand plan of 70 movies this year would lead them to a place of low financial returns in the future.
Without getting granular Sarandos, answered “If you think about it relative on a handful of titles that wind up doing enormous return for the studio versus the hundreds of titles that barely breakeven, this is a great model for producers to produce in. And the fact that we can support it day-in-and-day-out at this kind of volume, and make projects that are otherwise pretty difficult to make in some cases, has been very encouraging for filmmakers to embrace this kind of model.”