In search of cash, studios send old shows to Netflix

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For years, entertainment company executives happily licensed classic movies and TV shows to Netflix. Both sides enjoyed the spoils: Netflix received popular content like “Friends” and “Moana” from Disney, which satisfied its ever-growing subscriber base, and sent bags of cash to the companies.

But about five years ago, executives realized they were “selling nuclear weapons technology” to a powerful rival, as Disney CEO Robert A. Iger put it. Studios needed those same beloved movies and shows for the streaming services they were building from scratch, and fueling Netflix's rise was only hurting them. The content taps were, for the most part, closed.

Then the harsh realities of streaming began to emerge.

Facing significant debt loads and the fact that most streaming services still don't make money, studios like Disney and Warner Bros. Discovery have begun to soften their stances on not selling to Netflix. Companies are still holding back their most popular content (movies from the Disney-owned Star Wars and Marvel universes and blockbuster original series like HBO's “Game of Thrones” aren't going anywhere), but dozens of other movies like “Dune” and “Prometheus” and series like “Young Sheldon” are sent to the streaming giant in exchange for much-needed money. And Netflix benefits again.

Ted Sarandos, one of Netflix's co-CEOs, said at an investor conference last week that “licensing availability has opened up much more than it has in the past,” arguing that studios' previous decision to withhold content was ” unnatural.”

“They've always built the studios under license,” he said.

As David Decker, president of content sales at Warner Bros. Discovery, said: “Licensing is becoming fashionable again. It never went away, but there is more willingness to license again. It makes money and gets content seen and viewed.”

In the coming months, Disney will begin shipping a number of shows from its catalog to Netflix, including “This Is Us,” “How I Met Your Mother,” “Prison Break” and several editions of the ESPN sports docuseries “30 for 30”. .” “White Collar,” a Disney-owned show that used to be part of the same lineup as “Suits” on USA Network, will also join the service. (Older “Suits” episodes have been one of Netflix's biggest hits this year.) ABC's popular 2000s hit “Lost,” which left Netflix in 2018, will also return next year.

Jeremy Zimmer, CEO of United Talent Agency, said the studios' change of direction was a “financial necessity.”

“They said, 'Wow, for us to compete in streaming, it's costing us billions to create new content to drive subscriptions,'” Zimmer said. “'Where are we going to find the money? Oh! We have these things that have been here. We can sell that.' “It is a very logical progression.”

Dan Cohen, director of content licensing at Paramount, acknowledged the motivation, saying one of the biggest advantages of licensing for traditional media companies was that “margins tend to be high.”

Movies and series from other studios have long provided a vital backbone for Netflix, allowing executives to populate the service with established favorites to complement its original series like “The Crown,” “Wednesday” and “The Diplomat.” The company said Tuesday that from January to June, 45 percent of all viewing on the service came from licensed shows and movies.

While the amount of licensed content on the service is growing after a slowdown, content from other studios never completely disappeared. According to Netflix, the list of the top 10 most-watched movies for a one-week period ending December 10 includes four films from Universal Pictures alone. Those films come to Netflix from a handful of deals with Universal, one of which was struck in 2021, which saw new animated theatrical releases like “The Super Mario Bros.” go to Netflix as part of a structure that alternates titles between Netflix and Universal's own streaming service, Peacock.

The streaming giant has a similar agreement starting in 2021 with Sony Pictures, through which the studio sends films such as “Spider-Man: Across the Spider-Verse” and the Jennifer Lawrence comedy “No Hard Feelings” to Netflix between four and six months after its presentation in theaters. Is complete.

Studios are also licensing content to services like Amazon, Tubi and Hulu, of which Disney is the majority owner. And, in most cases, Netflix doesn't have exclusive access to the movies and series you're watching; Many titles will also be available on services from entertainment companies such as Max and Hulu.

Still, the return to Netflix is ​​notable.

When Warner Bros. was beginning to develop its streaming service, now known as Max, in 2020, it retained content from Netflix, which was now a direct and formidable competitor. Netflix has 247 million subscribers worldwide, while Max has less than half that.

David Zaslav dropped that policy shortly after taking over as CEO of Warner Bros. Discovery in April 2022. Last month, several seasons of “Young Sheldon,” a CBS show produced by Warner Bros., became available on Netflix. The series quickly found itself on the service's top 10 most-watched list.

Many Warner Bros. movie titles have also recently started appearing on Netflix, including the 2021 blockbuster “Dune” and DC movies like “Man of Steel,” “Batman v Superman: Dawn of Justice” and “Wonder Woman.” ”.

For years, Netflix had been trying to get its hands on HBO content. Although HBO had a history of licensing several of its shows — “Sex and the City” for E! Network, for example, or “The Sopranos” for A&E: the company flatly refused to grant the license to Netflix.

That changed abruptly several months ago when Netflix bought the rights to stream HBO series such as “Insecure,” “Ballers,” “Six Feet Under,” “Band of Brothers” and “The Pacific.”

Almost all of the shows quickly became hits on the streaming service.

“I'm comfortable with it, and so far it seems to be working,” Casey Bloys, president of HBO, said at a news conference last month, adding that any shows available on Netflix have also seen an “uptick.” on display on streaming service Max.

Netflix credits its large subscriber base and recommendation algorithm for the reasons why a 22-year-old show like “Six Feet Under” or a once-forgotten basic cable legal drama like “Suits” can become a hit in its service.

“That's a reflection of what we do best,” Sarandos said this week.

Even so, Netflix does not plan to return the favor.

Sarandos said the company does not have a division to license original series nor does it see any reason to create one.

“I think we can add tremendous value when we license content,” he said. “I'm not sure it's reciprocal.”



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