”They’re trying to play the old Hollywood game in the confines of new Hollywood,“ one analyst tells
The Russo brothers always envisioned Mark Greaney’s 11 “Gray Man”Books were a long-term action series before Netflix landed. Analysts and experts spoke out to question whether sequels to big-budget tentpole movies drive substantial subscriber growth and whether streaming is financially viable without a broad theatrical strategy.
“I think their hope is that they will hit gold at some point,”Bruce Nash, an analyst at The Numbers and Nash Information Services, said that. “Netflix’s biggest weakness compared to Disney+ and HBO Max is that they don’t have exclusive rights to a major film franchise, so I think it makes sense for them to keep trying to fill that gap.”
“What impression does it give people of Netflix moving forward? Is it more of a direct-to-video streamer where you have a high output of lower quality titles? Or is it a service where they can see marquee, original IP being debuted,”Paul Erickson of Parks Associates, a senior analyst, countered. “I think it’s the latter. It’s going to be concentrated on fewer titles but higher quality IP. And that’s not a foreign concept for the industry, because we already see HBO Max doing that.”
Finding the right franchise can be difficult. In fourth-quarter 2021, Dwayne Johnson’s “Red Notice,” which likewise had a $200-plus million price tag, quickly became Netflix’s most-watched original film in its history. Yet, the film’s viewership and the combination of its second largest film were still impressive. “Don’t Look Up”Permanent “Squid Game”Buzz, however, was not enough to help Netflix surpass its subscriber expectations for quarter.
One expert at a production and financing company noted that Netflix has proven willing to take the chances on non-IP-based big budget movies that even other studios won’t. They didn’t doubt Netflix’s eagerness to spend, but said they felt Netflix’s mandates are frequently changing.
Netflix declined to comment for this story, but the streamer’s film chief Scott Stuber gave an overview of his strategy when interviewed at ’s Grill conference:
“I came here with the recognition that I was starting at the bottom, that we are in last place, meaning that in the film industry, we were going to have to build a film studio and prove ourselves… We have no library, we have no IP, what are we going to do to define ourselves?”Stuber said it last fall. “This has always been a long-term plan for me. How do we get to the place where everyone at some point in the next five years goes, ‘That’s the best film studio in the world?’ And that’s something we’re trying to do.”
Jeff Bock, senior media analyst with Exhibitor Relations, said that it’s hard to truly gauge the success of any of these films or their big spends without box office receipts to use as comparisons.
In the case “The Gray Man,”The film premiered Friday at 1500 theaters in 25 nations, including approximately 450 in the U.S., Canada, and 120-plus in other markets. Netflix doesn’t report box office figures, but DeadlineAccording to reports, “The Gray Man”Domestically, it was less than $200,000 its first weekend.
It’s a lot like the theatrical rollout. “Red Notice,”It was seen on approximately 750 domestic screens last fall. reportedlyIt was worth between $1.25 and $1.5 million at its opening. Cinemark eventually made the most of it. AnnouncementIt was the most popular Netflix film ever to be shown in theaters.
“They haven’t made a huge amount of money for Netflix, but they have filled the theaters they’ve played in, and I think it’s a viable strategy for Netflix in terms of raising awareness of their films and potentially making some money from an alternative source,”Nash said. “The point of contention will always be the size of the theatrical window, particularly for streamers like Netflix that have such a large subscriber base. One week of theatrical exclusivity wouldn’t be enough, I think, but I can imagine ‘Knives Out 2’ playing in theaters over Thanksgiving and debuting on Netflix on Christmas Eve, for example.”
Netflix boasts two of these. “Red Notice” sequels in development with stars Johnson, Gal GadotAnd Ryan Reynolds all expected to return, but sequels for some of Netflix’s other most expensive hits such as “Bright” and “6 Underground”These have not yet materialized. Netflix is currently working on sequels to its mid-budget hits. “The Old Guard 2,” “Enola Holmes 2”And “Extraction 2,” which also hails from the Russo brothers’ AGBO banner. And it’s also found success with its lower-budget teen films like the “To All the Boys,” “The Kissing Booth”And “The Princess Switch”franchise is one example.
But despite some massive numbers — “Red Notice”It was viewed for 364,000,000 hours within its 28-day initial period. Global Top 10 Liste for 10 weeks — analysts argue these films don’t have the same shelf life or cultural cache of their many hit series.
“‘Cocomelon’ has more staying power than their big-budget popcorn pics. Simply put — they’re disposable. ‘Stranger Things’ is still their most popular homegrown success and that’s a series, not a film,”Bock spoke. “There’s rarely a film poster that can hold a candle to the most basic theatrical rollout, much less be hung in a dorm room. These films not only seem disposable, they are disposable. [They’re] not much in the way of lasting appeal.”
Many analysts’ are watching whether Netflix decides to tweak its theatrical approach for the holiday release of “Glass Onion,” Rian Johnson’s follow-up to the box office smash “Knives Out,”Netflix spent a huge $400-plus million to purchase the rights to the film and a sequel. But there’s no indication such a shift will happen any time soon, and each of Netflix’s theatrical strategies, be it for a tentpole blockbuster or an awards contender, remain bespoke.
A production and financing expert said that Netflix must overpay big event pictures in order to attract talent. They added it’s something that has made Netflix one of the best when it comes to giving talent creative freedom. This month, that approach paid off. “Stranger Things”Creators, the Duffer Brothers, signed a large deal with Netflix for other shows, movies and content. “Stranger Things” spin-off.
“There has to be the endgame or the bottom line result has to be putting this much money into a single film, one movie, has to somehow pay dividends,”Paul Dergarabedian was a senior media analyst for Comscore. “Those dividends could be filmmaker or creative talent loyalty or creating good will with really important and well known A-list talent in front of and behind the camera. In that calculus may not be the cold hard dollars and cents or traditional metrics.”
That could change if Netflix launches an ad-based subscription service that can increase downstream revenue and offset any losses in theatrical box offices. Expert believes that if this happens soon, it will allow them to continue supporting multiple big-budget tentpoles at their current pace.
Analysts are divided on which quality or quantity will be most important in the future.
“Think of how many low-budget horror flicks they could have made for $200 million instead of one ‘The Gray Man,’ which won’t even be a box office blip and will probably slip outside their own Top 10 in a matter of a few weeks,”Bock spoke. “They’re trying to play the old Hollywood game in the confines of new Hollywood. Big budget Hollywood films go through a production pipeline that has been developed for decades — there are no shortcuts and Netflix is finding that out firsthand.”
While “Red Notice”And “The Gray Man”They were all approved for Netflix at different times, not only for Netflix but also for the entire industry. Netflix has also not stopped spending its content. Back in April, Ted Sarandos said to a J.P. Morgan and Chase analyst he expected 2022 content spend to be “around $18 billion,”This would be an increase from the $17billion it spent in fiscal 2021.
“I think we’ve got to continue to invest in the content, both in the quality and the variety of the content. And we will continue to grow the content spend relative to prior years,” Sarandos .
If you have any luck, it would happen. “Gray Man”Netflix has not yet released a sequel but it is still committed specifically to action films, which are among its highest-performing movies. An Emily Blunt package was bought by the streamer from Cannes, which cost $50 million. “Pain Hustlers.”One source says that even the comedy ends will be funny. “Murder Mystery 2” with Adam Sandler and Jennifer Aniston is shaping up to be the streamer’s most expensive comedy ever, with a budget even on par with some of its biggest tentpoles.
“Netflix is very audacious in everything they do. If they lose a lot of subscribers or there’s still a lot of churn, they still go all in on a movie like ‘The Gray Man.’ The future is going to be about weighing the cost benefit,” Dergarabedian added. “It’s an expensive bet, but it may be about filmmaker and talent relationships as well that are an investment or an annuity in the future for Netflix. And in a year from now, everything can be different.”
