Streaming giant takes significant stride with long-anticipated hire of former Universal production chief.

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When Scott Stuber assumes his new role as head of Netflix’s original film initiative in a month or so, the film industry will be watching closely.

The streaming giant has spooked the industry for several years now with headline-grabbing plays like the $12.5m Sundance acquisition of US and multiple territories on Oscar bait Mudbound, and earlier out-of-festival buys on the likes of War Machine and Bright.

Yet despite a world-class TV pipeline and Oscar-nominated documentaries, the original film business has not earned the same level of acclaim.

Chief content officer Ted Sarandos knew it was time to act.

“Netflix wants to [compete with the] studios in production and attract more stars, producers and directors who can deliver high-quality content,” says entertainment business analyst Hal Vogel.

To do this, the streaming service brought in Stuber, whose tenure as former Universal vice-chairman of worldwide production encompassed the Fast And The Furious, Jason Bourne and Meet The Parents franchises. More recently he produced Ted and Central Intelligence on the lot through his Bluegrass Films.

Making films that Hollywood covets

The experienced new hire will be tasked with building an original film stable that will do something Netflix is yet to achieve – make films the other studios covet.

While few would argue that Hollywood was green with envy over the four-film deal with Adam Sandler announced in October 2014 – despite Netflix’s unverifiable claims of success – more recent projects have intrigued observers.

Stuber inherits a slate that may contain one or two surprises. Besides Bright directed by David Ayer and David Michod’s War Machine – which is tipped to possibly become Netflix’s first Cannes slot – the roster includes new work from directors like Bong Joon Ho, Angelina Jolie, and Duncan Jones.

Netflix reportedly paid $80m for War Machine starring Brad Pitt and forked out $90m for Will Smith starrer Bright. Yet detractors point out the studios passed on both projects and neither leading man is guaranteed box office, despite their obvious talents.

How Stuber shepherds those films and, crucially, begins to close his own deals, will be critical as Netflix seeks to pivot its original film business towards more in-house productions.

There is every indication Netflix will still look to buy completed films, but as one top studio executive put it to Screen recently: “They want to make movies and not continue to overpay for acquisitions.”

Luring talent with irresistible offers

Stuber and his paymasters will want to make lucrative offers that are irresistible to top talent. Vogel says this could involve participation for A-listers, in contrast to received wisdom that Netflix tempts producers and sales agents with up-front flat fees that enable financiers to recoup while cutting out the back-end.

Whether or not such deals occur, the success of the original film initiative is critical to Netflix’s chief goal. “The question,” Vogel says, “is always can they maintain their subscriber base and service the debt that comes with it.

“We’ve got a regime of rising interest rates, which will make borrowing more costly, [although] I don’t think that affects this company dramatically over the near to medium term. They have ability to raise capital… but you can’t count on that continuing.”

There has been speculation over a move into theatrical distribution. However Screen understands that while the streaming service is prepared to sanction qualifying releases for awards contenders like Mudbound, Netflix has no desire to match the studios in that arena – for now at least.

Besides, Sarandos has said many times in public how streaming appeals to the company’s subscribers, who now number more than 93m worldwide.

“[Netflix] wants want to do over-the-top (OTT) distribution of major shows and they’re not in the [theatrical] distribution category now,” Vogel says. “But if a major actor or director has a choice between [a studio] and Netflix it might be a tough decision these days. Ten years ago it wouldn’t have been a contest. Nowadays it’s a decision to be made.

“If the studios want to retain the services of the top people they’re probably going to have to match the offer. It’s not a competition about making feature films for theatrical distribution, but it is a competition for the resources, the raw material if you will, of making entertainment content.”

Netflix has already shown it will pay over the odds for films and talent, and because it is not set up to pay large sums on p&a and cannot get distracted by box office numbers and P&L accounting on individual titles, it can divert funds into production to ensure its features look as good as possible on the small screen.

As its ongoing dealings for Martin Scorsese’s $100m-plus The Irishman show, Netflix does not hold back when it wants something, nor is it afraid to step on toes. STX International acquired international rights last summer and is monitoring the streaming service’s negotiations with financier Gaston Pavlovich.