Netflix Glass Onion: A Knives Out Mystery (2022) (1 Viewer)

[David Weicker]

"Worth" $450 million could mean a great many things. There could be built-in incentives based on views, and an option for a fourth film or TV series.

Still, Knives Out was a perfectly fine crowd-pleaser. I could stand a few more films like this each year. Netflix is now the destination for the smart, mid-budget, “adult popcorn” film, it seems. If Sleeping with the Enemy or The Fugitive were released today, they’d go straight to Netflix. I am shocked sometimes at how much those types of films grossed.

The Fugitive? Are you talking about the film with the Spectacular Train Wreck sequence that is just so-so on a TV screen?

 

[AndyMcKinney]

$400 million-plus deal

Hear that? It's the sound of your Netflix subscription going up another two to three bucks this year!

 

[Josh Steinberg]

I think they key point from the Hollywood Reporter article is that the contract gives Johnson total control over content, budget and casting, with the only stipulation being that Daniel Craig appear in each film. That’s huge. I know the first film wasn’t hugely budgeted and Johnson was coming off a billion dollar grossing film, but that doesn’t mean that MRC and Lionsgate didn’t have opinions and requirements for how the first film got made. Being free from studio notes means not having to audition actors that the studio is high on, not having to shoot in location vs another because of a tax incentive, or any number of other similar things.

I’ve long thought that art thrives on limitations, and I’m not convinced that the Netflix model of writing a blank check is a guarantee of a great film. I think Scorsese’s The Irishman was actually hindered by all of that freedom. If it had been made at a studio, I believe the reality of production and budget limitations would have forced him to make choices that would have yielded a better film. But at the same time, I understand why this would be an appealing deal for Johnson.

 

[Jake Lipson]

These movies are meant for an audience. What a travesty that they are going exclusively to Netflix.

I share your concern about being able to see them in a theater. However, to be totally fair, my closest open Cinemark is currently playing Mank and The Trial of the Chicago 7 last I looked. These never would have shown up there even a couple years ago. With the theatrical window very much in flux right now anyway, it is possible that theaters might be more willing to work with Netflix in the post-pandemic landscape than they were before. The theaters know that Knives Out was a big success for them with a very leggy box office run. Perhaps they will recognize the value of booking the sequels even if they do come from Netflix this time.

I’ve long thought that art thrives on limitations, and I’m not convinced that the Netflix model of writing a blank check is a guarantee of a great film. I think Scorsese’s The Irishman was actually hindered by all of that freedom. If it had been made at a studio, I believe the reality of production and budget limitations would have forced him to make choices that would have yielded a better film. But at the same time, I understand why this would be an appealing deal for Johnson.

I see your point and agree with it to an extent. But I'm willing to trust Johnson on this one. The only mega-budget movie he has ever made was The Last Jedi, and he even said that he was able to make the movie he wanted to make within Lucasfilm's system. Just because Netflix isn't giving him constraints doesn't necessarily mean that he will be overindulgent. That is absolutely a possibility in some cases, as it was with Irishman, and if that ends up being the case here I'll say so when the movie comes out. However, in this case, I think Johnson is more likely than not to deliver another great film, and it will just be for Netflix. He doesn't seem to me like somebody who would go big just for the sake of big. So I'm guessing this is going to work out fine.

 

[JoeStemme]

I want Craig to have a different terrible accent in each one. Maybe in these he could be Benoit von Weiss and Benito Blanco. Or "Crocodile" Blancmange.

I swear that I thought that at the end of KNIVES OUT Craig's character would be revealed to be using a phony Southern accent all along. It was that unconvincing.
As to the Netflix deal. It doesn't make economic sense. Are there really $400M in new subscribers out there just to see a straight to streaming sequel or two?
And, if you insist on the 'retention' theory, are there really $400M in existing subscribers who would cancel in a huff if they didn't get KNIVES OUT PART DEUX?

 

[Jake Lipson]

$450 million for Knives Out sequels which Netflix knows have an existing fan base makes at least as much sense as giving Martin Scorsese a blank check to make The Irishman did. Netflix bets big all the time. I don't see this deal as different or worse than their other ones.

 

[JoeStemme]

THE IRISHMAN wasn't smart, either. At least they allowed a Criterion release to recoup some money. Even Netflix doesn't have an endless well of cash

 

[Josh Steinberg]

It might help to think of Netflix more as a studio of old, before the days when each individual picture was treated as its own horse race.

In the case of Netflix, it’s not about a Knives Out sequel (or any other single property) bringing in X number of dollars or subscribers. It’s about how well the entire slate does in aggregate.

It’s also about making Netflix a desirable destination for top notch talent. It’s worth it to their business model to finance some projects that may never completely pay off on their own financially if it continues to lead to signing deals with more people that’ll continue to give them content which outshines the competition. I don’t know if The Irishman got $200 million worth of views on Netflix, but them being able to say that they bankrolled Scorsese’s impossible project is the kind of thing that can be priceless for attracting future talent.

 

[JoeStemme]

I understand that "model", but even in the days of yore, studios couldn't keep on losing money on big projects. Otherwise, Century City would still be a part of the Fox (now Disney) backlot

 

[Jake Lipson]

At least they allowed a Criterion release to recoup some money.

With the state of physical media these days, I seriously doubt that the Criterion disc of The Irishman returned a significant amount of money to Netflix in relation to its costs. I think they did that because Scorsese was big enough to request a physical media release and get it, not because it was expected to be a blockbuster seller. Obviously, it is impossible to know for sure because Netflix doesn't release numbers, but I think it is a fair guess that most people who watched The Irishman did it on Netflix, which is exactly what they wanted. The disc may have sold well by Criterion's expectations for it, but it seems like more a courtesy to Scorsese than anything else. If Netflix believed there was significant money to be made in physical media sales, they would put out all of their original movies that way. Instead, they keep the vast majority exclusive to the service even after moving on from promoting older ones.

 

[Josh Steinberg]

True, but Netflix isn’t necessarily operating on a year to year budget, and they also bankroll as well as license a lot of content which costs significantly less. Something like Tiger King was huge for them but also pretty inexpensive in the grand scheme of things.

Netflix has over 200 million subscribers worldwide, each paying about $10 a month, amounting to over $2 billion in revenue a month, coming in around $25 billion a year. That’s a lot of money to put towards projects of all sizes. And from what I’ve read about their deals, they tend to pay more upfront in exchange for not doing residuals and future royalty payments. So whereas a studio or TV network might pay their talent less, and the overall budgets might seem lower, those older entities are often on the hook for years or even in perpetuity every time a project brings in revenue.

So on paper, the first Knives Out was a $40 million production. But Lionsgate probably spent $50-100 million to promote it theatrically. Johnson probably gets 10% or more of every dollar it earns, whether that be from a ticket sale, a disc, an individual streaming purchase or a deal that Lionsgate makes to license it for cable/TV/subscription streaming. Craig probably gets something closer to 20% of that. Some of the other talent is going to be getting percentage deals too. All of that’s to say, what Netflix is paying out up front is probably closer to the true cost of the film, and when they own it, they own it free and clear.

 

[JoeStemme]

I didn't mean to imply that the Criterion release of THE IRISHMAN would pay for Netflix' investment - just that it made a little ancillary cash that may not happen with Knives Out II & III. And, it's not part of Netflix' model anyway. They want to force you to subscribe to have access their content. They don't want others to have access via physical media.
And, yeah, Netflix dropping $200M+ on THE IRISHMAN really "lead to signing deals with more people that’ll continue to give them content." Scorsese jumped ship for his new project to Apple

 

[Josh Steinberg]

Scorsese didn’t jump ship from Netflix to Apple. Scorsese signed with Paramount to direct The Irishman and Flowers of the Killer Moon. Paramount decided to sell The Irishman to Netflix. Scorsese started work on Flowers for Paramount. Paramount decided to sell Flowers to Apple. It’s Paramount in both cases that saw the budget escalating and decided to unload the projects.

 

[JoeStemme]

Regardless, it didn't wed Scorsese to Netflix.
And, my main point is that all the loss leaders in the world won't add up eventually. You can't keep spending the kind of money Netflix is on financially dubious big deals. That's the reason that most Wall Street analysts aren't gung ho on Netflix stock.
Eventually, the bills need to be paid and there are only so many new subscribers out there

 

[Josh Steinberg]

I think the thing is, the bills are getting paid. They take in about $25 billion a year. They don’t have to split revenue with theaters, and they don’t have to pay profit participation with talent. They can spend $20 billion on content a year and still have $5 billion leftover as profit. That’s possibly a better equation than Disney spending $300 million to make a Marvel movie, another $300 million to promote it, which then grosses $2 billion, of which a large percentage of that has to be shared with theaters and talent. At this point, I don’t think subscriber growth is the most important metric for them; subscriber retention is.

It’s an entirely different model, for sure. But I think the overall concept is sound, even if some of the individual payouts raise eyebrows.

 

[Josh Steinberg]

For what it’s worth, I’d argue that the theatrical model in the moment immediately before the pandemic was also broken. It’s not sustainable to have a system where a film must gross three times what it cost to make, and must do that within the first ten days of release, in order to stand a chance of breaking even.

 

[JimmyO]

I think the thing is, the bills are getting paid. They take in about $25 billion a year. They don’t have to split revenue with theaters, and they don’t have to pay profit participation with talent. They can spend $20 billion on content a year and still have $5 billion leftover as profit. That’s possibly a better equation than Disney spending $300 million to make a Marvel movie, another $300 million to promote it, which then grosses $2 billion, of which a large percentage of that has to be shared with theaters and talent. At this point, I don’t think subscriber growth is the most important metric for them; subscriber retention is.

It’s an entirely different model, for sure. But I think the overall concept is sound, even if some of the individual payouts raise eyebrows.

Must cost them something to run the company, no? I'm guessing about two billion at least in costs and salaries. If not more.

With over 12k employees and likely being one of the highest bandwidth consumers on the planet, I'm guessing it's not a cheap company to run. So that 5bn you speak of kinda gets cut in half if your annual content licensing and new project budget of 20bn is right.

 

[Josh Steinberg]

I’m pulling the budgets out of thin air, I have no idea what the real number is, that’s not my point. I’m just trying to make the point that they don’t see things by the same metrics as a theatrical company. They’re playing a different game and for them it’s not so much about individual budgets and titles so much as continued engagement. Their goal is to keep you watching their app, and therefore subscribed, and to that end, they have massive amounts of data about viewing habits and spend based on what that data is telling them. And it’s working for them.

 

[Malcolm R]

they don’t have to pay profit participation with talent.

Yet. Eventually the talent may look for something like that if Netflix wants to keep them happy.

I'm a little confused about the Knives Out deal. Is that $400 million just to buy the rights, or is that supposed to cover the production of the films, too. In the article, they say there are "no limits on budget," which would seem to imply Netflix will pay even more to actually make the films?

 

[Josh Steinberg]

I was wondering that too.