Thursday, August 20, 2020

Franchises for Netflix are like full self driving for Tesla. Big, companies-saving breakthroughs that are always around the corner. The key difference is, with Netflix when a car crashes and burst into flames, it’s all CGI.

We’ve already covered the discussion of reality television in Julia Alexander’s article for the Verge. Here’s another section that jumped out at me.
Netflix is also betting big on franchises, which may help its library compete with Disney, NBCUniversal, WarnerMedia, and ViacomCBS’s incredible well of IP. Four of Netflix’s most popular movies are either actively developing sequels or end with enough room for a sequel: Chris Hemsworth’s Extraction, Mark Wahlberg’s Spenser Confidential, Sandra Bullock’s Bird Box, and Ryan Reynolds’ 6 Underground. Today, Netflix announced a new $200 million spy movie from Avengers: Endgame directors Joe and Anthony Russo that is designed as a franchise builder.

Blockbuster movies and franchise plays, which also include shows like Stranger Things, Money Heist, and The Witcher, not only bring in subscribers, but they keep people engaged. Extraction and Spenser Confidential were watched by 99 million and 85 million accounts, respectively, within their first four weeks of release, according to Bloomberg. Having access to big IP and building franchises is key to Netflix’s future, and even though some may flop, Hastings said he’s “excited that we’re taking those risks.”

“Ted has big plans to spend future billions on movies and [TV] series and animation,” Hastings said. “We got lots of places to put the money. We’re definitely focused on creating franchises.”

Netflix has been producing big budget scripted original content for more than seven years now and for most of that time they’ve been promising that big movie franchises were just around the corner. They actually seemed to clear the hurdle in 2017 when they announced a sequel to the Will Smith vehicle Bright. It seemed perfect. Huge numbers. Big star. The kind of concept that could support endless sequels, prequels, and spinoffs. The announcement of the sequel came within days of the debut.

Then came the slow walk. Despite being exactly what the company desperately needed, no one seemed all that eager to actually make the next installment. Long development schedules were proposed then followed up by silence until the deadlines were missed. The process was repeated until the pandemic finally gave everyone an excuse to drop the pretense.

How about since then? Consider the three films that Alexander holds up as examples of potential franchises. Two of them already appear to be dead in the water. Only Hemsworth‘s Extraction is moving ahead, and even then in a slow and tentative way.

It’s worth stopping to note here that when a studio really has faith in a franchise, they will often greenlight more than one film at a time. The cost savings from combining production can be enormous and it is the safest way to lock in talent. The technique has been successfully applied to huge budgeted blockbusters and shoestring exploitation films. It is no coincidence that the cheapest man in Hollywood, Roger Corman, successfully used the approach for decades.

No one has ever accused the executives at Netflix of being stupid or of being timid when it came to committing to projects. All of this makes it very difficult to reconcile the claims the company has made about its focus on franchises and its excitement over current projects with its apparent reluctance to actually move ahead with any of them.

The stock price of Netflix depends on convincing investors that it's pursuing a long game.Somewhat perversely, creating that impression is often easier if you focus on the short term at the expense of the long, doing things like spending hundreds of millions producing and promoting shows when other companies hold the rights or setting aside large chunks of your resources for shows of little lasting IP value. If you're going to judge a company's management solely by the stock price, it's not even clear if this is wrong.

But if you're a reporter covering a story stock, you have an obligation to point out the plot holes.

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