January 30, 2023

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Netflix's plan kept "Glass Onion" from making more than a million box office hits

Netflix’s plan kept “Glass Onion” from making more than a million box office hits

Netflix You likely left hundreds of millions of dollars on the table by not keeping Rian Johnson’s Glass Onion movie in theaters.

The sequel to Johnson’s critically acclaimed “Knives Out” opened in nearly 700 theaters, the largest release for any Netflix original film to date, last Wednesday before Thanksgiving weekend. “The Glass Onion” leaves theaters Tuesday. Coming to Netflix December 23rd.

The film is as entrapped as it can be $13 million to $15 million During the extended five-day period, it was a strong opening for a film released in only a limited number of theaters.

However, box office analysts say that number could have been much higher if Netflix had opted for a traditional wide release of 2,000 to 4,000 theaters. The truncated showing of “Glass Onion” prompted industry insiders to once again question the streaming device’s theatrical release strategy. Netflix has backtracked on its past policies, including by offering an ad-supported subscription option, leading many to wonder if the company should rethink its resistance to the traditional Hollywood movie release model as it looks for new ways to boost revenue.

“With its wide traditional release, premium screen penetration, and full marketing campaign, I believe Glass Onion could have generated at least $50 million to $60 million to lead the market,” said Sean Robbins, Senior Analyst at BoxOffice.com. the entirety.”

Instead, Disney and Marvel Studio’s Black Panther: Wakanda Forever continued to lead the box office, raking in $45.9 million in domestic ticket sales over the regular three-day weekend and $64 million for the five-day holiday period.

Netflix refused to provide box office receipts for the film, bypassing the standard procedures other studios adhere to each weekend, so it’s not clear what “Glass Onion” fared in ticket sales on Fridays, Saturdays and Sundays.

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But in 2019, Knives Out took in $312 million worldwide on a budget of just $40 million. The first film’s box office performance raised questions as to why Netflix limited the release of “Glass Onion” to just one week in a limited number of theaters. After all, the streamer reportedly shelled out $400 million for the rights to two sequels.

Box office analysts projected that the film could have made more than $200 million in ticket sales before the end of its run if it had been released worldwide on a larger scale.

“This is exactly the kind of movie adults want to see in theaters right now,” Robbins said. The family element of “Knives Out” made the perfect Thanksgiving release for audiences across the country three years ago. The return of Daniel Craig as Benoit Blanc, Rian Johnson’s storytelling, and another round of positive reviews for “Glass Onion” build on the stellar performance. The bona fides of the previous film as this semi-sequel reap some rewards, but arguably it could have done more.”

Word of mouth was a huge factor in Knives Out’s success, as evidenced by the film’s low drop in ticket sales week-to-week after its opening. Movies typically see weekend sales drop 50% or more each week after they open. But the drop in “Knives Out” ticket sales remained consistently below 40% until Christmas, when sales rose 50%, and then fell between 10% and 30% per week through February.

This indicated that the audience was talking about the movie and encouraging others to go out and see it, which led to a strong control of ticket sales.

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“Glass Onion” has a 93% “Fresh” rating on Rotten Tomatoes from 238 reviews and an audience score of 92%, indicating that it too could have generated the same kind of word of mouth.

Some Netflix executives reportedly pressured co-CEO Ted Sarandos earlier this year to consider longer runs in theaters and wider releases for some films, but Sarandos rejected the idea. The company’s top brass have said time and time again that the future of entertainment is streaming.

The company’s strategy in the past with limited theatrical releases — such as Martin Scorsese’s “The Irishman” — has been to generate buzz for subscribers before the film reaches its service. That’s the play here, too the company said during its most recent quarter earnings video.

“We’re working on entertaining our members with Netflix movies on Netflix,” Sarandos said during the call.

He said that Netflix brought films to festivals and gave them a limited number of showings in theaters because the filmmakers demanded it.

“there [are] All kinds of discussions all the time, back and forth, but there’s no internal doubt that we make our own movies for our members and really want them to watch them on Netflix.”

Netflix did not immediately respond to CNBC’s request for comment.

While Sarandos and co-CEO Reed Hastings have remained adamant that subscribers don’t want Netflix content in theaters, some Wall Street analysts don’t think that’s the case.

“Subscribers don’t care at all,” said Michael Pachter, an analyst at Wedbush. “Talent, on the other hand, cares a lot… Talent needs that to help negotiate future deals, and it thrives on award nominations standing.”

“Netflix didn’t do this for the money,” he added. “They did it out of pressure from the talent.”

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For others, like streaming guru Dan Rayburn, Netflix’s cross-platform promotion of putting “Glass Onion” in theaters for a week to tease its release on streaming device a month later “makes a lot of sense.”

The streaming giant also had to pay more marketing costs to promote the movie over time.

However, it’s hard for investors to see all the money left on the table — especially when Netflix continues to spend heavily on content as subscriber numbers slow.

In recent years, the streaming company has spent big on flashy action movies like “The Gray Man” and “Red Notice,” which cost the company $200 million each. The films are the first steps in the bids to spark event-level franchises. But it’s expensive, and it’s unclear how positive it was for Netflix’s bottom line.

Unlike competing studios worldwide And the DisneyNetflix does not have a wide range of sources to generate revenue. Its only option was, until recently, to recoup its spending through underwriting growth. The company hopes the ad layer will help generate more money to support its $17 billion annual content spend.

Wall Street box office analysts see theatrical releases as a smart way for Netflix to market its content and drive revenue growth.

“We hope Knives Out 3 will be given an opportunity to build further on this watershed moment of collaboration between Netflix and the theatrical showrunners,” Robbins said. “It will be profitable for the entire industry.”

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns Rotten Tomatoes.