Netflix and Sony Deal is Everything Both Parties Need Most
Thursday's deal between Netflix and Sony is a coup for the streaming service -- and no small feat for Sony, either.
For a reported (by Deadline) $1 billion over four years, Sony basically gets its own streaming service free-of-charge, AND in doing so gets a wider streaming distribution than any other movie studio. According to the deal, Netflix gets an exclusive 18-month window on theatrical releases starting in 2022, then subsequent windows afterward as films move to other streaming services as well.
Even as box office concerns continue to grow in the wake of the pandemic, this arrangement is a moneymaker for Sony that keeps it relevant for moviegoers no matter where they watch. And with select library rights also included, it allows the studio to keep fueling the popularity of Spider-Man -- Marvel's top character, but also one of the only Marvel properties whose film rights don't belong to Disney at this point.
The deal also allows for Netflix to get first dibs on direct-to streaming titles. Sony hasn't committed to just how many of these there would be, or the quality of said movies. However, the chance to get new movies in front of millions at no additional cost to them is an intriguing one, especially if the odds of big box office returns for those titles was low.
For Netflix, this is absolutely a steal, even with the billion-dollar pricetag.
Partnered with Sony, Netflix becomes a bigger premium video-on-demand (PVOD) player, but without the extra costs of newer rentals that Amazon and Disney+ (or others) have. Smaller theatrical windows and the continued popularity of Marvel properties make adding new and old Sony Spider-Man content a draw for Netflix that wasn't there before.
The timing for Netflix is also perfect, considering how much content from other studios the streaming service continues to lose to the streaming wars and resulting IP reclamation projects. As ViacomCBS, WarnerMedia and NBCUniversal take back content to fill out their own streaming offerings, you're left with a library of Netflix originals and licensed foreign projects.
That's not terrible, if Netflix has the right movies and shows, of course. But it helps explain part of why Netflix lost 31% of its streaming market share to competitors last year, and why it needed a unique boost to its content offering that wasn't entirely dependent on its originals.
Having access to recent box office releases now allows Netflix's constant emphasis on "new" to be less of a hinderance. It's difficult to tell shows and movies apart when the majority of what you're seeing on Netflix's home page is similar, direct-to-video fodder that lacks the franchise pull most studios are striving for today. When "new" means known IP and recent theater releases, Netflix's homepage regains status as a go-to for discovery-focused TV watchers.
In an ideal world for Netflix, perhaps they just buy Sony Pictures outright someday, and use the IP they've helped distribute from 2022-25 to continue to fuel its service's growth -- while also continuing to invest in original content.
You could argue that in this scenario, Netflix is just making said buy more expensive for itself, since the streaming deal inherently increases the value of Sony's content. But given the amount of money Netflix has shown itself willing to spend on content (estimated at $19 billion this year), what's more to buy Sony Pictures, increase its production and theatrical distribution chops, and fuel the franchise IP engine its thus far struggled to figure out despite its other numerous successes?
It won't happen just yet. Still, Netflix will utilize Sony as a core part of its value proposition going forward, even if those assets have permanent residence under a different roof.
