Netflix in Your Local Theater
The 2020 Oscars are tucked away in the annals of entertainment history, but streaming-giant Netflix is just donning its figurative tuxedo. For more than a decade, Netflix has primarily operated as an online streaming platform. The company launched this service in 2007 after seeing that its DVD-by-mail rental model was faltering. The digital library started small with around 1,000 titles, but movies and TV shows were steadily added. In 2013, in addition to what it had already accumulated, Netflix initiated a new business strategy; namely, it began producing original content. House of Cards, the company’s first production, became an immediate success, and other successful shows followed.
However, Netflix has not been the sole occupier of this market for quite some time. Amazon Prime Video, Hulu, Apple TV+, and Disney+ have become household names. Like Netflix, they also offer exclusive digital content and original productions, removing any competitive advantage Netflix once had. According to Forbes.com, the average American subscribes to 3.4 streaming services, so Netflix is forced to innovate in order to once again distinguish itself from its competitors. Netflix must embark on a new direction to ensure that old customers renew their subscriptions and new ones are convinced to join.
Netflix seems to have chosen a perplexing strategy. The company has gradually gravitated towards defining itself as an Oscar-worthy production studio, setting itself apart from most of its competitors. For instance, in August and September of 2019, Netflix collaborated with esteemed Hollywood directors to respectively release “Marriage Story” and “The Irishman.” Unlike any of Netflix’s previously produced films that were directly uploaded to its digital library, these movies were not instantly placed on the site.
In order for a film to qualify for an Oscar nomination, the Academy requires that a film be shown in a theater for at least one week in either New York or Los Angeles. Considering that online streaming is therefore not a sufficient mode for dispensing its films, Netflix signed a lease with the owner of the Paris Theater near midtown Manhattan. “Marriage Story” aired in this theater and “The Irishman” in a second venue, turning these films into Oscar contenders. In fact, the company’s efforts were not futile, as Netflix led the 2020 Oscars in nominations and even won two awards.
At first glance, associating itself with other impressive studios seems inconsistent. Netflix has become a successful company specifically because it offers its content digitally. Other production studios create films for the big screens, but Netflix creates original content for the exclusive viewing of its subscribers. Nevertheless, these recent projects indicate that Netflix is attempting a new approach.
Perhaps Netflix values credibility. Oscar nominations and victories certainly establish the company as reputable and professional. This esteem places Netflix in a higher league, so subscribers may be willing to pay more for this content. Additionally, Netflix might see an opportunity to increase its revenues by entering the movie theater business. Although streaming in the United States and globally has grown exponentially, it is not killing movie theaters. On the contrary, a study conducted by EY’s Quantitative Economics and Statistics group found that people who stream more also frequent the theaters more. This finding counterintuitively suggests that the more one streams online, the more one buys movie tickets. Thus, perceiving that the relationship is complementary, perhaps it is economically wise for Netflix to operate in physical theaters and create Oscar-winning films.
Photo Caption: Taking Netflix to the movie theaters
Photo Credit: Pixabay