Netflix film chief Scott Stuber and filmmaker Ron Howard discussed pay models, theatrical strategy and Stuber’s green light philosophy in an hour-long session kicking off the Produced By New York conference.
The pair, who first became acquainted when Stuber was an executive at Universal and Howard’s Imagine Entertainment had its long-running deal at the studio, are now teaming on Hillbilly Elegy. Stuber did most of the talking in the Producers Guild session, but Howard acquitted himself well as a moderator, pressing the executive about several controversial aspect of Netflix.
As to how filmmakers are compensated, “I believe in fair and righteous behavior,” Stuber said, invoking his years as a producer between his Universal and Netflx executive jobs. “One of the things I love so much about the company is that’s the way we’re built. When we make deals, we’re slightly different [than traditional studios]. We have a model. If we make a film, we pay in success.”
Netflix will typically analyze a filmmaker’s previous work and combine that history with the budget range of the new project. Depending on the status of the filmmaker and whether they have profit participation, “we together, with their attorneys, assume the great success ratio of that film. So if we make a movie for $60 million, and it made $200 million, we pay people under the auspices that that what’s your deal would be. And what we never want to be is a place where people feel they got taken advantage of.” If a film over-performs in terms of viewing on the platform, he added, “we want to make sure to take care of you.”
Discussions have recently grown more vigorous inside the company about adding those bonus amounts to filmmakers’ deals, but the “buyout” approach of a single up-front payment is still the prevailing model. “The whole business is talent and you need talent to feel great — spiritually about the work and financially about the respect of getting what you deserve,” Stuber said. Howard then asked how Netflix knows if the result of the film ended up exceeding expectations. “We do talk to the filmmakers about everything,” he said. Those briefings take the form of a Monday breakdown of numbers after a Friday opening, followed by weekly and monthly data reviews, he said.
“My friends who run other studios always say, ‘Aren’t you lucky you don’t have tracking anymore? You don’t have all those things you deal with on opening weekend,’” Stuber said. “And I say, ‘But we do. We just have it internally.’ I see it all, and have the same anxieties and the same worries and text my guys Friday night and say, ‘How are we doing?’”
Howard noted that the dramatic change rippling across the industry has forced producers to alter their methods. “The old model is, you take something interesting, your studio, your network acquires it for you and that’s that,” he said. At Imagine, which parted ways with Universal to chart an independent course, “We had to come up with new ways to control material, to co-operate with writers, and so forth. We optioned Hillbilly.” The next step was to hold an auction, which Netflix wound up winning.
Theatrical windowing — a flashpoint for Netflix as it has rolled out films like The Irishman and Marriage Story — “is a very complex issue,” Stuber said. “It’s not a Netflix issue, it’s become a business issue.” The theatrical marketplace “has become very tight. It’s become about giant IP, animation, horror. There are certain kinds of genres that have been squeezed out because they’re more challenging.” He continued, “Instead of the rhetoric of ‘us against them,’ we all have to get together and talk about how we widen the funnel. That is the most important thing so we give different voices the chance.”
The company has extended windows this year for films compared with Roma and Ballad of Buster Scruggs, though the streaming giant’s negotiations with major exhibitors like AMC and Cinemark bore no fruit. “The trick is, when you’re starting from scratch, it’s really hard to start a theatrical film business and put 12 to 14 films into the market against these titans,” Stuber shrugged. “It’s not a business model that can sustain.” Instead, Netflix has opted for a more blended model.
Stuber talked about the approach to filling the pipeline that is yielding more than 60 feature releases a year, across various verticals, among them documentary, genre, prestige an big-budget tentpole. Netflix is uniquely situated compared with traditional media peers, Stuber said. “We have no library,” Stuber said. “I can’t remake anything. I can’t remake [the Howard-directed] Cocoon, as much as I’d like to. I have no IP, so I can’t make Jurassic Park. I can’t make Avengers. … So your ‘IP ability’ is filmmakers and movie stars and things that we know and love. Ron Howard. Martin Scorsese. Will Smith. Things that you go, ‘OK, those people have brought me joy. I know they’re good, they’re sophisticated.’”
Development hell, he elaborated, is not a risk at Netflix. “I really don’t want the development system where you have five slots, 30 producers, and you buy 250 projects for five slots,” Stuber said. “In order to do that, when [producers] come in, I need a better path than normal. Pitches I don’t really believe in, except for comedy. I’ve been doing this for a long time. The success rate of pitch to movie is pretty small.” Comedies with talent attached — he named Will Ferrell, Kevin Hart and Melissa McCarthy as examples — are viable.
Operating in nearly 200 countries and serving more than 160 million subscribers worldwide means Netflix is “way more attuned to that consumer,” he said.
The company’s approach to using data is less Big Brother than many people assume. “We don’t know who is on an account,” Stuber said. “I have no idea that that 70-year-old woman in Liverpool, England, is watching Riverdale or our teen comedies. I don’t know who she is. So I don’t have bias in marketing to her.” Instead, the goal is to create a mosaic where all subscribers feel like something for them is on the service.