Facing ParamountUnyielding competitive bidIn order to successfully acquire Warner Bros. Discovery (WBD), Netflix is now forced to extend an olive branch to traditional theater chains. Netflix co-CEO Ted Sarandos stated this in an interview with The New York Times.ConsentIf the deal goes through, Warner Bros.' Exploration films will maintain a 45-day exclusive theatrical release period, instead of the simultaneous release or a significant reduction in theatrical release time as rumored.
Netflix: We also want to win the box office crown
According to Ted Sarandos, Netflix has no intention of quickly ending the traditional movie theater business. Sarandos emphasized, "We'll largely maintain our current operating model, which is a 45-day theatrical run," and added, "If we were to get into the theatrical business—and we are—we're competitive people, we want to win. I want to win the opening weekend box office, I want to dominate the box office."
This statement was clearly intended to dispel previous market rumors that Netflix was inclined to adopt a 17-day theatrical release, which would undoubtedly be a devastating blow to cinemas that rely on the long tail effect.
Reassure theater owners and clarify "outdated" statements.
In addition to promising a window period, Ted Sarandos also tried to downplay his past comments that the cinema business was "outmoded".
He explained that what he meant at the time was "outdated for some people," such as people living in remote towns without cinemas, for whom driving to the next town to watch a movie was impractical. However, his example was still a bit awkward—he mentioned the town set in the movie "Sinners," but the film was set in the 1930s, when movies were still a new technology, so it was criticized by the media as a "bad example."
This series of public relations moves was primarily aimed at appeasing theater owners who strongly opposed the acquisition. The trade organization Cinema United has issued a statement to the U.S. Congress, arguing that a single, powerful global streaming platform like Netflix acquiring Warner Bros. would lead to an excessive concentration of control over film production and distribution, ultimately creating a monopolistic market.
Stranger Things successfully tested the waters.
It's worth noting that Netflix's shift in attitude towards theatrical releases wasn't entirely unexpected. Reports indicate that the final installment of *Stranger Things* had a brief theatrical run during the New Year's holiday, grossing over $2500 million in just a few days. This may have made Netflix realize that letting major IPs run in theaters first not only generates box office revenue but also creates greater buzz for their streaming release.
Analysis of viewpoints
Netflix's most famous strategy in the past has been to break the day-and-date pattern, releasing movies online simultaneously or only having a symbolic theatrical release. However, in its pursuit of this once-in-a-century gamble by acquiring Warner Bros., regulatory antitrust scrutiny and backlash from traditional Hollywood forces (directors, unions, theaters) will be the biggest obstacles.
Promising a "45-day window" is clearly a necessary compromise for Netflix. First, it reassures directors worried about their films not getting theatrical releases, and second, it reduces the resistance from antitrust investigations.
On a deeper level, Netflix may have also discovered a sweet spot for a "win-win" situation. As streaming subscription growth slows, the huge box office revenue generated by Warner Bros.' blockbusters such as "The Batman" and "Dune" in theaters can just offset the high production costs of streaming content.
Therefore, retaining the film's 45-day theatrical run would not only generate box office revenue but also maintain the IP's popularity, before ultimately boosting subscriptions on Netflix. This is perhaps Ted Sarandos's true strategy.
