Netflix’s proposed acquisition of Warner Bros. Discovery’s (WBD) studio and streaming assets is a grim chapter in Hollywood’s history, but we have all contributed to this story. Anyone paying attention saw it coming, even if they did not want to believe it.
For more than a decade, the industry has been sunning itself by the banks of the Rubicon. A-list filmmakers, showrunners and stars signed lucrative deals with the streamer. And more often than not, mid-level creatives quietly carved out careers making frequently mediocre content that has become all-too familiar on the platform.
Sales agents and financiers helped the process, licensing territories or worldwide rights to Netflix at markets and festivals throughout the year. Festivals – with the obvious exception of Cannes – have played their part too, championing prestige fare from the platform. Awards shows and voter groups have done the same.
And we, the growing, borderless community of more than 300 million, have kept on watching Netflix films and television – be it brilliant, good or mediocre.
Exhibition is the only sector of the film business that never liked Netflix and has made no bones about it. Yes, they have cut deals here and there, carrying films exclusively for one or two weeks, but by and large they have railed against the platform, desperate to preserve the long, exclusive theatrical window.
Sadly for the large constituency of people who work in the sector, and the many more of us who cherish cinema-going, this is a battle that exhibition will never win. The cat scrambled out of the bag in 2006 as soon as IFC Films and Magnolia Pictures experimented with day-and-date distribution in cinemas and the home. A year later, Netflix launched its Watch Now function, which paved the way for streaming.
Others followed, but Netflix is doing it better and faster, scaling up at a rate that no other traditional studio, media group or platform (with the exception of YouTube) has been able to match.
The brilliance of co-CEO Ted Sarandos and his leadership suite of Silicon Valley and finance bros is that they realised people want what they want, when they want it, and have made it their mission to bring first-run entertainment to the home. The pandemic merely accelerated the process.
The tragedy is that exhibition has been too slow to respond and embrace alternative content and alternative revenue-share strategies. There is no inviolable right to orchestrate long, exclusive theatrical windows. All the while, audiences were being trained to watch “content” at home. Theatrical distributors saw the writing on the wall and slashed their release windows.
And so when a stricken media giant like WBD put itself up for sale, while everyone had their eye on Paramount, for Netflix this was a no-brainer. Finally, Sarandos saw an opportunity to acquire world-beating film franchises and exploitable IP, nurtured over a century, to lure and retain more subscribers.
The deal is expected to take 12-18 months to close and must still clear regulatory hurdles. Paramount may come back with a higher offer, but for now, it looks like Netflix has taken a studio off the table to better serve their subscribers.
That’s business. That’s life in an age of instant gratification, when communities are built on thumbs-up, thumbs-down appraisals of art and mediocre fare. It’s also one less buyer for creatives, and a slimmer inventory for cinema operators, at a time when box office revenues are getting further and further away from pre-pandemic times.
Sarandos has said he will honour theatrical agreements on existing Warner Bros films but the key phrase in his webcast to investors on Friday was this: “Over time, the windows will evolve to become much more consumer-friendly and meet the audience where they are quicker.”
It is not hard to envision a scenario five years down the line, certainty 10, when Netflix will give theatrical releases of 30 days or so to only a handful of its Warner Bros films each year. Even 30 days seems like a stretch. Most might go the route of day-and-date or very limited theatrical runs before the drop on the platform.
Sarandos and Netflix may not have set out to intentionally destroy theatrical windows and the exhibition sector, but they are not losing sleep over the collateral damage their business has inflicted on cinemas. Buying venues in Paris and Los Angeles, hosting theatrical world premieres of films to please important directors – this has all been a Trojan horse wrapped in a charm offensive to entice the world’s biggest filmmakers to work with them.
Friday’s announcement signalled the crossing of the Rubicon. Hollywood’s new titan has gobbled up a legendary legacy studio, and we are all watching on from our couches.
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