Netflix expects to release around 80 original films next year, as it looks to hit the kind of scale in movies that it’s achieved on the TV side, according to chief content officer Ted Sarandos.
“They range anywhere from the million-dollar Sundance hit, all the way up to something on a much larger scale,” like Will Smith-starrer “Bright,” Sarandos said in an investors’ interview Monday about Netflix’s third-quarter 2017 results.
Netflix’s target for original movies next year compares with a 2017 slate of about 50 film titles that it has released or is scheduled to debut globally. Those include comedies, dramas, anime, action movies, foreign films and documentaries.
“Bright,” a cop action-thriller movie directed by David Ayer, had a reported production price tag of $90 million. It’s set to debut on Netflix worldwide on Dec. 22. Sarandos also cited as a forthcoming big-budget picture Martin Scorsese’s gangster movie “The Irishman,” starring Robert DeNiro, slated to be released on Netflix in early 2019. “The Irishman” has a budget of more $100 million.
Sarandos said with the release of “Bright” — a “big-budget, event movie” — “I think people will start seeing the potential for this original movie initiative, that it could be done on the enormous scale we have on the television side.”
Netflix released eight original films in Q3. Those included “Death Note,” based on the popular Japanese manga series; Angelina Jolie’s “First They Killed My Father” drama about the Cambodian genocide; “Naked,” a romantic comedy featuring Marlon Wayans; and anorexia drama “To the Bone,” starring Lily Collins.
Theater chains have fought against Netflix’s incursion into movies, over its model of releasing films for theatrical debut the same day they’re available to stream on Netflix.
In reporting Q3 results Monday, Netflix said that its content spending in 2018 will be between $7 billion and $8 billion — up from $6 billion this year. Previously, the company had pegged $7 billion for content spending next year. That decision was not tied to Netflix’s recent price increases in several markets, including in the U.S., according to CFO David Wells.
“There’s no timing correlation between our intent to grow content and to grow content spending and the price increases,” Wells said. “This has been planned for a long time.”
Regarding Disney’s decision to end it movie-output deal with Netflix with 2019 releases, Sarandos said, “We just have to focus on creating content that our members can’t live without… Whether or not one of our partners decides to produce for us or compete with us, that’s really a choice that they have to make based on their own business.”
Netflix CEO Reed Hastings also noted that outside the U.S., the streamer has carried Disney content only in Australia, the Netherlands, and Canada. “Although [Disney’s] got an enormously significant brand… we’ve done very well in international without it,” he said.
Sarandos acknowledged that there’s a highly competitive market for top-tier content, but he argued that overall prices are not off the charts. “Those big ‘unicorn’ shows — the price of any one of them might go up in a more competitive market, but general content costs are quite predictable,” he said. With Netflix’s overall deal with Shonda Rhimes, Sarandos said, “creating a place… where she can get outside the network box a little bit had a lot more to do with her attractiveness to Netflix than, we just had to outbid ABC.”
Asked about the trend of media companies becoming less inclined to license TV shows to Netflix — for example, Hulu won exclusive rights to NBC’s “This Is Us” — Sarandos called out as an example teen drama “Riverdale” on The CW, which saw its ratings for season two increase 400% versus the first season. “Having ‘Riverdale’ in the second window meant an enormous audience growth for it in season 2,” he said. Producers and networks will have to look at the “trade-offs in value” to see when the threat of competition outweighs the value of licensing content to Netflix, Sarandos said.
Meanwhile, Hastings said Netflix will not be looking to buy the Weinstein Company, which has been devastated by the revelations surrounding Harvey Weinstein’s sexual harassment and assault of women over several decades.
“It would be extremely unlikely for us to be a bidder for the firm,” Hastings said in the investors’ interview.
Sarandos tried to distance Netflix from the Harvey Weinstein scandal, saying, “Our business with the Weinstein Company is pretty arm’s-distance.” According to Sarandos, the streamer has an output deal for some films and second-window distribution rights on TV series with the Weinstein Company, but he said those are “not material.”
Netflix’s first original movie came from the Weinstein Company: “Crouching Tiger, Hidden Dragon: Sword of Destiny,” the sequel to Ang Lee’s 2000 martial-arts hit. “Sword of Destiny” was released in February 2016.
On Monday, Colony Capital announced that it was extending the Weinstein Company an emergency infusion of cash, and the indie studio said it was negotiating with Colony Capital to sell all or a significant portion of its assets.
The Netflix Q3 interview for investors was prerecorded and posted on YouTube at 6 p.m. ET. As with the Q2 earnings investor interview, UBS’s Doug Mitchelson was the only analyst who asked questions during the interview with Netflix execs.
At the end of the interview, Hastings and Sarandos pulled on “Stranger Things”-themed Christmas-light sweaters — tub-thumping for the season 2 premiere on Oct. 27, as well as promoting the company’s merchandise deal with Target for the show.