Netflix and Amazon’s Venture Into Motion Pictures


Amidst increasingly volatile stock indexes and an unprecedentedly long period of economic expansion, Netflix successfully turned to the $1.3tn high-yield bond market in October to secure just over $2bn that will finance its ongoing aggressive expansion into original programming. Combined, Netflix and Amazon Video have over 130 million subscribers, dwarfing Hulu’s market share, and are regarded by many to be at the forefront of the modern entertainment industry. While they can take credit for the demise of Blockbuster and Hollywood Video, what is interesting to consider is how they will impact the film industry both over the next few years and in the long run.


Since 2012, Netflix and Amazon Studios have made major inroads in upending the television industry as more and more households canceled their cable subscriptions in favor of streaming content digitally. In conjunction with the concurrent rise of Facebook and Twitter, media’s powers that be, ranging from NBC to the Wall Street Journal, have had to quickly adapt to new mediums of communication while competing for attention with amateur and unprofessional new media outlets including, but not limited to, Buzzfeed, The Young Turks and Gawker.


Yet rather than focusing on producing a few high-quality series at a time like HBO has done with Game of Thrones, True Detective and numerous other dramas of years past, they have spit out new content at a blistering pace, seemingly regardless of quality, with Netflix alone releasing exactly as many movies as the Big Six studios combined in the first four months of 2018. Looking at the year as a whole, Netflix will pour between $8bn and $13bn into original content and has little reason to stop after 72 wins out of 432 total award nominations since 2013. Ultimately, “beauty is in the eye of the beholder” and there is more than enough evidence to justify greenlighting anything from season three of Stranger Things to a new Adam Sandler franchise as subscribers have shown few signs of slowing their consumption of content, regardless of how lowbrow it may be.


However, despite all of their success in producing new shows, neither has made any sort of significant progress in true cinema. Although Amazon Studios claimed victory in securing distribution rights to Manchester By The Sea and The Big Sick and both firms were able to pick up iconic series like The Office and Twin Peaks, subscribers rarely ever see any recently produced award-winning films available on either platform as studios can command much more money by selling movies individually through iTunes, Amazon or even in DVD format. Thus, the two innovators began their foray into creating motion pictures of their own.


In attempting to compete with the major studios in producing quality films, though, both have fallen woefully short of their aspirations - but this may be a product of factors beyond just ability. Theaters offer a significantly more immersive experience than watching movies at home and with millennials’ tendency to seek experiences over ownership – a trend best demonstrated by the success of Instagram and Snapchat, it will be effectively impossible for digital streaming platforms to expect to compete with them anytime in the near future. This isn’t to say that watching iconic films like Casablanca and 2001: A Space Odyssey from the comfort of one’s living room is a poor experience, but there is certainly less enthrallment in watching Rick and Ilsa’s final embrace or David boarding Discovery One for the final time at home than there was in seeing it on the silver screen. There is also a certain stigma attached to films that went straight-to-video – a practice that lies at the core of Netflix and Amazon’s respective film businesses. For example, regardless of its captivating storyline and star-studded cast, The Departed would never have garnered nearly as much respect had it been immediately available at Best Buy after post-production wrapped up. Consequently, it is difficult to imagine any A-list actors being willing to put their names on products of such ill repute.


At the end of the day, film studios will more than likely be safe from major upheaval at the hands of digital streaming services for the foreseeable future, but they must be weary of the enormous amount of capital that Netflix and Amazon have at their disposal. Imagine the chaos that would ensue if, against all odds, one of them was to lure Leonardo DiCaprio and Martin Scorsese, or talent of similar stature, to a multi-movie deal with a record-shattering contract. Realize that every industry has a tipping point in which it can be upended by well-executed innovation, just as ecommerce has optimized retail and flight revolutionized travel, and that nobody is entirely safe from it. That said, the studios have weathered countless storms of decades past, from the reign of Lew Wasserman to the dominance of Michael Ovitz, and will likely handle this one as well, demonstrating again their seemingly iron-fisted grip over the world’s favorite medium of entertainment.