Netflix Goes to the Movies (NASDAQ:NFLX)

simarik

Netflix, Inc.NASDAQ:NFLX) announced that glass onion: A mystery of knives, The long-awaited sequel to the 2019 hit Knives Out hits theaters in the US, UK, Ireland, Italy, Germany, Spain, Israel, Australia and New Zealand for one week starting November 23. the film will be available to Netflix subscribers a month later, on December 23. In the US, the film will be shown in 600 theaters across the AMC, Regal and Cinemark chains. This will be the first Netflix movie to debut in theaters. The company is calling this a preview event since the film will only be shown for a limited time. As discussed below, I see this as a very positive move as a Netflix shareholder.

The reason behind the theatrical release

Netflix subscriber growth is slowing, which is no longer news. The company is relying on its ad-supported level to revive subscriber growth, but this is likely to hurt ARPU and profit margins. At a time when Netflix is ​​facing these challenges, it makes sense to take advantage of every new opportunity that can generate revenue. Ticket sales will obviously help the company with this, but I think Netflix is ​​going for the long haul like it always has for the last 20 years.

There are a few reasons why Netflix should consider hitting theaters more often.

First off, Netflix has built a reputation for producing award-winning movies that continue to be loved by audiences. A few years ago, Netflix may not have been considered a big name in Hollywood, but that has really changed for the better in recent years.

Major Academy Awards won by Netflix

Category winners
best director Alfonso Cuaron – Rome
Jane Campion – The Power of the Dog
Best Supporting Actress Laura Dern – Marriage Story
Best Foreign Language Film Rome
Best Animated Short Film if something happens i love you
Best Documentary Feature Film icarus
american factory
my octopus teacher
Best Documentary Short Film

The White Helmets

Period. End of sentence.

Best Production Design

men

Best Photography

Rome

men

Best Costume Design

Ma Rainey’s Black Background

Best Live Action Short

Two distant strangers

In addition to these awards, Netflix movies Rome, the Irish, marriage storyY men they were also nominated for the Best Picture award.

The success of Netflix on a large scale should be better monetized and the best way forward would be to consider releasing movies in theaters before they are available for streaming. Easier said than done as Netflix needs to avoid cannibalization, but this is a strategy worth considering.

Second, recently Netflix has shifted its focus to big-budget movies in a bid to attract new subscribers. There’s no better way to garner attention than a blockbuster, and I think success in the movies will trickle down to your streaming business as well. With movie releases in theaters, Netflix will broaden its horizons by getting in front of potential subscribers who haven’t pulled the trigger yet.

The most expensive movies on Netflix

Movie Budget
the gray man $200 million
red notice $200 million
the Irish $160 million
6 underground $150 million
outlaw king $120 million
triple border $115 million
The Mitchells vs. the Machines $110 million
Sparkly $106 million
the midnight sky $100 million
army of the dead $90 million

Source: MovieWeb

Releasing movies in theaters, in my opinion, will help Netflix get more bang for its buck while attracting new subscribers to its streaming business. Now that the company plans to focus on big-budget movies, it makes sense to look for opportunities outside of the streaming platform.

Third, Netflix needs to keep up with its competitors. The likes of Disney+ and Apple TV+ have already explored this option with the latter reaching an agreement with Top Gun: Maverick producers. Failing to embrace cinema could create an opportunity for Netflix’s closest rivals to gain market share, something Netflix cannot afford.

As an investor, I’m excited to see what’s in store for Netflix in theaters and depending on the success (or lack thereof) of glass onion: A mystery of knives, the company may discuss a new strategy to fully explore the opportunities in this space.

Did Netflix Pick the Right Movie?

First impressions last, that’s why it’s important to make a good first impression. When I told my wife about the planned theatrical release of the new knives out movie, their initial reaction was that Netflix should have picked a better movie to go out to the public. I agree, this is not a Marvel franchise and it’s not like the world is counting down the days until this movie is released. That said, I think it’s not a bad choice.

The original knives out The film starring Daniel Craig and Chris Evans in 2019 has a high rating of 7.9 on IMBD and was nominated for Best Original Screenplay at the Academy Awards. The film also did surprisingly well at the box office, grossing $311 million on a $40 million budget. Glass Onion: A Knives Out Mystery The trailer, which was released about a month ago, has already garnered over 12 million views on YouTube, which is substantially higher than the views of trailers for some of the most anticipated Netflix movies and TV shows in recent years. recent times.

Movie/TV show name Views of the trailer on YouTube from October 7
Glass Onion: A Knives Out Mystery 12 millions
DAHMER – Monster 4.6 million
luckiest girl alive 4 millions
Enola Holmes 2 4.4 million
Personal time 5.8 million
spider head 8.2 million
Blond 9.8 million

Source: YouTube

Although there may not be a noticeable hype around the movie, I think Glass Onion: A Knives Out Mystery It’s not a bad choice for Netflix to experiment with a theatrical release.

Long term implications

Netflix, depending on the success of the next knives out movie at the box office, it’s likely to be more focused on producing big-budget films that are as suited to the couch as they are to the theater. However, this will be another growth initiative that will require the company to invest substantial amounts of money in content production, and for this reason, the market may not reward the company any time soon. With that said, I think Netflix is ​​following the right strategy to expand into untapped market segments.

Put off

Netflix is ​​finding it difficult to grow its subscriber base, and Mr. Market is not pleased with this. The company and its shareholders will face some tough quarters before growth picks up, but I think Netflix is ​​making strategic decisions that are likely to increase its long-term profitability. This consolidation phase, therefore, seems like a good opportunity for growth-oriented investors to consider investing in NFLX.

Leave a Comment