Amazon Studios spent $250 million to make “Red One,” a comedic holiday action film starring Dwayne Johnson and Chris Evans. Then the company pushed the film into more than 4,000 theaters, spending tens of millions more to market it.
So when the movie racked up only about $80 million in domestic box office receipts in recent weeks — half of which goes to the theater operators — it looked like a huge investment gone horribly bad.
Not so fast, Amazon says. “We did this for a very specific reason,” Courtenay Valenti, the company’s head of film, said.
And that reason: to make it a streaming hit.
For much of the past decade, Hollywood executives striving to catch Netflix started believing that the only way to increase the subscriber numbers for their own streaming services was either by significantly narrowing the time between a film’s theatrical release and its appearance on streaming or by putting both out simultaneously. Disney did it with “Black Widow,” much to the dismay of Scarlett Johansson. Warner Bros. did it with “Dune.” This was the future.
On top of that, the thinking went, streaming would give movie studios a chance to spend far less on the expensive marketing required for a theatrical release. The algorithm would do all the work instead.
But the industry has now largely come to a very different conclusion: The key to making a movie a streaming success and attracting new subscribers is to first release it in theaters. It turns out that all the things that make theatrical movies successful — expansive marketing and public relations campaigns, and valuable word of mouth — continue to help movies perform once they land in the home.
“We really believe that this theatrical marketing campaign and a theatrical window for this movie will only further amplify and enhance what we always believed was going to be a strong performance on the service,” Ms. Valenti said.
When “Red One” debuted on Prime Video last week, it became the No. 1 movie on the service, generating 50 million worldwide viewers in its first four days, the company said. It was Amazon MGM Studios’ most-watched streaming film debut ever, even though “Red One” is still playing on over 3,000 screens in North America — making it the latest theatrical release to find a big audience online.
Since August 2022, 65 percent of Netflix’s weekly top 10 English-language films were movies it had licensed from studios after they debuted in theaters. And when Nielsen, the audience measurement company, crunched its data for the past two years, only three of its top 20 streaming movies of 2023 had been released straight to a streaming service. (The outliers were Disney’s “Turning Red,” which was first released to its service in 2022; Netflix’s apocalyptic drama “Leave the World Behind,” starring Julia Roberts; and the Jonah Hill and Eddie Murphy comedy “You People.”)
In 2024, only four films in the top 20 went straight to streaming. Two of them, Netflix’s “Beverly Hills Cop: Axel F” and Amazon’s remake of “Road House,” were based on previous theatrical titles. (The two streaming originals that made the list were Netflix’s action film “Damsel,” starring Millie Bobby Brown, and the heist film “Lift,” with Kevin Hart.)
“You can objectively look at the data and see: Movies that have gone through the theatrical window perform better,” said Casey Bloys, who has overseen HBO content since 2016 and has overseen the Max streaming service since 2020. “For us, I know it for a fact, and you can see it in data for other platforms. We’re not the only one.”
Mr. Bloys’s sentiment is being echoed all over Hollywood.
“The better it does in theaters, the better it does on streaming,” said Joe Earley, the head of Disney+ and Hulu.
During Disney’s most recent earnings call, its chief executive, Robert A. Iger, said “a successful Disney movie today drives more value than it ever has in the past,” affecting all his other business lines, including streaming, theme parks and consumer products.
It’s not only new films that benefit from the copious marketing dollars spent on theatrical releases. (Summer blockbusters often cost north of $100 million in global marketing money, while even the smallest films have a hard time opening in theaters with marketing spends lower than $25 million.) When new chapters of a successful franchise are introduced to theaters, they prompt spikes in each company’s catalog of films.
Paramount Plus said that when “A Quiet Place: Day One” premiered on its service, viewers increased their “engagement” with the other films in the “Quiet Place” franchise by 207 percent. For “Mission: Impossible — Dead Reckoning Part One,” the percentage increase in interest in the other “Mission: Impossible” films was 181 percent.
“I think there’s no doubt that theatrical films drive not only sign-ups to streaming services but obviously drive engagement, too,” said Brian Robbins, the chief executive of Paramount Pictures. “They’re a very, very, very powerful acquisition tool.”
In many ways, the same hand-wringing that went into the latest declaration of the death of the multiplex is what fueled similar panic when new consumer technologies like televisions and DVD rentals were introduced. This time, things felt more pronounced, since the advent of streaming coincided with the coronavirus pandemic.
Mr. Robbins recalled that back in 2022, when he told an investor conference that theatrical movies would remain “the cornerstone” of Paramount’s business, it was a radical position to take.
“At that time, everybody was freaking out about how streaming was going to cannibalize theatrical,” he said.
It was a phenomenon, he said, that never happened.
Mr. Earley of Disney said the thought process just a few years ago was that if you started promoting a previous film in a franchise on a streaming service it would create consumer confusion over which film was in theaters.
“Back in 2020, we would not have merchandised ‘Inside Out,’ on Disney+,” he said. “There was a thinking back then that if you do that, people will think that ‘Inside Out 2’ is also on Disney+, and they won’t go to the theaters.”
According to Nielsen, “Inside Out” is the sixth-most-watched streaming movie of 2024. “Inside Out 2” is the year’s highest-grossing film.
Just a few years ago, Disney+ would never have promoted a theatrical movie on the service, either, for fear of frustrating the streaming consumer who would not have been able to watch that movie immediately at home. Now, the promotions are often prominent.
Mr. Earley uses the most recent “Planet of the Apes” movie as an example.
When “Kingdom of the Planet of the Apes” entered theaters in May, the marketing team provided Hulu subscribers with an “exclusive look” at the film, an effort that gave them more reason to watch the eight other “Planet of the Apes” films available in the Hulu library and built excitement for the new film, even if they never made it to the theater to watch it.
Fans, Mr. Earley said, were “ravenous” when the film hit the streaming service.
Netflix is now the outlier in Hollywood, still avoiding wide theatrical releases for the movies it produces. The company continues to argue that putting a film in theaters detracts from viewership on streaming. It recently lost out on a $150 million bid to make “Wuthering Heights” for the service, with Margot Robbie and the writer-director Emerald Fennell opting for an offer that was some $50 million lower in exchange for the guarantee of a theatrical release. Yet, while few Netflix films have pierced the zeitgeist, the company — with 283 million subscribers, far more than any other streaming service — is doing something right.
Still, all studios are being more selective about what movies they are willing to put into theaters, because the cost to break through an ever-crowded marketplace of entertainment options is more expensive than ever.
“When we make a movie and release it in theaters, it has to have a level of undeniability that is going to make people leave the comfort of their homes,” said Keith Le Goy, Sony’s chairman of worldwide distribution.
In 2021, Mr. Le Goy made a deal with Netflix whereby every one of Sony’s theatrical releases would head to the streaming giant after appearing in theaters. Thirty of the 32 Sony films landed in Netflix’s top 10. Nineteen of them hit No. 1. Universal Pictures signed a similarly lucrative deal with the streamer that year for its animated films and renewed it last month to add an exclusive 10-month Netflix window for the company’s live-action movies. In the past few years, Netflix’s top films have been dominated by Universal animated titles like “The Super Mario Movie” and “Minions: The Rise of Gru.”
Still, the theatrical movie business is very risky. For every “Wicked” that becomes a cultural phenomenon there is a “Joker: Folie à Deux,” for which equal amounts of effort went into determining its success only to have audiences flat out reject it in theaters.
Yet, like the marketing campaign for “Red One,” the one for “Joker” will not go to waste. A couple of weeks ago, Mr. Bloys said he expected the film, which grossed only $58 million at the domestic box office, to have a strong showing on Max.
He was right: Max released the movie on Friday, and it was service’s No. 1 title over the weekend.
“Just because the box office didn’t meet a certain threshold, I’m still happy to have it on the streaming service,” he said.
The post Here’s a Hollywood Twist: Streaming Success Runs Through Theaters appeared first on New York Times.
