Netflix doesn’t care about theatrical pennies
Plus: A perfect film assigned!
Once upon a time, Hollywood folks hated the idea of trading box office dollars for digital pennies.
Theatrical was where your film could make real money—let’s say, $50 to $100 million for a medium-budgeted picture; $200-$300 million for a blockbuster; and half-a-billion or more for a real hit—before hitting each progressively poorer stop on the revenue waterfall (physical media, then VOD, then streaming/cable) to earn back whatever was spent on production and marketing.
Again: theatrical dollars, digital pennies.
Netflix turned that whole model on its head. Netflix makes digital dollars, and lots of them: last year, the global revenue figure was about $30 billion, which is a hair under three times the total domestic box office for 2019 ($11.3 billion), the last year we had real attendance at movie theaters. When they deign to release a movie in theaters—and I’ve seen a handful of these pictures in theaters; it was a blast to watch Army of the Dead on the big screen—the advertising is minimal and the box office numbers generally go unreported.
Keep all this in mind when you look at the performance of Glass Onion: A Knives Out Mystery. It came in third over the five-day Thanksgiving weekend with $13 million or so. More impressively, it pulled that figure despite being on just 696 screens, for a per-screen average of over $19,000, the best average of the week. If you do a little extrapolation—put it on five times as many screens; amp up the marketing a bit—and it’s not hard to see this movie grossing $70 to $80 million in its opening weekend on the way to $250 to $300 million total.
There are two ways to look at this.
The first is to suggest that Netflix left lots of money on the table. This isn’t wrong, exactly, as it did in an abstract way leave some not-small-to-you-or-me amount of money on the table.
The second is to suggest that Netflix is right to ignore theatrical pennies in its race to secure digital dollars. And as someone who dearly loves theatrical exhibition, it pains me to say that Netflix is probably right to do so: their business model is predicated on getting people to pay $10 to $20 a month every month in perpetuity, and the way you do that is by getting people to watch things on Netflix. The Glass Onion release more or less covered the costs of marketing and the marketing has in turn caused a huge spike of interest in the film, which the vast majority of people will watch on Netflix.
I’d love for Netflix to commit more fully to theatrical. I adore the idea of being able to see Zack Snyder’s next picture, Rebel Moon, on a gloriously huge screen with a booming sound system. But the amount of money that theatrical exhibition would generate for them simply pales in comparison to the amount of money they make by selling digital subs.
Now look: Netflix is sui generis. As I mentioned a couple of weeks ago, I do not think it makes sense for Warners to abandon theatrical and try to turn HBO Max-Discovery into a Netflix killer. Disney+/Hulu/ESPN+ are great ancillary streams of revenue but they’re unlikely to be a Netflix replacement. Warner Bros. and Disney—along with Paramount (Paramount+) and Universal (Peacock)—can still make theatrical dollars to go along with their digital pennies.
But theatrical will likely never be more than a small portion of Netflix’s revenue stream.
Make sure to check out this week’s bonus episode of Across the Movie Aisle, in which we discuss Chinese protests against draconian Covid lockdowns and the pleas for “cinema freedom” from China.
And if you haven’t signed up yet, now’s a great time to do so:
I had a really interesting chat with Robbie Whelan of the WSJ about the state of Disney’s parks and why discomfort over some of the nickel-and-diming might have led to Bob Chapek’s ouster despite his overseeing huge profits in that sector of the company.
I think that pod also featured my first photo credit for the Bulwark; here’s an outtake that I almost used instead:
(I await Hannah’s scathing critique of my work.)
Sight and Sound dropped their decennial Greatest Films of All Time list this week and, I have to say, I find it very funny to imagine how all the people who decried Citizen Kane as boring and inaccessible might respond to Jeanne Dielman, 23, quai du commerce, 1080 Bruxelles—a three-and-a-half hour movie about, among other things, a prostitute making dinner—being named the greatest film of all time.
I believe we’ll be discussing the list on Across the Movie Aisle next week, so I’ll hold off until then. Suffice to say, I’m suspicious of any list that suggests Get Out or Parasite is better than Steven Spielberg’s entire catalogue.
Assigned Viewing: Indiana Jones and the Raiders of the Lost Ark (Paramount Plus)
A perfect movie. I mean, sure, it’s not a 200-minute meditation on feminine loneliness or whatever. But it is immaculately efficient with great set pieces and it does have a giant boulder and melting Nazis and the literal wrath of God. This is what we go to the cinema for, people!