Over the years, Netflix has repeatedly reversed course on key strategies, from advertising to password-sharing to binge releases and live sports. Companies will always take hard stances until markets change and the reward of pivoting outweighs the risk. Why do I bring this up now? Last week, it was reported that Netflix is taking its biggest step yet into theatrical moviegoing after more than a decade of resistance. Greta Gerwig’s Chronicles of Narnia reboot will play exclusively on 1,000 IMAX screens (and potentially non-IMAX venues) across 90 countries for up to four weeks next year before debuting on Netflix, complete with a robust pre-release marketing campaign. This far exceeds Netflix’s last major theatrical pivot, Glass Onion: A Knives Out Story, which played in 700 U.S. theaters for just five days in 2022. While Netflix co-CEO Ted Sarandos is still a streaming-first purist, this move could signal a broader strategy shift with potential benefits and drawbacks.
Growth opportunities in the post-subscriber era
Netflix doesn’t need movie theaters. The company saw its share price soar 84 percent in 2024, its largest annual increase since 2015. But Netflix does need new growth narratives as its password sharing crackdown slows, its ad business won’t be a primary revenue driver in 2025, and its gaming ventures are still at a nascent stage. Netflix’s decision to stop reporting subscriber numbers in 2025 suggests its pivot to alternative success metrics during an expected period of subscriber deceleration. But the company still needs a strong public story to maintain investor confidence and Wall Street bullishness.
Carefully selected theatrical releases can help provide exactly that, as well as incremental revenue. Glass Onion sold a lot of tickets in a very limited domestic release. The Chronicles of Narnia—with the three original films still maintaining above-average audience demand worldwide in 2024, according to Parrot Analytics, where I work as Senior Entertainment Industry Strategist—is a strong launching pad for such an effort.
Netflix has struggled to create lasting cultural impact with its original films. The streaming giant ranks last among major studios in producing movies with sustained public interest beyond five months, according to The Wall Street Journal. This has hurt the streamer’s ability to develop reliable long-term movie franchises that consistently guarantee a high floor of returning audience.
In 2020, former CEO and co-founder Reed Hastings said, “We’re very fired up about catching [Disney] in family animation, maybe eventually passing them, we’ll see.”
This hasn’t remotely come to pass. In fact, The disappointing performance of November’s Spellbound—the first film in Netflix’s new partnership with Skydance Animation, led by ousted Pixar star John Lasseter—suggests a change is needed. Given the consistent performance of family-friendly animated films at the box office, a theatrical component can help Netflix evolve its kids entertainment, which is historically the strongest springboard for multimedia franchise value.
Between 2019 and 2023, Netflix released around 221 scripted original films per year, yet none ranked among the 80 most in-demand films worldwide in that span, per Parrot Analytics. At the same time, 65 percent of Netflix’s weekly top 10 English-language films were theatrical titles licensed from other studios.
Theatrical movies with strong marketing campaigns boast greater awareness in the right circumstances and are often among a user’s first selection once they arrive on streaming, as HBO/Max CEO Casey Bloys told me in 2023. Amazon’s Red One is a perfect example. The costly box office underperformer was the most watched movie on streaming platforms in the U.S. in the first four days of its release (2.1 billion minutes), according to Nielsen. Amazon said it garnered 50 million global viewers in its first weekend. Even modest theatrical runs can increase awareness and streaming performance following standard promotional campaigns.
Expensive and risky
Gerwig’s Narnia reboot will reportedly exceed $200 million in production costs. A true blockbuster campaign may add another $80 million to $100 million in expenses. That would mean the film needs approximately $450 million to $500 million at the box office to break even. Studios typically split ticket sales revenue 50/50 with domestic movie theaters and receive slightly less overseas.
It’s expensive to put films in theaters and prop them up with the necessary marketing required to create a hit. Margins in the movie business are perilously thin and a theatrical release puts pressure on budgets, elongating the path to profitability. On top of that, Netflix would either need to build a theatrical marketing division from scratch, which is time-consuming and expensive, or outsource the work to an established player, which is expensive. It’s a costly headache that Netflix has largely avoided thus far.
Stepping into the theatrical arena with more gusto also moves Netflix away from its subscriber-first ethos. At its core, Netflix is a direct-to-consumer company selling ease, convenience and affordability. Bypassing its 302 million worldwide subscribers in favor of a few million potential ticket buyers may create friction. It also opens the door for other filmmakers with leverage to demand the same treatment that Gerwig is getting, and Netflix doesn’t want to open that Pandora’s box.
On the bright side, moviegoing is a habit built on momentum, as Comscore’s senior media analyst Paul Dergarabedian has told me numerous times. Getting more people into theaters in general can help with sampling of Netflix’s entire film library—both originals and the mountain of licensed titles it hoards on its service every month.
The negative PR that surrounds a flop can smother the streaming potential of a title and make Big Tech gun shy about theaters, as we’ve seen with various Apple (Fly Me to the Moon) and Amazon (My Old Ass to a lesser extent) titles. However, Killers of the Flower Moon was Apple TV+’s top title overall in acquisition and retention contribution in 2024, per Parrot Analytics’ Streaming Economics. So it’s a hit or miss ballgame that depends on title-specific talent.
Netflix doesn’t need to transform its entire release strategy and pull a complete 180 on theatrical releases. But experimenting with three to five carefully selected theatrical releases annually could provide valuable growth opportunities. The Narnia reboot, helmed by Greta Gerwig fresh off Barbie’s success, offers a strong test case for this expanded theatrical strategy.
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