“The WBD Deal Puts Hollywood, and Democracy, at Risk.” That was the headline for an opinion piece written by Jane Fonda last December. Fonda feared Neflix’s acquisition of Warner Brothers Discovery (WBD).
Notable about what Fonda wrote was how much it was at odds with the sentiment of WBD shareholders, at least at the time. Seemingly aware of Netflix’s unrivaled ability to see around the proverbial corner of commerce, WBD shareholders likely saw the return potential of Netflix acquiring their shares. Which, of course, was not what Fonda liked. And she wasn’t alone.
Their disdain was plainly rooted in Netflix’s past and present as an entity that has brought movies and television into the home for viewers to the alleged detriment of theaters. As Netflix co-CEO Ted Sarandos put it at the time, “Our primary goal is to bring first-run movies to our members, because that’s what they’re looking for.” It seems Fonda and the rest of Hollywood took Sarandos too literally.
That’s because it’s generally the intent of well-run businesses to compete where there’s money to be made. And contra the widespread perception that the best days of movie theaters are in the rear-view mirror, they weren’t nor are they. And that’s not a reference of the recent box office forThe Devil Wears Prada 2, Project Hail Mary, or The Super Mario Galaxy Movie.
Instead, it's a comment on Netflix’s own evolution. Last summer and fall, and after the unexpected streaming popularity of K-Pop Demon Hunters, Netflix made sure to capitalize on the latter with August and October weekend theater runs for the global hit. Notable about Netflix’s foray into theaters, it didn’t stop with K-Pop Demon Hunters.
As the New York Times reported this week, Netflix plans to release Greta Gerwig’s (Barbie, Little Women, among others) Narnia: The Magician’s Nephew “for over a month before making it available on the company’s streaming service.” Which shouldn’t surprise anyone.
As opposed to the Netflix home experience replacing movie theaters, the streamer’s enormous subscriber base speaks to the happy truth that movies and television are more popular than ever. Since they are, it’s only logical that Netflix would capitalize on the popularity that it played a major role in developing by showing its productions in theaters. Put another way, for Netflix to pass on box office receipts would be masochistic.
It recalls Jeff Bezos’s observation long before Amazon was Amazon that the then-online retailer would never be able to replace the genius of the shopping experience. And it didn’t. If anything, and as evidenced by vast improvements in bookstores, vinyl record stores and shopping malls, Amazon improved the outlook for all three by forcing their evolution while at the same time keeping the wares of all three in-person concepts very much in the eyesight of consumers.
Netflix is no different. The popularity of its streaming service renders movie theaters more, not less appealing. And once again, Netflix proves the previous truth as it increases its theater presence.
Looking back to the since concluded battle between Netflix and Paramount Global for the hand of WBD, the symbol that is “Hollywood” errantly mistook innovative competition as something existential for the industry. Not at all. For Netflix to prosper, Hollywood must be healthy.
Which means Netflix’s attempted acquisition of WBD wasn’t about gutting a business, it was about expanding Netflix’s streaming offerings and film production broadly as a way of expanding its product, including in theaters. Netflix’s aforementioned track record not unreasonably has to have WBD shareholders wondering if the right combination is occurring, but also Hollywood itself.
