Netflix Chief Doubles Down on Streamer’s Dealmaking Terms and Limited Theatrical Release Strategy
variety.comCynthia Littleton Business Editor As Netflix leaders unveiled Q3 earnings that are the envy of the media industry, co-CEO Ted Sarandos doubled down on the streamer’s commitment to dealmaking terms that have been vital to Netflix’s business model, as well as its preference for select and short theatrical runs for its original movies.
During Netflix’s Q3 video conference call, Sarandos addresssed head-on the recent industry chatter about the streamer implementing a big change in the financial terms of its standard licensing deals for series and movies.
For nearly a decade, Netflix has done business with Hollywood creatives on the basis of cost-plus licensing deals — an arrangement whereby Netflix covers the entire budget for a production, plus it adds a 10% to 20% (or higher) bonus to provide some profit for producers.
That’s been a big shift from the deficit-financing model that was the norm for traditional TV networks and studios. That model was rooted in the concept of creative talent sharing in the backend profits of a series or movie if it became a big hit.
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