Netflix’s decline in movies adds to Hollywood’s woes with box office struggles

The downsizing of Netflix’s cinematic ambitions is in line with a broader downturn at the streaming company, which announced 88 fewer original films last year than in 2022. But for some on Wall Street, the relevant number of Netflix original films may be zero.

Here’s how the dominant streaming device has changed the way movies are produced, distributed, and consumed — and why Hollywood shrinkage And reality flow economy And Viewer habits This doesn’t bode badly for the future of the original film, and not just at Netflix.

The rise of Netflix has been a mixed bag for movies

When Scott Stuber, Netflix’s head of movies, joined the company in 2017, the mandate was quantity. Netflix has been racing to amass a large library, knowing that legacy media companies will eventually pull their licensed titles from its service to build competing streaming devices of their own.

Stauber waved big checks and gave the filmmakers artistic freedom, fostering strong relationships with top talent like David Fincher in the process. Netflix has announced 232 original films in 2021, according to an Ampere analysis.

Results It was mixed In terms of critical reception and audience, however, Netflix began to be seen as a force in cinema and won Oscars for such prestigious projects as “Roma” and “Marriage Story.” The carrier’s stance against theatrical windows — which focuses on putting Oscar contenders into theaters only for the required qualifying slots — has been debated within Netflix and has upset some filmmakers as well. However, Stauber and his team, along with co-CEO Ted Sarandos, built a reputation for being friendly with filmmakers who were willing to give up the big screen.

“I always felt like they were betting on the creators,” said one producer who struck a deal with Netflix.

Netflix and other streaming companies have created new ways to distribute movies

But the streaming approach, coupled with pandemic shutdowns, has also trained people to watch movies at home rather than in theaters, depriving filmmakers of the marketing and revenue that theatrical releases can bring.

As they pursue global expansion, Netflix and other streaming companies have priced out domestic buyers in foreign lands, said independent filmmaker Ted Hope, who spent five years as a film executive at Amazon. This has led to a decline in the number of film buyers, which in turn has limited the diversity of stories being told, he said.

“If things continue as they are, we’re going to have big problems getting diversity, diversity of movie titles,” he told Business Insider.

Hope and others in the independent film world have also criticized Netflix for this backing down When purchasing films with difficult or political themes in the focus of more mainstream prices. This trend has been particularly noticeable in Netflix’s approach to documentaries, which it has helped popularize by providing a platform with global reach. The streaming company has gone on to acquire or produce some of its most successful titles, including “Black Barbie” and 2024’s “Power” about police.

Netflix is ​​now taking a less-is-more approach

Stopper now He confesses The rushed production schedule didn’t always lead to the best work and he told Variety that his focus was on a more deliberate process. He cited titles like “Maestro” and “May December,” among the streamer’s buzzy awards season releases, as representative of this new approach. “Right now, we’re not trying to get to a set number of movie releases,” he told Variety. “It’s more about, ‘Let’s make what we believe in.’”

Many in the film world agree that Netflix’s spending is unsustainable. “Ask any studio; it’s hard to have 50 if not 30 quality movies,” said Kevin Goetz, founder and CEO of Screen Engine/ASI, a media research and data firm that works across major studios and broadcast companies.

Netflix original movies began to decline in 2022 from a 2021 peak of 232 films. It announced an estimated 95 films in 2023, when a strike by Hollywood actors and writers worsened the situation by shutting down most production, according to Ampere Analysis.

The economics of streaming suggest that Netflix may produce fewer movies over time.

Netflix and other streaming companies are having an increasing problem retaining subscribers Cancel more of their services. Part of their answer is to rely on procedures or Long-running television series That could keep audiences coming back. Films may cost less to produce, but they may only be seen once. That’s partly why streamers are turning away from the genre, Wedbush analyst Michael Pachter told Business Insider.

“Most streamers who make original movies will tell you, it’s not going to get you subscribers, and it’s not going to keep your subscribers,” Casey Moore, who runs What’s on Netflix, told BI.

Netflix and other streaming companies as well Make a big splash in advertising To help offset the cost of content, which can benefit TV series over movies.

TV shows are more receptive to advertising than movies. It also represents a longer viewing time than movies. Netflix’s latest engagement report The films revealed make up only 11 of the top 100 films Most streamed titles For the first half of 2023, according to analysis By Book News. More viewing time means more ad operators can serve to viewers.

Should Netflix stop making movies permanently?

Some analysts have questioned Netflix’s ability to produce movies that achieve the cultural significance of some of its series like “Squid Game” and “Stranger Things” (and to be fair, the same can be said about movies versus series on Amazon’s Prime Video and Apple). TV+).

However, direct-to-Netflix features should probably be evaluated differently, LightShed Partners suggested. “In the streaming world, engagement is the north star and live-action feature films on Netflix are driving a ridiculous level of engagement,” LightShed analysts wrote in a Dec. 13 note, saying that while streaming movies haven’t matched due to cultural influence, For theatrical releases, Netflix’s data dump showed that it still gets plenty of screen time for its films.

Netflix has made clear that it is not interested in pursuing a broad theatrical release strategy, saying its focus is on attracting and retaining subscribers. But Goetz argues that even with a smaller slate, Netflix can still be a big player in movies, because it doesn’t have the budget constraints and need to reach broad audiences like legacy studios. While Netflix has done great big campaigns for its awards titles as well as for select projects like “Rebel Moon,” Goetz also called on the company to do more to generate excitement for its films, saying it is “missing an opportunity” to increase viewership.

At least one analyst believes Netflix may eventually miss this opportunity. Without a broad theatrical strategy, streamers’ revenue is limited, Wedbush’s Butcher said, noting that working with big stars who can attract large audiences is expensive.

“It would be very smart for Netflix to stop movies,” Butcher said.

This article was originally published on January 9.