Netflix may have to cooperate with film industry to reverse losses

Netflix is ​​still reeling from the stock slump last month after losing subscribers for the first time in more than a decade.

To turn the narrative in your favor, analysts suggested adding ads and cracking down on password sharing.

But one way Netflix can help itself is to ally itself with an industry it was previously at odds with.: the cinemas.

While Netflix has released many movies in theaters – and has even purchased a few theaters – most of its theatrical releases have been purposefully limited.

With the streamer licking his wounds and theaters slowly recovering from the pandemic, now might be the time for the two sides to finally come together.

Netflix needs franchises, theaters need movies

By releasing more movies in theaters, Netflix can bring in new box office revenue, expand its brand to more potential subscribers and help make its movies more memorable – something the company has struggled to do.

Despite being a leader in streaming with 221 million global subscribers, winning multiple Oscars and working with some of the biggest names in Hollywood, Netflix hasn’t seen many of its movies become beloved brands the way some of its series have, such as ” Stranger Things”, whose new season premieres later this month.

Take “Red Warning” for example. The movie starring Dwayne “The Rock” Johnson and Gal Gadot was Netflix’s most-watched movie of all time, according to the company, but it arguably failed to make any sort of point in pop culture.

“It’s still basically impossible to build a big movie franchise without theatrical releases,” Andrew Hare, senior vice president of research at Magid, told CNN Business .

Hare added that as the company expands its offerings, “a number of titles are likely to require theater.”

“Not just for awards season, but for the buzz it takes to be a major player in a hybrid moment in a time that remains one foot on the physical and one foot on the digital,” he said.

Playing well with Netflix would also be a good idea for theaters.

“Theatres need content, now more than ever,” said Jeff Bock, senior analyst at entertainment research firm Exhibitor Relations. “A lot of Netflix releases have big names, so that would certainly get them through the turnstiles.”

Even the National Association of Theater Owners is open to the idea.

“Our doors are open to making more space for Netflix movies,” said John Fithian, CEO of NATO, last month. “We would love to show more of your films.”

Why the delay?

One of the biggest hurdles for Netflix and theaters is that both sides have fought over how long a movie should run in theaters.

Netflix’s business is subscription-based, so it doesn’t want subscribers waiting for movies, while theater owners whose businesses run on foot traffic want exclusivity for as long as possible.

That debate reached a high point in 2019 when the two sides couldn’t agree on how long “The Irishman,” Martin Scorsese’s crime epic, should be shown in theaters before going to stream.

Theaters wanted an exclusive 70-day window and Netflix wouldn’t go beyond 45 days, according to the New York Times.

But the pandemic changed everything by shrinking the theatrical window industry.

Even traditional studios like Warner Bros. and Universal Pictures are releasing movies to theatrical streaming after just a few weeks or sometimes simultaneously.

Aside from the theatrical window, there are other issues considering the theater business comes with extra costs that Netflix isn’t used to.

“It’s definitely not as easy as a homepage acquisition,” Hare said. “It is moving from the digital to the physical world. It takes money for marketing and promotion… There are a lot of huge tactical and strategic decisions that need to be made.”

And putting more movies in theaters can undermine Netflix’s own model. If you can go see the one Netflix movie you’re looking forward to seeing in theaters, does that give you less of an incentive to subscribe?

Ultimately, there are pros and cons for Netflix when it comes to working more with theaters.

However, the company needs to keep its ship from sinking and theaters are getting back to normal, so now might be the time for the streamer to put more of their movies in a marquee.

“I think Netflix is ​​still in experimental mode,” Hare said. “He can’t afford not to try it now.”