How Streaming is Dooming Hollywood (Especially Mid-Range Budget Sci-Fi)

Last weekend, I watched Duncan Jones’s new movie Mute from the comfort of my room with a cozy blanket covering me up amidst the chilly weather outside.  While I might have not seen the film had it released in theaters, I couldn’t help but feel like I was cheating Jones.  Netflix is inherently a non-theatrical experience, and forgive me if I sound like a stuck-up old soul, but I believe that there’s something magical about watching a film in the theaters.  Seeing this big and visually-impressive production on a small screen roughly a month after its release date was announced made me associate Mute with an immediately forgettable direct-to-DVD movie.  I’m not calling Mute precisely that as that’s a topic for another day, but I personally think this was wrong.  I think if you had asked Jones, who has had his fair share of big releases with Source Code and Warcraft, about whether he preferred a Netflix or theatrical release, I’m sure he would choose the theatrical option.  But therein lies the question: why didn’t it?  Mute had everything going for it – a notable director, great visuals, an amazing cast, and (most importantly) Paul Rudd’s incredible mustache.

This is what I think happened: Production company Liberty Films probably had a difficulty finding a distributor who would take the risk of Mute’s budget and attempt to create a profit.  I’d estimate the production to be around $40 million.  The visuals were the best part of Mute, but a lot of it was practical and utilized lighting techniques that probably allowed the company to reduce the amount of CGI, which would create an optimal mid-range budget.  $40 million allows for a good amount of room to be considered a success.  Typically, with added the added marketing costs from a distributor, a film needs to earn 2.5 times its original production budget to be considered financially successful, which means that Mute would have to make $100 million worldwide to turn a profit.  Historically, it’s been pretty difficult for small R-rated sci-fi productions to make that much.  For example, last year’s Life made barely over $100 million, but that had a $58 million budget so the film was not considered a success despite its all-star cast and that it was fairly well supported by critics and audiences alike.  Also, genre sci-fi films that go on to become successful tend to be franchise films, but even that’s not really a safe option especially if its an R-rated sci-fi film like Mute (Blade Runner 2049 made $259 million off of a $150 million production budget, and that’s definitely not a profit).  Even if the film is good, there’s no guarantee people will see it so it doesn’t help that the Mute feels confused in its narrative despite having a small, contained cast of characters.  So the point is it’s difficult to create a profit out of an R-rated sci-fi, but Liberty films needs to make a profit somehow.

Enter Netflix.  Recently, the company has become the knight in shining armor for production companies that couldn’t find a theatrical distribution (I’ll get to how they handled some other films like Mute later).  Netflix most likely offered Liberty Films exactly Mute’s budget, which would allow the producers to rest easy so they probably took the offer in a heartbeat.  It would also ensure Jones that his film would be watched by a lot more people than if the film was released theatrically.  The film was sold to Netflix and had a pretty vocal marketing campaign from Jones himself.  This probably means that marketing costs were next to minimal, and the film ultimately had a rather quiet release on Netflix outside of Jones’s fanbase.

Regardless of what I or anyone else thought of the final product, it’s hard not to see this production as a sad story.  A filmmaker often works on a single product for years, and Jones supposedly spent fifteen years on Mute.  Apparently this was the film he wanted to make all along and seemingly created Moon, Source Code, and Warcraft to build his way up to this.  So it’s really sad then to see something with this much evident passion put into it just fizzle.  I guess that’s the staple tragedy in Hollywood, but Netflix masks the reality of the situation by plastering its logo on the poster and featuring it on the front page for a few days.  Jones seems to be looking on the bright side that at least Netflix allows for full creative freedom, which means that Mute wasn’t cut to meet theatrical standards and maximize profits.  On the other hand, Mute was immediately crushed by critics and failed to find its ground with audiences.  A mid-range sci-fi movie was deemed unsuccessful from the moment it finished production, and this opens the door for the topic of this article

Now here’s the thing: is this just a one off situation?  Evidently, no.  Netflix is slowly becoming a place for medium budgeted films to live in order for studios to avoid risk.  Usually these movies aren’t great or studios feel that the final products won’t resonate with audiences so they cut their losses and settle with Netflix, which has more money laying around than they know what to do with.  The exact same thing happened to The Cloverfield Paradox, a $40 million production that had a surprise release on Netflix after Paramount believed the film would flop in a theatrical release.  Granted, The Cloverfield Paradox wasn’t well received upon it’s Netflix release, but we’re seeing a similar treatment with these movies that we see with direct-to-VOD films.  I’ve already talked about the mess behind that movie, but the point is that many are disregarding these Netflix movies as legitimate cinematic experiences.

This begs the question: Why would studios take the risk of a mid-range budget movie anyways?  It’s not like a studio was ever going to give Mute a budget of $100 million because there’s no way Mute would make $250 million, and Liberty Films couldn’t give Mute the $5 million budget that they gave Moon had because Jones wouldn’t be able to pull off that cast and more importantly, the futuristic Berlin setting that gave the film its flavor.  Given that R-rated sci-fi has been recently unsuccessful in a day of everything being made by Disney and cinematic universes that require hundreds of millions of dollars, why should studios even take the risk of producing a mid-range budget sci-fi film in the first place?

Here’s what I think is going to happen eventually: these mid-range budget R-rated films aren’t going to be released in theaters anymore and will ultimately either find their place in streaming or not get made at all.  If I’m right, it’s a little alarming knowing that a good portion of scripts will never see the light of day unless they’re somehow reworked into the franchise model.  Something tells me that creative freedom given by production companies is going to diminish for these films.  Selling to a streaming platform is a studio’s way of making a quick buck for their productions that have already been in years of development.  After the stack of films in production that fall under that category is done, you can bet that studio is going to stop producing these movies.

Another big example of Netflix changing release strategies is Alex Garland’s new movie Annihilation.  Garland, who helmed Ex Machina in 2015 and wrote the 2002 film 28 Days Later as well as its sequel 28 Weeks Later), was put in a similar situation as Jones and The Cloverfield Paradox’s director, Julius Onah.  Annihilation had a $40 million budget, a great cast starring Natalie Portman and Tessa Thompson, and featured an R rating with horror-esque themes.  Sound familiar?  Guess which company bought the international rights to the film?  Netflix.  Yes, while Garland, an Academy Award nominated screenwriter, has proven himself to be a competent filmmaker and Annihilation has received wonderful praise from both critics and audiences alike, the film is only received a stateside release.  Internationally, the film will premiere on Netflix on March 12.  Paramount supposedly sold the film to Netflix because the studio executives believed that audiences would not grasp the film and therefore fail to resonate with it.

This concept is just flawed because if they start believing that people won’t understand or appreciate philosophical movies like Annihilation, we’re not going to get those movies.  However, this is where I’m going to defend both sides.  I saw Annihilation last week (interestingly right after I saw Mute), and I loved it.  I think these are the types of films that really stand out in a sea of CGI-filled, giant-world-ending-beam-in-the-sky smorgasbords.  This is a film that deserves to be seen on the big screen – it’s intelligently crafted, visually impressive, and nerve-wracking to the point where I was on the edge of my seat throughout.  However, the number’s don’t lie and Annihilation was annihilated at the box office.  It had an $11 million opening weekend and most likely will end up with under $25 million domestically.  Unlike Mute and The Cloverfield Paradox, Annihilation actually had a big marketing campaign by Paramount before it was sold to Netflix, meaning $25 million might not allow the film to break even even when you add the untold money Paramount made for selling the international rights.  From a studio standpoint, Annihilation was a disaster, and it didn’t matter that the film was good.  If the film had a budget of $5 or $10 million, a domestic opening of $11 million would be a big deal, Annihilation would be profitable, and the studio would be happy.  This performance is exactly why Paramount, which has struggled to meet costs in 2017, would sell Annihilation to Netflix.

It’s easy to see why studios can pull away from this type of film because even the good ones don’t do well.  They’re risky and while greater risk yields greater reward, that’s becoming more of a myth in Hollywood and the risk can now be averted when you can just sell it to Netflix and break even.

What’s in it for Netflix?  Why would Netflix shell out hundreds of millions of dollars for all these movies to drive more subscribers?  Netflix is leading the game and crushing all competition right now so why frantically buy anything that comes your way?  Every other major streaming company is gearing up for all out war.  With the announcement that Disney and Apple are entering the game with their own streaming platforms, the impending streaming war has begun to loom over Hollywood.  Netflix is currently streaming plenty of Disney owned movies such as Captain America: Civil WarDoctor Strange, Beauty and the Beast, and Rogue One: A Star Wars Story, and now those movies are going to be taken away.  If the Disney-Fox merger goes through, all the Fox movies are probably going to move from Netflix to Disney’s streaming service.  Then there’s Apple, which is probably going to make exclusive partnerships with big studios soon because they’re Apple.  That evens the playing field a lot for everyone involved including Netflix’s current competition: Hulu and Amazon.  When there’s no clear winner, the war won’t end until there is.  Netflix is attempting to save itself from the inevitable future competition by acquiring high profile films with big names attached.  It doesn’t matter if the reveiws are bad because subscribers will probably still see the movies since they’re not paying on top of what they already pay Netflix.  To tie it back, Mute, The Cloverfield Paradox, and Annihilation were all caught in the crossfires of corporate struggles.  In the end, it’s unlikely that there’s a real winner.

An example of a studio that’s doing extremely well right now and is basically impervious to the Netflix model is Blumhouse Productions.  In 2017, they produced Get Out, Split, and Happy Death Day, all of which had budgets of under $10 million.  Get Out and Split were two of the most profitable films the year (Get Out made over 50 times its production budget).  The company is so successful because their minimal budget model makes for an automatic theatrical success.  Distributors want that more than anything at this point.  So we’ll keep getting the smaller films even though the mid-range productions are going to drastically drop.

Streaming platforms could doom Hollywood if it ceases possibilities for mid-range budget productions.  It’s not in the studio’s best interests to focus all their efforts on a risk just to break even.  They can either go all out with big budget productions or really small films with around $5 million to work with like the typical Blumhouse production.  I’m predicting that in the next few years, we’ll see a drop in the types of films we see getting a $40-$70 million price tag, and this ultimately reduces creative freedom.

So those are my thoughts on this subject!  What do you think about streaming?  Is Netflix going to ruin some aspects of Hollywood?  Feel free to let me know in the comments section!

Also, if you’d like to read more like this, be sure to check out my thoughts on the state of live-action original movies in Hollywood.  Thanks!

Twitter: @MohitPuvvala

Instagram: @MohitPuvvala

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