Faced with theater closures amid the pandemic, studios adjusted on the fly in 2020 and sold off theatrical titles to streaming services. Lionsgate offloaded horror title Run to Hulu while Paramount dished The Trial of the Chicago 7 to Netflix and Coming 2 America to Amazon Studios, among other films. On April 8, Sony went further, inking a first-look deal with Netflix and setting up a pipeline of streaming feature development.
That news arrived as part of an expansive Sony pact that set up a five-year, exclusive pay TV window deal with Netflix for the U.S. rights to its theatrical films beginning in 2022. The agreement will see films like next year’s Morbius, Uncharted, Bullet Train and the sequel to the Oscar-winning Spider-Man: Into the Spider-Verse head to the streaming giant after the home entertainment window closes, often 18 months after a film’s release in theaters.
Unlike the pay TV window pact, the first-look development deal starts immediately and encompasses worldwide rights. In March, Sony, which during the pandemic licensed Happiest Season to Hulu and Greyhound to Apple, sold the once theatrically bound Kevin Hart-starring Fatherhood to Netflix. The new deal creates a designated pipeline for similar deals. Should Netflix commit to a Sony project prior to production, Sony would still take the lead of producing but Netflix — which will be providing various amount of financing on these films — would have approvals on creative decissions.
Although the agreement may be a win-win for both Sony, which doesn’t have an owned-and-operated streaming service, and Netflix, there is one studio taking a hit. “Starz is going to have more trouble,” says Wedbush Securities analyst Michael Pachter of the Lionsgate-owned premium cable network, which has been Sony’s pay TV partner since 2006.
Other studios have become increasingly opportunistic toward pay TV partners as many launch their own streaming services. In 2019, Disney agreed to run a Starz ad after customers signed up for Disney+ in exchange for a revised licensing deal for titles like the new Star Wars trilogy films. During its February investor day, ViacomCBS unveiled an expansion on its deal with the MGM-owned Epix, which will get a 90-day exclusive pay TV window for many Paramount theatrical titles before their Paramount+ debuts. In exchange, Paramount+ will have access to MGM titles.
Yet feature films may not hold the same value as their time-consuming TV series counterparts in the Netflix ecosystem. “You are talking about 40 hours a year of content for an average Netflix customer that averages 40 hours a month of content,” adds Pachter, who notes that features offer little replayability outside of kids films. “No one is going to say, ‘I am not quitting Netflix because I want to watch the new Spider-Man movie in two years.’ ”
This story appeared in the April 14 issue of The Hollywood Reporter magazine. Click here to subscribe.