Daniel Craig returns as Benoit Blanc in “Glass Onion: A Knives Out Story.”
Netflix
Netflix obstructed on the ads. Should the next theater show?
Some theater owners and industry analysts are wondering if the streaming giant will rethink going against the traditional Hollywood movie distribution model as it searches for new ways to increase revenue. or not.
This Thanksgiving, Netflix plans to release “Glass Onion: A Knives Out Story,” the sequel to the 2019 hit “Knives Out,” in select theaters for a week before making it available to the public. subscribers a month later.
The streamer reportedly spent $400 million on the rights to the two sequels after the original “Knives Out” generated $312 million globally on a budget of just $40 million. The performance of the first film at the box office has raised questions about why Netflix limited the release of “Glass Onion” to just one week in 600 theaters.
And with a this year’s big movie release listTheater owners want more from Netflix.
“We’re glad they’re experimenting and offering us some exclusivity,” said Brock Bagby, director of content and development at B&B Theaters, which has more than 50 locations in 14 states. . “But we wish it ran longer and we wish it was wider.”
Several executives in Netflix are said to have lobbied co-CEO Ted Sarandos earlier this year to consider a longer theatrical run and wider release for some films, but Sarandos dismissed the idea. Company heads have repeatedly said that the future of entertainment is streaming.
Netflix could benefit with a more flexible approach to movie distribution, according to some on Wall Street. That could help bring in more box office revenue and attract filmmakers with the prestige that can be gained from films in theaters.
“If anything, the past year has shown that Netflix is opening up and in need of new revenue streams,” said Mike Proulx, vice president and director of research at Forrester. “Increased subscription revenue alone will not cut in the future.”
Read more: Netflix wants investors to focus on earnings, not subscribers
That’s part of why Netflix one more level of ad support for its service after so many years of resistance, he said.
Michael Pachter, an analyst at Wedbush, said he understands Netflix doesn’t make movies to profit from theatrical release and that the company’s priority is to please its members. “But that ignores the fact that film creators have a lot of faith in theatrical exhibition as a measure of success,” says Pachter.
Netflix executives stood firm by the decision to show “Glass Onion” in just 600 theaters in a week. The company’s strategy in the past with limited theatrical releases – such as Martin Scorsese’s “The Irishman” – has been to create buzz for subscribers when movies are released on their service. That’s the game here, too, the company said in Tuesday’s earnings video.
“We are in the business of entertaining our members with Netflix movies on Netflix,” Sarandos said on the call.
He said that Netflix brought the film to festivals and limited screenings in theaters because the filmmakers requested it.
“There [are] all kinds of arguments all the time, back and forth, but there’s no question internally that we make movies for our members and we really want them to watch them on Netflix,” he said.
Netflix declined to comment further.
Still tinkering
Ralph Schackart, research analyst at William Blair, said: “One thing Netflix has historically been successful at is iterating, testing and seeing what works best for its members and shareholders. “. “It then focuses on what works and pulls out what doesn’t. We think part of Netflix’s historic success is its willingness to be flexible and try unconventional approaches.”
He said Netflix is unlikely to commit to a longer theatrical release window until it sees if that strategy can benefit its business.
Additionally, Dan Rayburn, a streaming and media analyst, says that there’s no public data to suggest Netflix will make more money from subscriptions, in the long run, if the company puts in a lot of content. Make your movie more out in theaters.
Of course, theatrical releases come with marketing costs, and Netflix hasn’t hesitated to spend on promoting streaming features for limited engagement.
And while theatrical releases could open up a new revenue stream for Netflix, Forrester’s Proulx notes that movie theaters may not be as relevant as they once were. According to the Forrester Retail Pulse and Consumer Energy Index survey released in December 2021, 54% of US adults using a streaming service said they enjoy watching movie premieres. online.
However, people are returning to cinemas after suffering the pandemic early, especially for action and horror movies, as well as established brands. “Halloween Ends” debuted at $41.25 million at the domestic box office over the weekend, despite also debuting on Universal’s Peacock streaming service around the same time.
There’s also an argument to be made for making decisions on a case-by-case basis, especially for a movie like “Glass Onion”, considering how well the first installment of the franchise performs as in theaters in late 2019 – especially considering there are Very few big movies hit theaters before the end of the year.
The original “Knives Out,” which had a production budget of $40 million, grossed $26.7 million in its opening weekend and held audiences’ attention for weeks, before witnessing another boost in holiday ticket sales in December. By the end of its theatrical run, the film had grossed $165 million at the domestic box office and $312 million worldwide.
Shawn Robbins, head of media analytics at BoxOffice.com, said: “The advantages of longer theatrical showings for Netflix are likely to outweigh any cons. “This is not an untested original movie like streamers have primarily made for their platform in the past, but an IP sequel with star names and strong commercial potential. “
He also noted that Netflix places such a high value on filmmaker Rian Johnson’s sequels because of the success the original film enjoyed during a long period of exclusive theatrical release under Lionsgate.
“Without that second component, would Netflix have invested heavily in ‘Glass Onion’ and its eventual sequel, if any?” Robbins said.
The deal for two sequels to “Knives Out” was announced in March 2021 and is said to be worth around 400 million dollars. Johnson will retain full creative control and Daniel Craig, the star of the original film, will return for both films.
“Like the first movie, legs can be really strong,” B&B’s Bagby said of “Glass Onion.”
Disclosure: Comcast is the parent company of Universal, Peacock, and CNBC.
