Netflix Takes Hollywood

Netflix Over Hollywood

Netflix solidified its position in Hollywood by recently taking the empty seat at the Motion Picture Association of America vacated when Disney acquired Fox. 

The six studios that make up the MPAA are Disney, Paramount, Sony Pictures, Universal Studios, Warner Bros., and now Netflix.

As it was widely reported around the time of the Oscars this year, that several powerful Hollywood figures opposed Netflix’s best picture campaign for its film Roma. With some difficulty, Netflix secured theater space for Roma so the film would meet eligibility requirements set forth by the Academy of Motion Pictures Arts and Sciences.

In all, Roma received 10 nominations, including for director, screenplay, and cinematography. Roma’s director, Alfonso Cuarón is now the only director in history to receive simultaneous nominations for direction and cinematography. In the end, Roma won three Oscars – best foreign language film, director, and cinematography. The last of which must irk its detractors the most who said Roma was comparable to a TV movie.

Roma was the first Netflix film to receive a best picture nomination. Amazon’s Manchester By The Sea was the first from any streamer to receive a best picture nomination when it did in 2017.

Netflix spent $25 million on the awards campaign for Roma, much more than the $15 million it cost to make the film. 

Netflix’s current direct-to-streaming release model is compared to the nightmarish direct-to-video release model. However, after breaking the Oscar-ceiling with Roma, the company announced it would break with precedent and soon release a few of its films for three weeks in theaters before becoming available on its streaming site. 

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Comparatively, Amazon still observes the industry standard three-month theatrical window supported by most exhibitors. This strategy proved wildly successful for its lone best picture nomination. Manchester By The Sea, which only had a budget of $10 million, hauled in nearly $80 million in global box office receipts; 60% from domestic exhibition. 

Roadside Attractions, the film’s distributor used a classic Oscar platform releasing strategy. It started in 4 theaters during Thanksgiving weekend, then expanded to 50 in the next week, then 150 and 350 before releasing mid-December in over 1,200 theaters for five weeks straight. The film was still in nearly 400 theaters through week 16 in March.

Hollywood Fights Back

Prior, and especially after the wins for Roma, Steven Spielberg and other power players started lobbying the Academy to changes its rules to shut out Netflix and presumably other streaming services producing original content. 

In essence, the group wanted stricter release rules that would require a minimum threshold of screens a film had to be released on. This change would not only impact Netflix, but many other films that implement a minimal release strategy. Many distributors release a film in a handful of theaters in mid- November or December to qualify for the Oscars. If there is buzz about a possible nomination they expand the release, and if nominated the film goes into wide release.

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Obviously, the group’s plan to exclude Netflix from the competition was not well thought out. Also, the motives of Spielberg don’t seem wholly genuine after recently signing a multi-year deal with Apple’s new streaming service.

Enter Justice

In a letter from the U.S. Justice Department, its antitrust division warned the Academy against any rule changes designed to exclude Netflix. The agency said any changes requiring eligible films to be released more widely in theaters could represent an agreement by competitors to sideline an emerging rival. 

When the Academy met in late-April to review its rules for the 2020 competition, it heeding the advice of the Justice Department and left its rule as they were. 

For a film to be eligible, it must be shown for at least one week in a Los Angeles County theater. The required seven-day theatrical run must included at least three screenings per day for paid admission. 

Critics believe that meeting some token qualification of one week shouldn’t be enough to qualify. According to one member of the Academy’s board of governors – “can’t a contest set their own rules?”

Like any other trade association comprising direct competitors, it is important to understand that one misguided rule change can produce an avalanche of antitrust actions and private litigation.

FilmTake Away

Exhibitors have been locked in a battle for years with Netflix, convinced the streaming service is killing the film business.

However, according to new research, it turns out Netflix is not responsible for the decline of theater attendance. In fact, the more content consumers stream online, the more often they go to the movies according to the Ernst & Young Quantitative Economics and Statistics Group (QUEST).

The study was commissioned by the members of the National Association of Theatre Owners (NATO), some of which opposed the entry of Netflix’s Roma and The Ballard of Buster Scruggs at the Oscars.