The 6 Billion Dollar Threat to Hollywood

Once heralded as the saviour to the industry, streaming-video service Netflix is now in direct competition with Hollywood for original content, viewing figures and high profile directors who are making the switch to the so-called “small screen”.

Netflix began in 1998 as a DVD by mail company similar to the Love Film model of days gone by, transitioning into the video streaming service in its second iteration. This development has meant that it is now even easier to enjoy the latest releases from the comfort of your own home than it has ever been before, leaving the question: with a revenue of $6.8 billion dollars and its foray into ‘Netflix Original’ content, should Hollywood be concerned with the Netflix model?

Holding a monopoly on the production, distribution and exhibition of popular movies and shows exclusive to Netflix, and promising to spend $6 billion on television and film content in 2017 alone, it is easy to see why so many high-ranking and/or influential industry professionals (from show-runners to directors) are being lured to the pot of gold at the end of the rainbow, and why Hollywood has begun to look over its shoulder.

With Hollywood seemingly fixated on the tried and tested Superhero franchise, massive CGI effects-driven pictures and their re-branding of generic scripts starring A-list celebrities playing the same role under a different guise (looking at you Mr Cruise), it’s become the norm to assume that if a film doesn’t feature something exploding into a huge ball of flames, it’s unlikely to make it onto our cinema screens. Thus, a niche in the market may have fallen into Netflix’s lap.

Hollywood has been long-considered to have taken independent cinema for granted; she’s grown disillusioned, packed her bags and decided the new younger, clean cut Silicon Valley upstart can provide the much needed attention she has been craving. Netflix, Amazon and Hulu are buying up scripts, developing more original, more innovative material, and taking risks on independently produced films, scouring the likes of Sundance, trawling through the likes of Toronto; a pastime that big wigs at Hollywood can no longer afford to gamble on.

While film production companies play it safe with remakes, sequels and their monthly output of superhero films, it has become increasingly easy to see the appeal of the Netflix model; one which is seemingly set up for filmmakers who still hold storytelling and cinematography close to their heart.

From left to right: Scorsese, De Niro, Pesci, Pacino. Image: mensxp.com

Martin Scorsese’s The Irishman starring Robert De Niro, Joe Pesci and Al Pacino, is one of the latest film rights to be purchased by Netflix, after previously being held by Paramount Pictures, a news story that illustrates the growing trend of filmmakers transitioning to the pay monthly service. Indie director David Michôd (Animal Kingdom) is another example of this, joining forces with Brad Pitt for feature film War Machine which was made for a whopping $60million, proving Netflix’s financial muscle.

David Fincher’s first foray into TV with the enigmatic Kevin Spacey in ‘House of Cards’ proves the success film directors are finding online, with over half of all Netflix subscribers having binge watched at least 3 episodes of the first 3 seasons in a single day within the first month of release. In 2017, Fincher’s latest series, FBI drama ‘Mindhunter’, is set for release within the Netflix Original format in October and features a strong list of respected names including fellow executive producer Charlize Theron.

The narrowing divide in production values between TV and film as overall entities offers many opportunities to the VOD services. In many respects TV can be considered crisper and glossier than it ever has been, thus inherently looking cinematic. A freeze frame from Game of Thrones would rival even the biggest budget Hollywood blockbuster, and the fluidity of transferring from TV producer to Film production provides untold benefits, the talent through which ideas are sparked/managed being only the tip of the iceberg.

The Netflix business model works on subscriptions sold, and moving away from the more rigid system of judging success by viewing figures allows auteurs and producers the artistic freedom to realise their visions without the same level of compromise they may experience elsewhere, particularly if they’re in the adolescence of their careers. Netflix content officer Ted Sarandos explains how “they are making movies for where the audience is”, and that seems to be the defining factor in the seismic shift taking place in Hollywood; Netflix do not need to bankroll an extensive marketing campaign to attract their film audience as their subscribers are almost always already there, binge viewing through countless hours of guilty pleasures, forgotten gems and now original content. Hollywood is at a defining cross roads. Could VOD kill the cinema star?

The transition from TV streaming service to film producers has not been plain sailing, and a brief exploration of Rotten Tomatoes will open eyes to the ratings of 0 (yes ZERO) for Netflix’s exclusive Adam Sandler film The Ridiculous 6 (2015). This highlights the difficulty faced, but in spite of critical damnation Netflix have announced that since December 2015 Netflix subscribers have consumed over 500 million hours of Adam Sandler movies, thus proving that the model clearly works. Fast forward to the 2017 Oscar ceremony… both Netflix and Amazon have arguably cemented their status as elite film producers, with Manchester by the Sea receiving Best Original Screenplay for Amazon, and Netflix’s eye opening documentary The White Helmets taking Best Documentary Short.

The size of the threat to Hollywood may be determined by the reception of these new ideas and inputs from audiences and subscribers alike. Can upcoming original films pull off the big screen spectacle and provide the cinematic experience of opening week viewings in the traditional sense of Hollywood films? Movies like War Machine may be viewed entirely on small screens, but advancements in technology – curved screens, 4K with sizes pushing the 75” mark – may well make home entertainment a viable alternative to the big screen.

Perhaps the Netflix transition to filmmakers can provide healthy competition to the big six? Perhaps it will give the wake-up call many think Hollywood needs? Perhaps not. When is the next Avengers film released anyway?

By Lee Royle


You can follow Lee on Twitter: @MrRoyle_Media


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  • Steven Garstone

    I don’t think Netflix is a threat to “Hollywood” as a whole but definitely providing competition that will damage the crapier of the studios financially (Anything Tom Rothman touches, for example).

    When a studio screws up constantly it will discourage people from going to see crappy reviewed movies in favor of binging at home for something they are already paying for. They will still sbow up in droves for great films and popular IPs.