In Search of Cash, Studios Send Old Shows Back to Netflix
When building their own streaming companies, many entertainment studios ended lucrative licensing deals with Netflix. But they missed the money too much.
In Search of Cash, Studios Send Old Shows Back to Netflix
When building their own streaming companies, many entertainment studios ended lucrative licensing deals with Netflix. But they missed the money too much.- Share full article
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Old episodes of “Suits” have been one of Netflix’s biggest hits this year.Credit...Christos Kalohoridis/USA Network
By John Koblin and Nicole Sperling
Dec. 15, 2023
For years, entertainment company executives happily licensed classic movies and television shows to Netflix. Both sides enjoyed the spoils: Netflix received popular content like “Friends” and Disney’s “Moana,” which satisfied its ever-growing subscriber base, and it sent bags of cash back to the companies.
But around five years ago, executives realized they were “selling nuclear weapons technology” to a powerful rival, as Disney’s chief executive, 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 spigots were, in large part, turned off.
Then the harsh realities of streaming began to emerge.
Confronting sizable debt burdens and the fact that most streaming services still don’t make money, studios like Disney and Warner Bros. Discovery have begun to soften their do-not-sell-to-Netflix stances. The 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 films like “Dune” and “Prometheus” and series like “Young Sheldon” are being sent to the streaming behemoth in return for much-needed cash. And Netflix is once again benefiting.
Ted Sarandos, one of Netflix’s co-chief executives, said at an investor conference last week that the “availability to license has opened up a lot more than it was in the past,” arguing that the studios’ earlier decision to hold back content was “unnatural.”
“They’ve always built the studios to license,” he said.
As David Decker, the content sales president for Warner Bros. Discovery, said: “Licensing is becoming in vogue again. It never went away, but there’s more of a willingness to license things again. It generates money, and it gets content viewed and seen.”
In the coming months, Disney will start sending a number of shows from its catalog to Netflix, including “This Is Us,” “How I Met Your Mother,” “Prison Break” and several editions of ESPN’s sports documentary series “30 for 30.” “White Collar,” a Disney-owned show that used to be part of the same lineup as “Suits” on the USA Network, will also join the service. (Old episodes of “Suits” have been one of Netflix’s biggest hits this year.) The popular 2000s-era ABC hit “Lost,” which left Netflix in 2018, is also returning next year.
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Jeremy Zimmer, the chief executive of the United Talent Agency, said the studios’ about face was a “financial necessity.”
“They said, ‘Wow, in order for us to compete in streaming, it’s costing us billions to create new content to drive subscriptions,’” Mr. Zimmer said. “‘Where are we going to find the money? Oh! We have this stuff that’s been sitting here. We can sell that.’ It’s a very logical progression.”
Acknowledging the motivation, Dan Cohen, the chief content licensing officer for Paramount, said one of the biggest advantages to licensing for traditional media companies was that “the margins tend to be high.”
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Many Warner Bros. movie titles also began appearing on Netflix last month, including the 2021 blockbuster “Dune.”Credit...Chia Bella James/Warner Bros. Pictures
Movies and series from other studios have long provided a vital backbone to 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 on 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 went away. According to Netflix, the top 10 most-watched movie list for a one-week period ending Dec. 10 includes four films from Universal Pictures alone. Those movies come to Netflix from a handful of agreements with Universal, one of which was reached in 2021, in which new animated theatrical releases like “The Super Mario Bros.” go to Netflix as part of a structure that toggles titles between Netflix and Universal’s own streaming service, Peacock.
The streaming giant has a similar agreement from 2021 with Sony Pictures, whereby the studio sends movies like “Spider-Man: Across the Spider-Verse” and the Jennifer Lawrence comedy “No Hard Feelings” to Netflix four to six months after their theatrical run 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 does not have exclusive access to the movies and series it’s getting; many titles will also be available on entertainment company services like Max and Hulu.
Still, the return to Netflix is notable.
When Warner Bros. was beginning to build out its streaming service — now known as Max — in 2020, it held back 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 tossed that policy aside soon after he took over as chief executive of Warner Bros. Discovery in April 2022. Last month, several seasons of “Young Sheldon,” a CBS show that Warner Bros. produces, became available on Netflix. The series quickly found itself on the service’s top 10 most-watched list.
Many Warner Bros. movie titles also began appearing on Netflix recently, including the 2021 blockbuster “Dune,” and D.C. films 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. Though HBO had a history of licensing several of its shows — “Sex and the City” to the E! Network, for instance, or “The Sopranos” to A&E — the company steadfastly refused to license to Netflix.
That abruptly changed several months ago when Netflix bought the rights to stream HBO series like “Insecure,” “Ballers,” “Six Feet Under,” “Band of Brothers” and “The Pacific.”
Nearly all of the shows quickly became hits on the streaming service.
“I am comfortable with it, and so far, it seems to be working,” Casey Bloys, HBO’s chairman, said at a news media conference last month, adding that any show that has become available on Netflix has also seen an “uptick” in viewing on the Max streaming service.
Netflix credits its large subscriber base and its recommendation algorithm as the reasons that a 22-year-old show like “Six Feet Under” or a once forgotten basic cable legal drama like “Suits” can become a hit on its service.
“That is a reflection of what we do best,” Mr. Sarandos said this week.
Still, Netflix does not anticipate returning the favor.
Mr. Sarandos said that the company doesn’t have a division for licensing original series nor does he see any reason to set one up.
“I do think that we can add tremendous value when we license content,” he said. “I’m not positive that it’s reciprocal.”
John Koblin covers the television industry. He is the co-author of “It’s Not TV: The Spectacular Rise, Revolution, and Future of HBO.” More about John Koblin
Nicole Sperling covers Hollywood and the streaming industry. She has been a reporter for more than two decades. More about Nicole Sperling
A version of this article appears in print on Dec. 16, 2023, Section B, Page 1 of the New York edition with the headline: Studios Loosen Reluctance To Send Shows to Netflix. Order Reprints | Today’s Paper | Subscribe
Would have never came to that if they maintained symbiosis with Netflix. But nah they had to get greedy and try to violate Netflix when it was time to renew licensing deals.
