Netflix has dipped its toe into theatrical. Is it ready to jump in?
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Follow your favorite stocksCREATE FREE ACCOUNTThe Netflix logo is seen at the Egyptian Theatre ahead of the premiere for Netflix’s “Running Point,” Season 2, in Hollywood on April 15, 2026. Patrick T. Fallon | Afp | Getty Images
Netflix is making itself clear: It’s a streaming-first business.
During the company’s third-quarter earnings call on Tuesday, co-CEO Ted Sarandos reiterated the streaming giant’s long-held stance that its content, which it spent $20 billion on last year, is meant for its subscribers and, therefore, should be delivered to customers on its streaming platform as quickly as possible.
Yet, the company is set to have 30 theatrical releases in 2027, on par with what it brought to cinemas in 2026. And while not all of these features are expected to have wide releases or long runs in theaters, Netflix is testing the waters with projects like Greta Gerwig’s “Narnia: The Magician’s Nephew,” which will have a wide release and a 49-day exclusive theatrical window when it hits cinemas in February.
The company seems poised to carve a new path forward as it grapples with viewership stagnation and a stock slump of roughly 30% since January.
How its theatrical ambitions fit into a streaming-first strategy remains a question mark.
“Theatrical releases are a net positive for reach and streaming demand,” Alicia Reese, analyst at Wedbush, wrote in a note Wednesday. “Netflix’s more amenable attitude toward exclusive theatrical windows will not only facilitate better relationships with talent, but also add a new revenue stream and build interest in its streaming service. This follows the pattern we have seen with the major studios’ streaming platforms over the past several years: theatrical releases don’t cannibalize the streaming window, as Netflix fears.”
Ahead of its Tuesday earnings report, Netflix restructured its C-suite, bringing in former Disney executive Peter Rice to take over as the company’s chief content officer, ousting 10-year veteran Bela Bajaria.
Netflix also dismissed Dan Lin, the company’s head of film, according to a person familiar with the matter who spoke on the condition of anonymity to discuss internal changes. That came just days after it laid off roughly 1,000 employees including Lin’s right hand Doug Belgrad as well as Sheroum Kim, the director of independent film, according to various media reports. It’s unclear who Netflix will tap to take over Lin’s position.
The company aims to restore quality to the brand and utilize Rice’s expertise in talent relations to lure big names in an increasingly competitive market.
Still, Netflix executives seemed to downplay the change in leadership during the company’s earnings call.
“Our business and our business flywheel are working,” Sarandos told investors during the company’s earnings call. “There is no need for a fundamental shift in the strategy. We do need better execution in the U.S. … It’s just not growing as fast as it could or as fast as we’d like.”
Sarandos said the streamer had “some really solid doubles and triples this year,” but suggested the company needs more “home runs.”
Netflix’s Ted Sarandos attends the 92nd Annual Academy Awards in Hollywood, California, Feb. 09, 2020.Jeff Kravitz | Getty Images
In an emblematic moment during Tuesday’s call, Sarandos highlighted a deal with Disney , struck in October, to bring the Ice Age films and others to the streaming service, and gave a nod to that company’s CEO, Josh D’Amaro.
“We already are seeing some of those benefits from the Ice Age movies. All five of them hit our top 10. That’s really exciting,” the Netflix co-CEO said. “And by the way, yes, Netflix just plugged a Disney movie on our earnings call. You’re welcome, Josh.”
Netflix’s content strategy
In a bid to capture consumer attention and broaden its subscriber funnel, Netflix has spent years diversifying its offerings to include video games, live sports and quick-turn documentaries on buzzy cultural moments.
But more recently, it’s lacked some of the water-cooler-type hits like “Stranger Things,” “Bridgerton” and “Squid Game” that previously boosted subscriptions and viewership numbers.
The cast of Netflix’s “Stranger Things” Season 5.Courtesy: Netflix
“We know there’s some investor concern about our view hours growth,” Netflix said in its shareholder letter Tuesday. “Engagement — which encompasses quantity, quality and variety of viewing — remains healthy.”
And yet with Netflix stating plainly that it needs new avenues for growth — and against the backdrop of a foiled deal to buy the Warner Bros. film studio — investors and onlookers are once again looking at the theatrical business.
“I think there’s a place for the theatrical for Netflix,” Matthew Condon, equity research analyst at Citizens, told CNBC. “Especially, as the competition for time and attention just continues to increase.”
“If they really want to build stickier fan bases around some of their [intellectual property], I think theatrical could be a good avenue for them to do that,” Condon said. “That’s one area that Netflix has historically not been all that strong in, is building like really, really strong IP. And I think building fan bases around theatrical releases and things of that nature can help with that and then also can help them get top tier talent.”
Netflix is no stranger to luring in big Hollywood directors. It’s worked with the likes of Rian Johnson, Martin Scorsese, Alfonso Cuarón, Bong Joon Ho, Spike Lee and Guillermo del Toro. However, none of these directors’ Netflix films received a wide theatrical release or a long run in theaters.
Sarandos admitted earlier this month that the company has lost talent because it would
Source: www.cnbc.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.