A New Direction for Netflix?

For the first time, Netflix will distribute one of its titles through three major Old Hollywood theater chains, AMC, Cinemark, and Regal. Glass Onion: A Knives Out Mystery, the sequel to the hit Knives Out, will be distributed to 600 theaters on November 23. The movie will run for one week, followed by a blackout period, and then a streaming premiere on Netflix December 23.

Even though Glass Onion will see a limited theatrical run (Netflix calls the theatrical release a sneak peek), the agreement is a landmark. For years, Netflix has locked horns with the major theater chains because Netflix has refused to give its movies a wide theatrical release before taking its films to streaming. AMC and Regal have flat-out boycotted Netflix’s films.

Because Old Hollywood and New Hollywood need each other.

The Old Hollywood theaters are still reeling from the devastating effects of the Covid-19 pandemic. Even though box office sales are rebounding strongly from 2020 and 2021, when the pandemic virtually closed theater chains, moviegoing has tallied off sharply in the second half of 2022 because of a shortage of available films. (Too many films had their production delayed because of the pandemic, and studios sold a number of titles to streaming companies to recoup their cost during the shutdown.) 

Meanwhile, Netflix is suffering from declining subscriber totals. (The streaming giant lost 2 million subscribers in the first two quarters of 2022.) The company is adopting an advertising tier to bring in revenue. Exhibiting a major title in movie theaters could become a permanent strategy if the Glass Onion approach works.

Netflix acquired the rights to Glass Onion and Knives Out 3 for $450 million in 2021 before the company’s fortunes declined. It’s likely that Netflix is betting that a theatrical run of Glass Onion will:

1. Generate revenue from box office sales.

2. Create excitement for the movie’s streaming premiere, which could result in more subscribers and a spike in engagement levels. 

The success of the WarnerBros. title The Batman should be encouraging to Netflix. The Batman earned $750 million globally before WarnerBros. premiered the film the HBO Max streaming service. The Batman then enjoyed a first-week viewership of an estimated 4.1 million households (per Samba TV) – the second best first-week for a theatrical release on HBO Max.

The appeal of Glass Onion to movie chains is clear: even with a limited run, the movie is likely to generate foot traffic. Glass Onion received a rousing reception at the Toronto International Film Festival and is building strong buzz. The title is also benefitting from a halo effect created by the wildly successful Knives Out.