Netflix’s Warner Bros. Acquisition: Exhibitors Worry About Theatrical Impact

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During today’s investor call about Netflix’s deal with Warner Bros. Discovery, Netflix leaders Greg Peters, Ted Sarandos, and Spence Neumann repeatedly emphasized expansion, using the words “grow,” “growth,” and “growing” a total of 35 times.

Netflix presented the acquisition of Warner Bros. as a way to position themselves for long-term success in creating stories, constantly highlighting “growth” during the announcement. Ted Sarandos called the merger beneficial for viewers, innovators, employees, and creators, as well as for overall growth. However, it’s clear this deal marks a move away from the previous restrictions on content distribution and viewing options.

Okay, so I was on the investor call, and here’s the gist of what Netflix’s Greg Peters and Ted Sarandos were saying. Peters seemed really pleased with how Netflix was growing before the deal with Disney, calling it a strong organic trajectory. Sarandos explained that once everything merges, we should really see it as increased investment in content overall. And Peters also emphasized that Netflix was already seeing impressive double-digit revenue growth heading into this, which is a good sign for the future.

Netflix Is Not Interested in Growing Theatrical Output

Netflix often discusses its overall growth, but rarely mentions growth in movie theaters. Cinema owners are concerned that a recent business move by Netflix could actually harm the moviegoing experience. Cinema United, a global trade group representing over 56,000 movie screens worldwide, has publicly opposed the deal.

Cinema United is concerned that if Netflix buys Warner Bros., it could significantly hurt movie theaters. They estimate up to 25% of annual domestic box office revenue could be lost if Warner Bros. films, which usually play in theaters, instead go straight to Netflix. According to Cinema United’s president, Michael O’Leary, Netflix’s business model doesn’t prioritize showing movies in theaters, and he’s asking regulators to investigate how this deal might harm both audiences and the film industry.

At April’s Time100 Summit in New York, Netflix’s Ted Sarandos told Time editor Sam Jacobs that he believes Netflix is helping to revitalize Hollywood, arguing that traditional movie theater releases are becoming obsolete. It’s easy to understand why movie theater owners are worried, considering Netflix’s approach and the fact that other studios are also shortening the time movies play exclusively in theaters after the pandemic.

Things have really changed when it comes to how long movies stay in theaters. It used to be a standard 90 days, but now most studios are down to 45. Some, like Universal, are even experimenting with just 17 days! I heard Adam Aron, the head of AMC, say at CinemaCon that out of the six big studios, only three think a 45-day window is still necessary. And just recently, Paramount was bought by Skydance, and now Warner Bros. Discovery is going to be part of Netflix. It’s amazing how fast things move in the movie business!

During the call, Netflix directly responded to worries about Warner Bros. They assured everyone that Warner Bros.’ movie theater business would remain unchanged, continuing with the 12-14 movie releases per year that CEO David Zaslav had already promised. As Ted Sarandos explained, their intention is to keep running the well-known Warner Bros. studios – including HBO – and continue releasing films in theaters.

Sarandos emphasized that all future Warner Brothers theatrical releases will continue as planned. He also pointed out that Netflix already releases around 30 films in cinemas each year, clarifying that they aren’t against releasing movies theatrically.

But looking back at similar releases, Netflix’s movie theater runs are usually short and limited. They don’t typically involve the large, widespread releases—across 2,000 or more screens—that are standard in the film industry. Director James Cameron has criticized Netflix for this approach, saying it prevents movies from earning as much money as they could in theaters.

Even Netflix’s biggest upcoming movies are taking a different approach to release. Greta Gerwig’s Chronicles of Narnia films will debut exclusively in IMAX for a limited time, instead of opening in most theaters at once. Similarly, Guillermo del Toro’s Frankenstein, one of his most expensive projects ever, also had a limited theatrical run.

These comments show that exhibitors worry Netflix’s approach – releasing films quickly and without traditional theatrical windows – isn’t helping to maintain the movie theater business. As O’Leary points out…

Netflix’s current business strategy isn’t designed to support movies being shown in theaters – quite the opposite, actually. Regulators need to carefully examine this deal to understand how it could harm viewers, movie theaters, and the entertainment industry as a whole.

During a meeting with investors today, Sarandos restated his long-held belief that movies shouldn’t have long periods of exclusivity in theaters. He explained that Netflix believes these extended theatrical windows aren’t ideal for viewers. However, he also acknowledged that Warner Bros. currently begins its film releases in cinemas, and Netflix respects that approach. But here’s the key point:

According to Ted, people who show movies are understandably concerned that keeping the current system running could mean fewer big-screen releases or shorter times that movies are shown in theaters after the companies merge.

To figure out if Netflix is legally required to maintain Warner Bros.’ movie theater presence after the merger, Ebaster consulted David King, a management professor at Florida State University. Here’s what Professor King had to say:

It’s difficult to hold companies accountable for statements about future acquisitions because they can always claim things changed. However, Netflix has started releasing some movies in theaters to qualify them for awards like the Oscars. In the near future, we can expect Netflix to release more content in theaters and then make it available for streaming soon after. But as movie theater attendance decreases, Netflix will probably concentrate on creating content exclusively for its streaming platform in the long run.

King’s assessment explains why movie theater owners don’t view Netflix’s statements as firm promises, but rather as short-term attempts to ease concerns. Cinema United further explained the wider financial consequences they anticipate if fewer films are released in theaters.

Movie theaters are vital parts of towns and cities, boosting both culture and the local economy. For every dollar spent at a movie theater, nearby businesses see an extra $1.50 in spending. Reducing the number of movies available puts all of that at risk – theaters could close, hurting communities and costing people their jobs.

Netflix responded by saying they plan to keep creating a lot of content. According to Ted Sarandos, viewers can expect continued investment in content not just for Netflix, but also for HBO and the studio. Greg Neumann added that, after the merger, the company will continue to increase how much money they spend on content.

We’re still hearing from exhibitors about the recent acquisition. Ebaster reached out to major chains like AMC Theatres, Regal Cinemas, and Cineplex to get their reactions, but we hadn’t received responses from any of them as of press time.

As a movie fan, I’m really hoping this merger works out for everyone. The future of going to the cinema depends on whether Netflix keeps its word and continues to release movies in theaters like Warner Bros. used to. It’s a big deal because Warner Bros. has always been a huge part of the moviegoing experience, and now they’re owned by a company that, let’s be honest, originally tried to bypass theaters altogether. I’m cautiously optimistic, but the pressure is on for Netflix to support the theatrical releases we all love.

A major question for Hollywood is whether Netflix’s plans for expansion are compatible with the continued success of movie theaters.

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2025-12-05 23:22