With all the screeching and squealing about Netflix at Cannes, I decided to take a look at what the Netflix “movie” business really looks like this year… not by posturing, but by the detail of what actually exists.

Netflix intends to “release” (meaning on their service, some potentially in a handful of theaters) 50 non-doc feature films in 2017. That total is on the streaming service; ten features are scheduled to be shown at iPic premium theaters around Los Angeles and New York City.

Fifty features. That’s more than double the number of scheduled releases planned by any American theatrical-first wide-release distributor.

Using IMDB, I counted 53 non-doc 2017 “film” titles due from Netflix.

Three are at Cannes (Okja, The Meyerowitz Stories, Rodney King)

Three have a major star (War Machine, Bright, Sandy Wexler)

Two are currently out with notable marketing (Handsome, Berlin Syndrome)

Four may be lingering in your mind (Mudbound/Sundance, Win It All/SXSW, Wet Hot American Summer: 10 Years Later, The Most Hated Woman in America)

Of the other 41, four debuted at Sundance in January and have already been released by Netflix (I Don’t Feel at Home in This World Anymore, Burning Sands, Deidra & Laney Rob a Train, The Discovery). Another three purchased at Sundance are due sometime this year (Fun Mom Dinner, iBoy, To The Bone).

34 movies to go… some of these will be higher profile, some will not… some have well-known actors or directors, some do not… some will turn out to be great, some not… but here is the list:

1922, #REALITYHIGH, 6 Balloons, A Futile & Stupid Gesture, Alias Grace, Amateur, The Babysitter, Bill Nye Saves the World, Blame!, Clinical, Coin Heist, Come Sunday, Death Note, Gerald’s Game, Girlfriend’s Day, Happy Anniversary, Je ne suis pas un homme facile, Juanita, The Land of Steady Habits, Little Evil, Milada, Mute, My Happy Family, Naked, Our Souls at Night, Private Life, Pup Star 2, Sand Castle, Shimmer Lake, Small Crimes, Spivak, Take The 10, What Happened to Monday?, You Get Me.

There is nothing wrong with this list of films. It has high-profile, high art and high ambitions. It also has low-profile, low art and low ambitions. But it is also instantly apparent what this group of films is not… revolutionary.

Amazon is no more revolutionary. Nor HBO. Or Hulu. Or whomever.

Being a big spender is not a revolutionary idea. And the truth is, in terms of making/securing exclusive product for their network that is between 85 minutes and 180 minutes long, Netflix is still not a very big spender.

I would estimate that the ” Netflix films” of 2017 are costing the company around $500 million overall to get to digital air. Contrast that with the billions they are spending on series and acquisitions annually and it seems almost minor. They are investing about half what most majors do annually on “films” and about 20% of the Disney spend.

Not that there’s anything wrong with that.

But let’s maintain perspective on the whole picture.

In that long list of 34 films, it is likely there are none of which you have yet heard (unless personally connected). But most of these are both content for now and the seeds of the future. Netflix is building a legacy of filmmaker who are happy to have done business with the company and are that much more likely to come back again to do business. Smart. Netflix is not the originator of this idea either.

Amongst these titles you probably haven’t heard of, there are some that have a hook that you will probably connect to along the way. There is a Redford/Fonda movie, a Duncan Jones, a Tamara Jenkins, a McG, a Joshua Marston, a David Wain film about NatLamp’s Doug Kenney and an Alfre Woodard starrer directed by Clark Johnson. I am happy all of those films – even the McG – got a chance to happen. Some of them may well have landed elsewhere, but many might not have.

But the illusion that no one makes this kind of movie or that kind of movie anymore is false. The economics of particular genres have changed. And they continue to shift. As I wrote in a piece about the summer releases, the genre that is missing from this summer is the male buddy comedy… while there are three female buddy comedies. This does not mean the male buddy comedy is over. Things change. Every change is not a revolution.

But with the relentless stream of think-pieces about how major studios are killing cinema, keep in mind that with the exception of a title or two per year, Netflix is not pushing a model that is going after the studio business. Netflix “film” is competing, almost exclusively, with the indies.

And the indie business already has a thriving day-n-date VOD business. Like Netflix “movies,” most of the films released by indies do not get a substantial theatrical airing, if at all.

So why is there so much chit-chat about Netflix disrupting the theatrical model?

Netflix wants distribution freedom for, basically, three movies this year. (Remember… a foreign-language Oscar play for Okja starts with getting South Korea to nominate the film.) Mudbound (a Sundance hero), Bright (a reported $90 million Will Smith/David Ayer movie), and The Meyerowitz Stories (primarily an Oscar candidate for screenplay).

Mudbound could be desirous of Lawless-type numbers, which that film did by opening wide (2888 screens) and generating 94% of its $37m domestic take in the first 4 weekends.

No Noah Baumbach-directed movie has ever been on as many as 800 screens or grossed as much as $8 million domestic, so the release of The Meyerowitz Stories was always likely to be limited, but still, will potentially compete with indies that still release theatrically.

And Bright is a full-out sci-fi-tinged Will Smith action movie. A major would release it into 4,000 theaters on 10,000+ screens on opening weekend. Assuming AMC-Wanda and perhaps Regal are still willing, Netflix can open Bright to about a third the number of screens it needs for what would be considered a proper opening on a very wide release.

Putting aside Suicide Squad and its Bat/Joker-connection, the top opening for Will Smith in the last 5 years was $54 million for Men In Black III. A third of that is $18 million. How much would it cost Netflix to release Bright to $18 million, which is probably a high number. And if more than half of America has Netflix and probably over 90% of those who would see all but the rarest movie on opening weekend, who is going to pay to see Bright in a movie theater the same day it arrives at home?

In many ways, the industry would be well-served by Netflix trying this distribution experiment. If the opening weekend number was, say, $5 million in 1200 venues/3500 screens at a cost of, say, $20 million to advertise, that would slow the day-n-date argument for a while.

Exhibitors would, no doubt, fear that Bright would open to $50 million and make the argument about theatrical being cannibalized by day-n-date appear false, opening the floodgates of theatrical’s decimation.

But here’s the thing. This is R&D for Netflix. It’s worth taking the $20 million hit to see how the film would perform if available on all platforms on the same day. At a traditional studio, that might get someone fired.

What is R&D for Netflix is the entire kettle of fish for most studios. It’s just not as complicated for Netflix, which doesn’t have layers and layers of responsibilities and revenue streams that studios work in for their releases.

Every movie a studio makes is an individual risk-reward scenario. Losses seems to vanish in a strong year for the overall slate, but in may ways, each movie is its own business in the studio world, benefiting from some shared costs. Netflix needs each subscriber to hit about .250 with one strong memory every 3 or 4 months, which represents the three or four times a year when people think about whether they subscription is worth the money. People may complain about being overwhelmed by the amount of content on Netflix, but if you are choking on content, you are feeling that your value consideration is being well fulfilled.

If a studio bats .250 in a year, even with a big hit, the bosses are looking for a new studio chief after they have fired/blamed the head of marketing.

Of course, again, Netflix’s film program, as it stands now, is not producing many movies that are seen as legitimate contenders for significant theatrical launch. In all but a few cases (perhaps only one this year), the ambition level for theatrical would be, at maximum, in the realm of the indies… where day-n-date VOD already exists, with the acceptance of exhibitors, and a history that doesn’t demand R&D.

So the idea that exhibitors should change their position on day-n-date to service what really comes down to a single Netflix film seems like a giant, dubious ask.

COMING TOMORROW
The Movies, Part 2: Profitability and Disrupting The Indies

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