In the middle of last week’s new theatrical release trends analysis there was this look at Netflix and its handling of director Sam Hargrave’s Extraction 2.
Netflix dropped director Sam Hargrave’s $70 million production of Extraction 2, starring Chris Hemsworth, Golshifteh Farahani (reprising her role as Nik Kahn), and Adam Bessa (also back as Yaz Kahn) on June 16 and it was immediately released by at least two different “helper”/”void-filler” sites as Blu-ray editions on the same day.
A couple of observations, nothing more — Netflix has their way of doing things — and who are we to second-guess.
You bypass, in the prime summer theatrical season, a nationwide theatrical launch of a $70 million action flick, with a bankable box office star, and go directly to streaming … does that really maximize shareholder return on investment?
Does it help boost the fortunes of the theatrical marketplace, which is still in recovery mode after the ill-conceived Covid lockdowns?
You also skip another stop along the way, where — as a rights’ owner — you control the revenue stream. This would be the individual sales of DVD, Blu-ray and 4K Ultra HD copies. Does bypassing this sales source maximize shareholder return on investment?
Just doing dummy math — nothing official, just guessing — let’s say the film pulled in $100 million in domestic ticket sales during its summer run, that means Netflix burned roughly — give or take — $50 million in income.
Next, let’s net out 1.5 million units in home entertainment packaged media SKUs (across all three formats combined) and peg Netflix’s net for each unit sold at $15 (to take care of packaging, manufacturing, distribution and sales). That’s another $22.5 million tossed aside (is that too harsh? Perhaps “an unrealized revenue opportunity” would be more appropriate).
The exclusive Netflix streaming venue still remains for all those who didn’t go to the movies or buy a copy of the film, both of which are “windows” that Netflix controls. So, was it worth tossing a $70 million film into the streaming blender and kissing-off another $72.5 million in “opportunity revenue” just to generate Netflix views?
Did the arrival of Extraction 2 produce new subscribers? Were these new subs worth foregoing $72.5 million in net profits for Netflix?
Just an observation, nothing more.