Last week Netflix announced it planned – or at least intended – to release roughly 80 films in 2018.
That’s a lot of movies. And the news was met with a collective gasp that the company was taking such an ambitious approach to original material, reportedly allocating as much as $8 billion to its production. By contrast, most of the major Hollywood studios have roughly two dozen, give or take, movies on their 2018 release calendars. Netflix’s planned output is at least three if not closer to four times what any studio will wind up putting in theaters.
Much has been made in the last year over how much licensed content Netflix has or will be losing. Disney is pulling its movies as it looks to ramp up its own OTT service, just one example of major deals that have been upended by new projects and priorities, the desire of media companies to own more of the distribution pipeline and subsequent revenue.
With so much high-profile content being lost Netflix is therefore counting on original content to maintain its position as the OTT service with the lowest subscriber churn rate. Those subscribers are always looking for the latest and greatest and newest and will begin abandoning ship if “I don’t know, let’s just find something on Netflix” is a dead-end conversation.
While no studio would dream of releasing 80 films a year, Netflix enjoys a few advantages that make it well-suited to succeed by doing just that.
Better ROI on Spending
Every dollar Netflix used to spend licensing movies from other studios can now be used on original productions. Not only that, but the return on that spending is higher since it’s paying itself back. A 2:1 ROI ratio ($2 revenue for every $1 spent) is a lot better when you get to keep that whole dollar you’ve made, not split it with another entity.
It Doesn’t Carry A Host of Expenses
There’s no need to create film prints or go through other processes that are necessary for the theatrical release model. By being entirely digital (save for a few ego screenings of select films here and there) it just doesn’t have to put in all the labor the studios do to actually bring the movie to audiences.
Marketing Is Lean and Owned
I’ve taken Netflix to task from time to time regarding the robustness of their marketing efforts, which is usually lackluster. Those pre-release campaigns are inconsistent and vary greatly based on the prestige of the talent involved, which honestly isn’t that different from any major studio push. From a more generous perspective, it doesn’t spend more than it deems necessary to sell it to the audience. Plus, it likely knows the most effective marketing channel is the recommendations and promotions that happen within the platform itself, encouraging current subscribers to check out something they haven’t seen yet.
A Reputation For Creative Freedom
Netflix just released Noah Baumbach’s new movie. Just in the last year it’s been the home for new films from Bong Joon-ho, Christopher Guest, Jessica Williams, Joe Swanberg and other talent both established and rising. Already on the release schedule are new films from Dee Rees, David Ayer and Martin Scorsese. All those projects aren’t going to the big studios and the theatrical industry that relies on them. That’s notable.
It goes without saying that not every Netflix Original will be a masterpiece. But the incongruity of the latest Adam Sandler vehicle sitting alongside a well-crafted prestige piece like To The Bone is no greater on Netflix than it would be in at the local multiplex. It’s providing a range of options for the audience to choose from, leveraging its unique strengths and opportunities to do so in a way that works best for the future of the company.
Chris Thilk is a freelance writer and content strategist who lives in the Chicago suburbs.