Amazon (AMZN) is committed to the cinema experience.
According to a new report from Bloomberg, the tech giant plans to invest $1 billion to produce 12 to 15 movies a year exclusively for theaters. Those expenses would be roughly comparable to major movie studios like Paramount Pictures (PARA), Bloomberg noted.
The report sent shares of theatrical giants like AMC (AMC) and Cinemark (CNK) higher on Wednesday, up 4.4% and 12.5% respectively. Amazon did not immediately respond to Yahoo Finance’s request for comment.
Earlier this year, Amazon closed the $8.5 billion deal to acquire MGM.
“A lot will depend on what kind of content Amazon produces, how long their windows will be, and how heavily it can lean on IP versus original material, but this is still extremely good news for theater owners and Hollywood,” Shawn Robbins, chief analyst at Box Office Pro, told Yahoo Finance, explaining that more streamers committed to the theatrical window will help fill gaps in the agenda for theaters.
“As streaming begins to mature, the pendulum is definitely swinging back to an equilibrium as these distributors see the kind of success they’ve left on the table with an all-inclusive approach to streaming,” Robbins said. “Theatrical remains a very lucrative business model, and [Amazon’s] news underlines that once again.”
If confirmed, Amazon’s investment would represent the largest commitment by any internet company to movie theaters and “could easily boost movie theater revenue by 15% to 20% given that Universal and Warner have roughly comparable budgets,” Bloomberg Intelligence analyst Geetha Rangathan wrote in a statement. new note.
‘The debate is over’
Streaming companies are slowly beginning to embrace the theater window, with powerful Hollywood executives arguing that the box office has become an essential stopper for movies looking to turn a profit.
“The debate is over,” Richard Gelfond, CEO of IMAX (IMAX), previously told Yahoo Finance Live. “The argument that you can skip a theater window and make it up through streaming just isn’t true. The theater window is more important than ever to get the streaming revenue.”
Gelfond referenced large direct-to-consumer losses from the likes of Disney (DIS), which reported disappointing earnings earlier this month amid unfavorable macroeconomic conditions and high content costs.
Gelfond argued that the “facts are undisputed” when it comes to the benefits of releasing a movie in theaters first, citing “Top Gun: Maverick” as a prime example. The summer blockbuster had a record-breaking box office success after Paramount delayed its release five times due to the pandemic.
The Tom Cruise-led sequel grossed nearly $1.5 billion worldwide, eventually becoming the number one digital release of all time on OTT streaming platforms. On Tuesday, seven months after Paramount first hit theaters, Paramount announced that the sequel will officially launch on Paramount+ starting December 22.
But one streamer largely withstood the box office: Netflix (NFLX).
“We’re in the business of entertaining our members with Netflix movies on Netflix, so that’s where we’re focusing all of our energy and most of our spending,” Netflix co-CEO Ted Sarandos said after the company’s results. the third quarter.
But even Netflix will release its much-anticipated “Knives Out 2” sequel in select AMC, Regal, and Cinemark theaters for a week over Thanksgiving Weekend — despite the platform claiming it won’t report its box office earnings.
Robbins suspected there could be unofficial reports bubbling up after the debut, raising expectations that the film could gross between $6 million and $8 million in domestic ticket sales over the three-day weekend, with the potential to gross more than $ to reach 10 million.
“The level of success here could really make this a turning point for the relationship between Netflix and all streamers and exhibitors as this is arguably the most important ‘streaming title’ to open exclusively in theaters.”
“If anything sets the needle in motion, it starts right here with this movie,” Robbins said. “I expect this to do very, very well.”
The original “Knives Out” grossed $312.9 million in 2019. Netflix reportedly spent more than $450 million to secure the rights of the next two sequels, one of the biggest deals for movie streamers in history.
Still, Netflix co-CEO Ted Sarandos downplayed the decision to release the movie in theaters, telling investors during the earnings call: “There are all kinds of debates all the time, back and forth. But there’s no question that we internalize our movies for our members, and we really want them to watch them on Netflix.”
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