Netflix and Chill! Why Distributors should be afraid of Netflix
Dinosaurs are on the mind of Hollywood executives this week — although it is Netflix’s deal on a new Brad Pitt movie and not the fearsome creatures in Jurassic World that will have industry types shifting uncomfortably in their seats.
Once the streaming giant confirmed its role on 8 June as producer and financier on the military satire War Machine, heads snapped up from grassy pastures as the movie landscape trembled beneath the shadow of the on-rushing beast.
Its $3bn acquisitions war chest for 2015 alone and $600m marketing budget to woo international subscribers helps — it is hard to think of a single independent distributor that could outbid it, should it choose to pursue a movie project.
While it might be exaggerating things to cast Netflix as the Silicon Valley predator hell-bent on devouring the theatre-going ecosystem, its willingness to cater to the culture of instant gratification heralds a sea change in how things get done in the film business.
By reportedly investing around $70m (£45m) in War Machine, which will see Pitt play a character based on the controversial former commander of US troops in Afghanistan, General Stanley McChrystal, Netflix is showing its studio chops.
This is the biggest signal yet of the movie ambitions of a company whose rapid ascent up the evolutionary ladder has had Hollywood in a spin.
Netflix has moved on drastically from its roots. The initial DVD-by-mail operation has dwindled and given way to a streaming service that commands more than 62 million global subscribers and plans to be in 200 countries within 18 months.
Feeding the video-on-demand (VOD) pipeline is an acclaimed stable of original content — a library of studio movie titles that costs Netflix tens of millions of dollars in licensing fees each year and.
Shows like House of Cards and Orange is the New Black have bolstered the service. Netflix is now looking hard at growing its original movie progamming, which it sees as a way of bypassing the hierarchy of distribution windows.
The hallowed order in which movies are seen — starting with the theatrical opening weekend all the way through to home entertainment platforms and streaming — has increasingly come under attack, and Netflix does not see why its customers should wait.
The company’s first original movie announcement put Hollywood on high alert and came last September when it emerged that Netflix was partnering with Harvey Weinstein — a big ally — and Imax on Crouching Tiger, Hidden Dragon 2. The kicker is that Netflix will stream the sequel to the beloved 2000 foreign-language Oscar winner — which admittedly features almost none of the original cast –digitally and in select Imax theatres simultaneously.
Conventional theatre owners, an embattled breed that rank towards the bottom of this prehistoric food chain analogy, were the first to react: the top companies will boycott the movie’s US release in August.
Then Netflix began to encroach on the independent space, where international distributors negotiate for distribution rights in their territories as part of a project’s funding, often before it has started production.
When the Weinstein Company told buyers late last year that Netflix was going to be the global S-VOD (subscription VOD) distributor on Quentin Tarantino’s forthcoming The Hateful Eight, a project the Weinstein Company controls worldwide, it caused uproar. Buyers were furious that they would not be able to get hold of the lucrative digital window alongside theatrical and TV rights. The Weinstein Company quickly shelved the plan and Netflix, which from 2016 will be the exclusive pay-TV distributor of Weinstein films in the US, walked away.
This year, Netflix has bounced back as a buyer with a vengeance. People who have dealings with the company say its strategy changes every six months, however the policy du jour seems to be to acquire worldwide rights.
Netflix paid $17m in February for the forthcoming war film Jadotville, featuring Jamie Dornan from Fifty Shades of Grey, $12m in March for the Idris Elba-starring Beasts of No Nation and an undisclosed sum for Ricky Gervais’ Special Correspondents.
In each case, Netflix took all rights off the table. Its $3bn acquisitions war chest for 2015 alone and $600m marketing budget to woo international subscribers helps — it is hard to think of a single independent distributor that could outbid it, should it choose to pursue a movie project.
Unfortunately for the independents, they seem to share the same raison d’etre with Netflix’s original content business, which appears designed to champion challenging fare that the risk-allergic studios typically avoid.
There is lots of talk among the independent community on what they must do to survive. Insiders say smaller buyers will struggle and eventually vanish. One suggestion is that the more resourceful players align themselves with a capital source and move into production as a way of guaranteeing product flow. Netflix is also courting less mainstream talent, or those whose theatrical global appeal may have waned but who remain a big draw on the small screen.
Hence the four-film deals with Adam Sandler and the Duplass brothers and an unconfirmed worldwide buy in Cannes on Kevin James comedy The True Memoirs of an International Assassin.
Until this week, neither Netflix nor Amazon Studios — another potential bete noire for traditional Hollywood that is slowly starting to ramp up — had stumped up a studio-level budget. War Machine changed all that.
Netflix demonstrated unprecedented chutzpah and financial clout. Few studios will single-handedly commit to a high budget of $70m or above — slate financing deals exist to preclude that eventuality, so the studios can share the risk on a big bet, even if it does star Brad Pitt.
For now, the studios and their tentpole franchises are not expected to suffer unduly at the hands of Netflix, although talent availability and fees could get a shake-up. And of course, if Netflix creates its own franchises with A-list stars, there could be seismic changes.
It has been said that the streaming giant’s tight-lipped acquisitions cohorts lack soul, as they home in on whatever the company’s notorious algorithms indicate viewers will want to see. Yet Netflix is admired by many besides its 62 million subscribers and has shown a willingness to back artistic endeavours that may not be surefire commercial winners.
This will please cineastes, and especially Pitt and his producer cohorts at Plan B. At least one prominent producer-financier that works with studios passed on War Machine, which will be directed by Animal Kingdom’s David Michôd and is based on Michael Hastings’ non-fiction book, The Operators: The Wild and Terrifying Inside Story of America’s War in Afghanistan. Netflix has said the film will get a limited theatrical launch alongside its premiere on the streaming service.
Insiders say the deal does not mean for one minute that Pitt will turn his back on Hollywood productions — rather, it offers him a creative outlet away from the tentpole gigs. And who knows? If the movie turns out well, Pitt might want to commit to further projects, increasing the strength of the company’s roster.
All of which will be music to the ears of chief content officer Ted Sarandos, a self-professed cinephile who sought to reassure an audience of producers at the Cannes film festival last month.
“Nothing we’re doing is meant to be anti-cinema,” Sarandos said. “I have great confidence that if things were day-and-date [the theatrical experience] will compete … People need choice. It might be that theatres have to give up some of that, but in total, more movies will be seen.”
He was not pressed to define “movies” nor how they might be seen. The answer will reveal itself in the years ahead as Netflix will surely unveil more transactions in the magnitude of War Machine and the landscape will lurch into its next iteration.