Netflix Leaving Hundreds of Millions of Dollars on the Table With ‘Knives Out’ Sequel Release Strategy

NEWS ANALYSIS — Netflix made waves this year when it announced it would release a handful of original movies with limited exclusive theatrical windows. It was a major move (or concession) for the world’s largest subscription service that has steadfastly turned a cold shoulder to theatrical exhibitors in favor of a “streaming first” mindset.

Netflix’s first major exclusive theatrical release was the Nov. 23 debut of Glass Onion: A Knives Out Mystery, the expensive follow-up to the 2019 box office hit Knives Out, also featuring Daniel Craig as the awkwardly accented detective Benoit Blanc, and elevating Ana de Armas into a global star.

After spending a reported $450 million securing the rights to the sequel and a third movie, it seemed logical Netflix would release the movie in theaters exclusively to recoup some of that spending. But Netflix continues to ignore conventional norms.

Glass Onion was released in less than 700 screens across AMC Theatres, Regal and Cinemark over the Thanksgiving weekend resulting in an estimated $13 million box office. Netflix has not officially released any theatrical financials. While the tally was almost big enough to supplant Disney’s disappointing animated debut of Strange World ($18.8 million), the movie could have likely won the holiday box office outright given a wider release of 4,000 screens.

“Most likely, they did around 25% of what they could have done, so maybe a $60 million opening weekend,” Michael Pachter, media analyst with Wedbush Securities in Los Angeles, wrote in an email.

When asked on the fiscal call about the company’s revised approach to movie distribution, Netflix co-CEO and chief content officer Ted Sarandos quickly reiterated his opinion on theatrical windows. Namely, that Netflix makes movies for its subscribers and prefers they watch them on Netflix.

“I’ll tell you, we’re in the business of entertaining our members with movies on Netflix,” Sarandos said. “So that’s where we focus all of our energy and most of our spend.”

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That leaves Pachter scratching his head.

“Realistically, they probably focused on more urban theater locations where the film would have broader appeal, and likely, some fans drove a ways to get to the theaters,” Pachter wrote. “That extrapolates to $200 million to  $250 million over a normal run in the U.S., double that for global, so $400 million to $500 million total.”

That’s a lot of onions.

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