Yahoo Finance 'The door is open' for Netflix to expand box office reach, says theater owners' chief
As Netflix (NFLX) grapples with company-wide layoffs and slowing subscriber growth, there's been increased talk when it comes to the streamer's complicated relationship with the box office — and what it could look like moving forward.
National Association of Theatre Owners (NATO) CEO and president John Fithian told Yahoo Finance that theaters would happily welcome more streaming content on the big screen, despite exhibitors' strained history with the streaming boom at large.
"The door is open to Netflix to play more movies with the right kind of exclusive windows [and] with a broader reach. They've got some great movies," Fithian said during an interview with Yahoo Finance Live (video above.)
"[Netflix CEO] Ted Sarandos knows his content, and we'd love to play more of them wider in theaters if we could," the CEO added, underscoring his confidence in the industry after its record-breaking "Top Gun: Maverick" success.
Although Netflix has played multiple original features in theaters, from 2018 breakout hit "Roma" to the more recent "The Irishman" and "Don't Look Up," those debuts had very short theatrical windows with a much more limited release.
Today, as Netflix stock struggles to rebound — trading at about $197 a share and down more than 66% year-to-date — investors have questioned the longevity of the Netflix business model.
"It's time for Netflix to be a real company," Jon Christian, founding partner at OnPrem, a global technology firm that works with major entertainment networks to drive content performance, previously told Yahoo Finance.
"[Netflix] has to be smart," the executive said, explaining that the risk-reward model from years past is no longer relevant without the box office tie-in.
Christian suggested that the streaming company shift its focus to franchise businesses — a strategy that's easily transferrable to the big screen.
Theatrical "gives you a window where you can make a lot of money on top of your subscriptions — that could even pay your cost of some of these franchise tentpole titles."
"With franchise comes fandom," he continued, citing Amazon Prime Video's (AMZN) upcoming "The Lord of the Rings: The Rings of Power" series (which the streamer coughed up a reported $465 million to produce), in addition to Disney+'s (DIS) powerful Marvel and Stars Wars franchises.
Theaters 'thrive during economic challenges'
Theater chains could also benefit from big streaming releases as labor challenges, supply chain disruptions and inflationary pressures remain top concerns for owners.
On Tuesday, The Wall Street Journal reported that cinema popcorn and other standard concession stand products — crucial revenue drivers for chains — could be hard to come by this summer due to various supply shortages.
"Labor is a challenge to anybody in the service industry right now and supply chain challenges are affecting everyone," Fithian admitted; however, the CEO noted that theaters are leaning on their recession-proof nature to battle the storm.
"People like to come out to the movies during difficult economic times because it's affordable," Fithian explained, noting that the theatrical experience is significantly cheaper than other forms of out-of-the-home entertainment such as vacations or live sporting events.
Even with more premium ticketing, the CEO sees a continued uptick in sales, despite the current inflationary environment.
"What we advocate for and what we're seeing is a range of choices at the box office," the executive said, referencing the pricer IMAX (IMAX) experience, along with the cheaper standard outing or matinee.
Overall, "movie theaters do better during recessions than almost any other form of entertainment outside of the home."
"These are all economic challenges that everyone is facing. The difference is that movie theaters thrive during economic challenges," he stated.
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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