Netflix’s New International Release Strategy Might Mean Great Things for Hollywood Films

As Netflix snaps up distribution rights abroad, studios have an opportunity to make movies that don’t chase global box office success.
Annihilation Poster
By  · Published on February 1st, 2018

As Netflix snaps up distribution rights abroad, studios have an opportunity to make movies that don’t chase global box office success.

Do you a remember a time when film criticism involved more than just arguing about Netflix? For years now, critics have engaged in debates about the value of Netflix to global film distribution. Maybe Netflix is a streaming oligarch who has done more to crumble distribution than any other movie business. Or maybe it’s given much-needed access to moviegoers around the world and defended the creative freedom of some of our most important filmmakers. However you may feel about Netflix, it does come with two constants: it will always be at the forefront of the distribution game and, as a direct result, it will always be a source of uneasiness for many cinephiles.

Yesterday, The Atlantic‘s David Sims published a piece on Paramount’s decision to forego international theatrical distribution for Alex Garland’s Annihilation. Building on a December 2017 Hollywood Reporter story that claimed infighting and personality clashes had caused the studio to sour on director Alex Garland’s film, Sims pointed to this new blended release format – a domestic theatrical release paired with a streaming international release – as a possible new trend for the industry. “(T)his could be the sign of a more worrying Hollywood trend,” Sims wrote in his article, “in which the very idea of a bigger-budgeted film that isn’t a guaranteed financial success is simply anathema to a big studio, with Netflix used as a last-resort, cost-saving measure.”

As Sims notes, this isn’t the first time we’ve seen Hollywood dabble with the idea of international Netflix distribution. Deadline announced in October that New Line would be partnering with the streaming giant for the release of Shaft; it also broke a similar story last week regarding God Particle, Bad Robot’s Cloverfield sequel. If two is a coincidence and three is a trend, then it certainly seems that Hollywood is prepared to use streaming services like Netflix as an alternative to traditional distribution models. And in a world where international distribution has backed many studio releases into a creative and financial corner, this new approach may represent new possibilities for filmmakers and audiences alike.

Now that websites like Box Office Mojo meticulously tally every dollar spent at the global box office, we’ve gotten much better about discussing international grosses. We’re considerably less skilled at talking about international expenses. Back in 2014, for example, The Hollywood Reporter estimated that even modestly budgeted theatrical releases like The Fault in Our Stars ($12m), and Tammy ($20m) would still cost about $40 million for a studio to market, with bigger films costing upwards of $100 million in international marketing alone. This means a film like Annihilation could cost Paramount tens of millions of dollars just in the hope that it connects with an audience abroad. This might be a winning proposition for a tentpole action film, but for a high-concept movie like Annihilation, that money is probably best spent somewhere else.

Given that the best-case scenario for Annihilation is that it follows in the footsteps of Denis Villeneuve’s Arrival and pulls in around $100 million overseas, executives had to make a choice. Would you rather front $40+ million in marketing in the hope that you’ll clear $60 million abroad? Or, as the aforementioned Hollywood Reporter article suggests, would you take the sure $50(ish) million from Netflix and put the remainder of your energy into domestic marketing? Critics often complain that tentpole releases seem reverse-engineered for international success; taking away the need for universal appeal in Hollywood releases would allow writers and directors to pursue stories that speak uniquely to them. Suddenly, there might be a demand for movies that could do strong business domestically and lackluster numbers elsewhere.

But that’s not the only reason why Netflix’s Annihilation deal might be good news for moviegoers: it provides much-needed incentive for studios to consider making mid-budget movies. Critics have long lamented the disappearance of films costing north of $10 million but less than $100 million to make; this was a subject Sims even wrote about in a 2017 Atlantic article focused on the unconventional financing of Steven Soderbergh’s Logan Lucky. In that article, Sims points to the scope of studio distribution as a sticking point between filmmakers and producers. “(P)roducing a film for $29 million is a lot easier than distributing it wide,” Sims argued, noting that the “the latter usually requires the participation of a major studio, to the chagrin of many artists like Soderbergh.” In other words, while any movie can theoretically get made, not every movie can theoretically get distributed, and that has held movies like Logan Lucky back over the years.

If Netflix is willing to offset production costs for a slice of the pie, that could also unfreeze some of the mid-budget movies that have been kicking around Hollywood. Whereas before a 50 million dollar movie might cost a studio an additional $50 million in global marketing, now studios can break even internationally before the film has even finished production. Netflix will effectively subsidize domestic releases, making successes like Girls Trip – which grossed $115 million domestically against only $24 million abroad – something to consciously strategize around. It’s probably a bit too dramatic to say that this approach could usher in a new era in American cinema, but the higher the floor, the more likely some studios are to take a gamble on high-concepts films like Annihilation. It may not be the theater-focused future that many filmgoers were hoping for, but if we have to choose between the quality of the film and the quality of the venue, I’ll choose the former every day of the week.

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Matthew Monagle is an Austin-based film and culture critic. His work has appeared in a true hodgepodge of regional and national film publications. He is also the editor and co-founder of Certified Forgotten, an independent horror publication. Follow him on Twitter at @labsplice. (He/Him)