Berlin: Netflix and Amazon Evolve From Industry Disrupters to Market Darlings

Causeway Films
'Cargo,' which was nabbed by Netflix

Hot off a dealmaking frenzy at Sundance, the streaming giants are aggressively reshaping the traditional sales models in Berlin — and more players are on the way.

One year ago, the first question on everyone’s mind was if deep-pocketed streaming companies Amazon and Netflix would be as aggressive in Berlin as they had been at Sundance. And while both put in bids for some hot titles (including Loving and Southside With You, which went to Focus and the team of Miramax and Roadside, respectively), they ended up not taking any.

At Sundance this year, Netflix nabbed 10 films — including a jaw-dropping eight-figure deal for Dee Rees’ Mudbound — and Amazon took five. Two days into the Berlin market, Netflix already has sealed its first deal, picking up worldwide rights to the Martin Freeman zombie movie Cargo after seeing a three-minute promo. The film, from the producers of The Babadook, is the first Australian project to go out under the Netflix Originals banner.

But it’s unlikely that the streamers will be as busy in Berlin as they were in Park City. Both Amazon and Netflix are focused on picking up finished films (or developing them in-house as they both began doing last year), and Berlin is still a market heavily focused on films in the packaging phase.

The second question on everyone’s mind last year was how much damage the streamers would do to the traditional film business. A year later, both companies have tweaked their models. While they remain a disruptive force, the gap between old and new is shrinking. Amazon, in particular, has played well with others, partnering with theatrical distributors on awards film Manchester by the Sea and other critical darlings, such as Love & Friendship.

Netflix has, so far, preferred to go it alone, but its Mudbound deal is an indication that it could be returning to the theatrical business. The period drama, starring Garrett Hedlund and Carey Mulligan, is a potential awards contender, which would mean at least a limited theatrical release. It remains to be seen if Netflix will partner with a distributor for a small qualifying run, as it did with Bleecker Street for Beasts of No Nation, or a more ambitious, Amazon-style release.

Many expect Netflix will move closer to the Amazon theatrical model as competition increases for projects and talent. “Netflix wants to be able to work with all the talent, and all the talent is not going to settle for the [online-only] Netflix paradigm. They’ll have to have an alternative model, like Amazon’s. Eventually, Netflix will do the same,” says Route One Entertainment’s Russell Levine, who produced Jenny Slate’s Landline, which Amazon bought for $3 million at Sundance this year, and Tallulah, which sold to Netflix.

“Netflix will be forced by the dynamics of the industry to enter the theatrical business if they want to get the best films," said Efe Cakarel, CEO of MUBI, an online streaming service specializing in art house films. "The 90-day theatrical window is very important to the producers and the filmmakers, that's how they build their reputation and how they get the attention. If both Amazon and Netflix pay $10 million, you will chose Amazon because they will guarantee you a theatrical release.” 

MUBI has also moved into theatrical release of its titles. In Cannes it picked up exclusive U.K. and U.S. rights to Finnish drama The Happiest Day in the Life of Olli Maki and Bruno Dumont's Slack Bay starring Juliette Binoche.

“The advantage for us and other streamers is that don't have to make money on theatrical. Online is the growth engine. I can lose significantly on theatrical but the buzz surrounding the release will increase our subscriber base," said Cakarel.

The field of potential online buyers is about to get much more crowded. Several tech companies were aggressively participating in the bidding process at Sundance, including Hulu, Google, Apple and Vimeo. Within the next year, any of them could become as active as Netflix and Amazon.

“They already have great reach with their existing audiences, so now it’s about figuring out who the best partners are to build out their platform for distribution,” says WME’s Christine D’Souza. “They are being strategic about what value they can bring to more traditional companies.”

The success of Amazon and Netflix is convincing some, including Levine, that the SVOD market is becoming more important as the foreign market wanes.

“The dynamic and the figures they are paying mean more films can get made, if you manage your budgets carefully and not depend on doing a great deal of foreign sales anymore,” he says. “The older system of foreign sales is really diminishing. A lot of people are missing targets because a lot of the actors aren’t worth as much any more, and the ones who are worth something are usually doing studio movies, anyway.”