Netflix is expanding its theatrical strategy while insisting it remains a streaming-first business, with about 30 films scheduled for cinema release in 2027. The company says most will receive tailored, limited runs, although Greta Gerwig’s “Narnia: The Magician’s Nephew” is due to receive a wide release and a 49-day exclusive cinema window.
The approach marks a careful step into an area Netflix has historically treated as secondary to its streaming service. Co-chief executive Ted Sarandos told investors that the company’s films were made for subscribers and should reach them on its platform as quickly as possible.
However, Netflix is facing stagnant viewing growth and a share-price decline of roughly 30% since the start of the year. Analysts believe cinema releases could help attract audiences, strengthen relationships with filmmakers and create additional interest in the streaming service.
“Theatrical releases are a net positive for reach and streaming demand,” Alicia Reese, an analyst at Wedbush, said in a note. She added that a more flexible approach to exclusive cinema windows could bring in talent, add a new revenue stream and build interest in Netflix without necessarily reducing streaming audiences.
Netflix’s theatrical strategy
Netflix’s cinema plans vary from film to film. Some titles are shown for the minimum period required for awards eligibility, while others receive short event screenings. “KPop Demon Hunters”, for example, had a two-day cinema run.
Mr Sarandos described the model as “specialty theatrical releasing”, in which each film receives its own release plan. The longer and wider releases planned for 2027 include “Narnia: The Magician’s Nephew” and the animated “Charlie vs. the Chocolate Factory”.
“Both films have big global IP and big global fandom, so we’re very excited about how they’ll play out next year,” Mr Sarandos said.
Netflix has also said it will publish box-office results for films given longer cinema windows. Such reporting is standard among major film studios but represents a new level of disclosure for the streaming company.
Matthew Condon, an equity research analyst at Citizens, said there was “a place for the theatrical for Netflix”, particularly as competition for viewers’ time and attention continued to grow.
He said cinema releases could help Netflix build stronger fan bases around its intellectual property and attract leading talent. The company has worked with directors including Rian Johnson, Martin Scorsese, Alfonso Cuarón, Bong Joon Ho, Spike Lee and Guillermo del Toro, although none of their Netflix films received a wide release or an extended cinema run.
Mr Sarandos acknowledged earlier this month that Netflix had lost talent because it would not guarantee wide theatrical releases. Matt and Ross Duffer, the creators of “Stranger Things”, signed a four-year exclusive deal with Skydance, while lead producer Shawn Levy joined Disney to direct “Star Wars: Starfighter”.
The change in emphasis comes as Netflix broadens its content offering beyond films and series, including video games, live sport and rapidly produced documentaries. Yet the company has recently lacked some of the major cultural hits that previously drove subscriptions and viewing, such as “Stranger Things”, “Bridgerton” and “Squid Game”.
In its shareholder letter, Netflix said there was investor concern about growth in viewing hours but insisted that engagement, including the quantity, quality and variety of viewing, remained healthy.
The company has also reshaped its film and television leadership. Former Disney executive Peter Rice has replaced Bela Bajaria as chief content officer, while Dan Lin has left his role as head of film, according to a person familiar with the matter. Netflix has not identified a successor to Mr Lin.
The changes followed the reported loss of about 1,000 jobs, including Mr Lin’s deputy Doug Belgrad and independent-film director Sheroum Kim. Netflix is hoping Mr Rice’s experience in film, television and talent relations will help it improve the quality of its output and attract high-profile filmmakers.
Mr Sarandos played down the prospect of a fundamental change in direction during the earnings call. “Our business and our business flywheel are working,” he told investors. “There is no need for a fundamental shift in the strategy. We do need better execution in the U.S. … It’s just not growing as fast as it could or as fast as we’d like.”
He said Netflix had produced “some really solid doubles and triples this year” but needed more “home runs”.
Steven Cahall, a stock analyst at Wells Fargo, said a substantial move into cinema would require more than occasional limited releases. Netflix would need relationships with cinema operators, a dedicated distribution team, a pipeline of films intended for theatrical release and a marketing operation to support them.
The company’s near-term ability to build that infrastructure is uncertain after a proposed deal to buy Warner Bros Discovery’s studio assets fell through. A full cinema operation would also expose Netflix to marketing costs that can run into hundreds of millions of dollars for an individual film.
“So that becomes more of an existential question for Netflix: Is it time to become a media conglomerate rather than being a pure play streaming company?” Mr Cahall said.
