Maybe you’ve heard, but things haven’t exactly been going according to plan for Netflix lately. The streaming giant lost subscribers for the first time in a decade during the first quarter of the year and the company’s stock plummeted, erasing billions of dollars in value as a result.
This has led the streamer to make changes that it has long avoided, including advancing plans to add an advertising-supported tier and cracking down on subscribers sharing their passwords. However, in a panel discussion at SeriesFest 2022 in Denver last week, Lionsgate CEO Jon Feltheimer discussed a number of other changes that he believes Netflix will make moving forward.
While Feltheimer acknowledged that the world’s largest streaming service still has “a tremendous business,” he said that the company would need to adjust some of the practices that got them to the dominant place in the market that they enjoy today.
“They would just spend and spend, and if anyone else tried to spend as much, they would go out of business,” he said. “That was pretty much their strategy. But they got to a point where they started slowing down, and we had the pandemic. And I think that maybe they didn’t pivot quite quickly enough. But they’re going to pivot.”
One of the pivots that Feltheimer predicted from the service is that they would reevaluate how they managed their partnerships with outside studios.
“They’ll change how much original and library product they have too, and how much ownership they have,” he said. “And will they window their product — because they should.”
As an example, the CEO recounted the negotiations that his studio had with Netflix around the sequels for filmmaker Rian Johnson’s whodunit blockbuster “Knives Out.” Lionsgate distributed the original film in 2019 as it went on to gross $311.4 million at the box office. When it came time for Johnson to sell sequels to the film, Netflix won the rights, essentially paying double what Lionsgate was willing to offer. However, Feltheimer proposed a partnership with the service that he thought would be mutually beneficial.
Knives Out
When renowned crime novelist Harlan Thrombey is found dead at his estate just after his 85th birthday, the inquisitive and debonair Detective Benoit Blanc is mysteriously enlisted to investigate. From Harlan’s dysfunctional family to his devoted staff, Blanc sifts through a web of red herrings and self-serving lies to uncover the truth behind Harlan’s untimely death.
Lionsgate’s proposal was that they would allow Netflix to stream the original film in exchange for allowing the studio to distribute the second and third films into movie theaters. Netflix wasn’t interested.
“‘We’re going to make a lot of money; we’ll distribute it, we’ll take a distribution fee, send it back to you,’” Feltheimer told Netflix at the time. “It’s an interesting, organic idea for them. They thought about it and they said, ‘No.’”
However, Feltheimer noted that things have changed for Netflix and the entire industry since that conversation.
“That was then and this is now. So, I’m going to go back to them. Same idea, Ted,” he said referencing Netflix co-CEO Ted Sarandos.
As of now, without Lionsgate’s involvement, the upcoming “Knives Out” sequels are expected to only receive a limited number of weeks in movie theaters.
Another one of the areas in which Feltheimer believes that Netflix will have to pivot is in regards to how much the company pays executives.
“They have consistently gone after people — including some of ours,” he said, “and paid them twice or sometimes three times more than we might have paid them. Well, that’s not going to work forever, right?”
Netflix has already made a number of personnel moves, including firing dozens of staff members — many of them recently hired — from the company’s in-house fansite Tudum.
Despite a decade of moving forward essentially unchallenged, Netflix has now hit the biggest bumps in its road to total streaming domination. Whether by choice or necessity, the company has shown that it is willing to make changes in how it operates moving forward. Just how creative and/or austere those changes will be is still up in the air, but it is interesting that Feltheimer is proposing more collaboration between Netflix and outside studios as the streamer has seemed to be more invested in the opposite in recent years.
While Netflix built its empire on licensing content from external studios, as deals expire and new streamers bring their content home, Netflix has pivoted — there’s that word again — to pouring billions and billions of dollars into original series, films, documentaries, and more.
With the purse strings tightening, it is an interesting idea for Netflix to again become more collaborative with outside content makers; whether or not they take Feltheimer’s advice remains to be seen.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.