Select Page

As ‘Streaming Wars’ Intensify, Netflix Splurges $500 Million On 3 Movies

Netflix shareholders panicked earlier this month when the company reported overall subscription growth was much weaker than anticipated, and that, for the first time in eight years, the number of domestic subscribers had fallen. Some analysts wondered aloud whether this might be the beginning of the end of Netflix’s dominance of the streaming-video space.

With intensifying competition in the streaming space set to rob Netflix of all-important licensed content (like the Office and Parks and Rec), for the first time, the original streaming giant looks vulnerable.

And what’s Netflix’s solution? The company is effectively doubling down by deciding to spend more than $500 million on three original feature films. Netflix’s new growth strategy apparently relies on big tentpole projects to draw in subscribers, WSJ reports.

Of course, by spending so much on three projects, the company risks putting all of its eggs in one basket: If these films flop, then Netflix is out half a billion with little to show for it.

Two of the movies are big-budget action movies that the company hopes will launch popular franchises – these include the Dwayne “The Rock” Johnson’s action movie “Red Notice”, as well as “6 Underground,” a Michael-Bay directed action film. The third movie is Martin Scorsese’s historical drama “the Irishman.”

The streaming giant is investing more than $520 million to make three big-budget films, according to people familiar with movie budgets. None of those movies is likely to get the kind of wide theatrical release typically used to make such substantial investments pay off.

Earlier this month, Netflix agreed to spend nearly $200 million to make the Dwayne Johnson action movie “Red Notice,” which will be filmed next year at exotic locations and also stars Ryan Reynolds and Gal Gadot, the people said. In addition, a person familiar with the matter said, Netflix plans to release later this year “6 Underground,” a Michael Bay-directed action film that is costing about $150 million, and Martin Scorsese’s “The Irishman.”

Netflix has said about one-third of its total viewing is movies instead of TV. The company is betting the new productions will help retain its more than 150 million existing subscribers and attract new ones, whose monthly fees – rather than ticket sales – generate the company’s revenue.

All told, analysts expect Netflix to spend $15 billion on programming this year, while it also faces more pressure to pay for more international programming.

It costs Netflix more to make movies than the big Hollywood studios since it must pay big-name stars more up front to compensate for the lack of royalty revenue. This means actors earn more upfront, but less overall if the movie ends up being a massive smash success.

But Netflix has repeatedly shown that it can wring success from movies that have been rejected by the Hollywood studio set. Sandra Bullock’s post-apocalyptic thriller “Bird Box” was streamed 80 million times during its first month, which made it “worth it” for Netflix, even if its unwieldy budget would have been too much for the studios.


This post has been republished with permission from a publicly-available RSS feed found on Zero Hedge. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.

Read the original article.

About The Author

Tyler Durden

Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

Leave a reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Welcome

Bringing together a variety of news and information from some of today’s most important libertarian thought leaders. All feeds are checked and refreshed every hour and pages auto-refresh every 15 minutes. External images are deleted after 30 days.

Time since last refresh: 0 second

Publish Your Own Article

Follow The Libertarian Hub

 

Support Our Work

Support the Libertarian Hub by tipping with Bitcoin!

Weekly Newsletter

Newsletter Signup

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!

Weekly Newsletter SignupTop 5 Stories of the Week

Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!