In search of money, studios are sending old shows back to Netflix

For years, entertainment company executives have happily licensed classic films and television shows to Netflix. Both sides enjoyed the spoils: Netflix received popular content like “Friends” and Disney’s “Moana,” satisfying its ever-growing subscriber base, and it sent bags of money back to the companies.

But about five years ago, executives realized they were “selling nuclear weapons technology” to a powerful rival, as Disney CEO Robert A. Iger put it. Studios needed the same beloved movies and shows for the streaming services they were building from the ground up, and fueling the rise of Netflix only hurt them. The content taps were largely turned off.

Then the harsh realities of streaming started to emerge.

Faced with significant debt burdens and the fact that most streaming services are still not making money, studios like Disney and Warner Bros. Discovery started to soften their ‘don’t sell to Netflix’ stance. The companies are still holding back their most popular content — films from Disney’s Star Wars and Marvel universes and blockbuster original series like HBO’s “Game of Thrones” aren’t going anywhere — but dozens of other films like “Dune” and “Prometheus ” and series like “Young Sheldon” are sent to the streaming giant in exchange for much-needed cash. And Netflix benefits again.

Ted Sarandos, one of Netflix’s co-chief executives, said at an investor conference last week that “availability for licensing has opened up much more than in the past,” arguing that the studios’ previous decision to withhold content “unnatural.”

“They’ve always built the studios on license,” he said.

As David Decker, the content sales president of Warner Bros. Discovery, said: “Licensing is coming back into fashion. It never went away, but there is more willingness to relicense things. It makes money and ensures that content is viewed and seen.”

In the coming months, Disney will send a number of shows from its catalog to Netflix, including “This Is Us,” “How I Met Your Mother,” “Prison Break” and several editions of ESPN’s sports documentary series “30 for 30.” .” “White Collar,” a Disney show that was part of the same lineup as “Suits” on the USA Network, will also be part of the service. (Old episodes of “Suits” were one of Netflix’s biggest hits this year.) The popular 2000s ABC hit “Lost,” which left Netflix in 2018, will also return next year.

Jeremy Zimmer, the CEO of United Talent Agency, said the face of the studios was a “financial necessity.”

“They said, ‘Wow, if we want to compete in streaming, it’s going to cost us billions to create new content to drive subscriptions,’” ​​Mr. Zimmer said. ‘Where are we going to find the money? Oh! We have this stuff that’s been sitting here. We can sell that.’ It is a very logical development.”

Dan Cohen, Paramount’s chief content licensing officer, acknowledged the motivation, saying one of the biggest benefits of licensing for traditional media companies was that “margins tend to be high.”

Films and series from other studios have long been an essential backbone for Netflix, allowing executives to fill the service with established favorites to complement original series like “The Crown,” “Wednesday” and “The Diplomat.” The company said Tuesday that from January to June, 45 percent of all viewership on the service came from licensed shows and movies.

While the amount of licensed content on the service is growing after a slowdown, content from other studios has never completely disappeared. According to Netflix, the top 10 most-watched films for the one-week period ending December 10 include four films from Universal Pictures alone. Those films come to Netflix from a handful of deals with Universal, one of which was reached in 2021, which includes new animated theatrical releases such as “The Super Mario Bros.” head to Netflix as part of a structure that switches titles between Netflix and Universal’s own streaming service, Peacock.

The streaming giant has a similar deal with Sony Pictures starting in 2021, with the studio sending films like “Spider-Man: Across the Spider-Verse” and the Jennifer Lawrence comedy “No Hard Feelings” to Netflix four to six months after their theatrical run. is complete.

Studios also license content to services like Amazon, Tubi and Hulu, of which Disney is the majority owner. And in most cases, Netflix doesn’t have exclusive access to the movies and series it gets; many titles will also be available on entertainment company services like Max and Hulu.

Still, the return to Netflix is ​​remarkable.

When Warner Bros. When it started to build out its streaming service – now known as Max – in 2020, it withheld content from Netflix, which was now a direct and formidable competitor. Netflix has 247 million subscribers worldwide, while Max has less than half.

David Zaslav threw that policy aside shortly after taking over as CEO of Warner Bros. in April 2022. Discovery took over. Last month, several seasons of “Young Sheldon,” a CBS show that Warner Bros. produces, available on Netflix. The series quickly found itself in the service’s top 10 most-watched list.

Many film titles from Warner Bros. have also recently arrived on Netflix, including the 2021 blockbuster ‘Dune’ and DC films such as ‘Man of Steel’, ‘Batman v Superman: Dawn of Justice’ and ‘Wonder Woman’.

Netflix had been trying to get its hands on HBO content for years. Although HBO had a history of licensing several of its shows — “Sex and the City” to the E! Network, for example, or “The Sopranos” for A&E – the company steadfastly refused to license it to Netflix.

That changed abruptly a few months ago when Netflix bought the rights to stream HBO series like “Insecure,” “Ballers,” “Six Feet Under,” “Band of Brothers” and “The Pacific.”

Almost all of the shows quickly became hits on the streaming service.

“I feel comfortable with it, and so far it seems to be working,” HBO chairman Casey Bloys said at a news media conference last month, adding that every show that has become available on Netflix has also seen a “resurgence” . when viewed on the Max streaming service.

Netflix credits its large subscriber base and recommendation algorithm as the reasons a 22-year-old series like “Six Feet Under” or a once-forgotten staple cable drama like “Suits” can become a hit on its service.

“That is a reflection of what we are good at,” Mr Sarandos said this week.

Still, Netflix doesn’t expect to give anything back.

Mr. Sarandos said the company does not have an original series licensing department, and he sees no reason to create one.

“I think we can add tremendous value when we license content,” he said. “I’m not sure it’s reciprocal.”