Guest column: TheIrishman and why Netflix shouldn't give in to theaters' demands
" Fithian is an effective advocate for his constituents, but as a Netflix shareholder, I disagree with his position. It would be a major strategic and financial mistake for the streamer to spend large sums to giveAs film insiders know, the "P&A" cost to market and distribute a wide-release studio movie can equal or exceed the budget of the film itself.
Still, entertainment companies that need to monetize movies via theaters have little choice but to spend big on marketing and distribution. The talent involved often demands a large marketing push, and if the studio doesn't invest big, the film has little chance of a large opening weekend at the box office. Because a low opening weekend impairs the downstream value of the movie, P&A spend can have a material impact on the long-term economic viability of a film.
Netflix's business model is not held hostage by any of these constraints. It does not need to drive opening-weekend box office, nor does it sell DVDs or license its owned content. The $100 million in P&A costs that Netflix probably would need to spend to openMore new film content leads to more customer engagement and retention, key drivers of a healthy subscription business model. This strategy is creating real value: From Sept.
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