Beginning in late 2018 through this year, Netflix has redoubled efforts to produce original feature-length movies in addition to episodic TV series.
At the same time, the SVOD pioneer continues to throw a curve ball into traditional theatrical distribution by largely eschewing exhibitor releases in favor of worldwide streaming access.
The result is friction from theater operators, industry awards groups and a significant hit to the fiscal bottom line.
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Netflix said its most-popular original movies from October 2018 through September 2019 included Bird Box (80 million views), Murder Mystery (73 million), Triple Frontier (52 million), The Perfect Date (48 million) and Tall Girl (41 million).
The streamer said movies such as Fyre, Otherhood, Always Be My Maybe, Secret Obsession and The Highwaymen generated more than 20 million views each within four weeks of release. The list excludes El Camino: A Breaking Bad Movie (25 million) and The Irishman (40 million).
While 72% of Netflix households have more than one user on the account, when factoring just one view per subscription, the aforementioned movies generated about 394 million views. Netflix ended Q3 with 158 million subscribers worldwide.
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Multiplying the views by $9.11, the average cost of a theatrical movie ticket in 2018, suggests Netflix conservatively left more than $3.58 billion in ticket sales on the table over a film’s initial 30-day period.
That’s just slightly less than Netflix’s entire third-quarter 2018 revenue of $3.9 billion.
While it can be argued that streaming a movie for “free” is more likely an option for consumers than leaving the house and buying a ticket for a non-Marvel release at a cineplex, the data underscores users’ willingness to devote a significant time allotment for video content.
“The thing that’s amazing about that is … think of everything those people could be doing on those screens, and they chose a [Netflix] film,” Ted Sarandos, chief content officer at the streamer, told an industry gathering earlier this month.
Sarandos was talking about The Irishman, Netflix’s 3-and-a-half-hour big-budget gangster movie from director Martin Scorsese that has multiple Golden Globe nominations. “Consumers understand the value of proposition of new movie watching, compared with TV series,” he said.
Scorsese’s most-recent theatrical release, 2016’s Silence, earned just $23.7 million at the global box office against an estimated budget of more than $40 million. But before that, 2013’s The Wolf of Wall Street earned $392 million at the worldwide box office, 2011’s Hugo earned $186 million, 2010’s Shutter Island earned $294 million, and 2006’s The Departed generated $291 million. With The Irishman touting a typical Scorsese cast: Robert De Niro, Joe Pesci and Al Pacino, it’s not unreasonable the film would have attracted moviegoers.
Irishman was released in select indie theaters to be considered for industry awards, including the Oscars.
“The Irishman lost a lot of box office,” Mooky Greidinger, CEO of Cineworld, said in an interview. “A Scorsese released properly in cinemas would have generated a nice income.”
Indeed, Netflix hasn’t been shy seeking third-party funding for its content aspirations. In October the platform sold more than $2 billion in long-term debt (bonds) in the U.S. and Europe to buttress original content production in response to growing third-party competition, including Disney+.