“A New Paradigm”: How Netflix and Apple Are Upending Hollywood Hierarchy With Studio Deals
Paramount and A24 agreeing to produce original films for the digital giants represents an about-face in the traditional pecking order and signals a major shift in the entertainment industry.
In the future, when we chart the year the movie business changed, we may thank — or blame —Noah Centineo. That’s because the square-jawed heartthrob’s teen romantic comedy for Netflix, To All the Boys I’ve Loved Before, is pointing the way toward a new hierarchy in Hollywood, one in which the 106-year-old studio behind movies like The Godfather and Transformers produces original films for a streaming service.
In a Viacom earnings call on Nov. 16, Paramount Pictures CEO Jim Gianopulos described a new, multipicture deal his studio had set — not with a producer or star, but with Netflix. At a time when competitors Disney and Warner Bros. are withholding their movies from Netflix to feed their own future streaming services, Paramount is trying another tactic: becoming a ready supplier in exchange for what Gianopulos called “an incremental revenue stream.”
A day earlier, A24, the 6-year-old independent-minded company behind such art-house hits asLady Bird, Hereditary, Moonlight and Eighth Grade, signed its own deal to produce a slate of films for Apple.
Taken together, the deals represent a major shift in the industry: Movie studios are no longer making films just for themselves, but for the deep-pocketed technology companies that have become Hollywood’s latest conquistadors. And it’s not hard to visualize a time soon when an iconic studio like Paramount becomes a mere supplier.
“This is the year where the movie business takes on a new paradigm,” says Tuna Amobi, senior analyst for investment firm CFRA Research. The deals are a reaction to 2018’s seismic changes — Disney’s acquisition of Fox assets, AT&T’s of Time Warner and the announcement of the streaming services both companies intend to launch. “Even Apple is taking note,” says Amobi. “Everyone is trying to withstand the onslaught. Everyone is playing offense and defense.”
One of the first movies being discussed for the Paramount-Netflix deal will be a sequel to To All the Boys I’ve Loved Before (the first film was made by Awesomeness, which Viacom acquired in August, and the new movie likely will retain the Awesomeness banner). Paramount has supplied its library titles to Netflix for years and has recently relied on the streaming company to bail the studio out of some expensive projects — as when Netflix bought Martin Scorsese’s 2019 crime film The Irishman for $105 million while it was still in development and its budget was ballooning, then committed another $20 million to the project.
In producing new films designed for Netflix from the greenlighting stage, Paramount will mine its IP and creative relationships to make movies that might not justify the expense of a theatrical release, most likely the decent dramas and mid-budget movies that have a hard time luring audiences in a marketplace driven by tentpoles.
Some potential sellers have mixed feelings about Paramount’s new arrangement, seeing it less as a savvy solution for a studio en route to profitability after years on its heels and more as a last gasp. “I don’t want Paramount to be in trouble,” says an agency source. “Losing another distributor would be a disaster. But this feels like a Band-Aid.”
Apple and A24, both notoriously tight-lipped, have shared virtually nothing about their deal, including where these movies will be seen — in theaters, on a streaming service or on some yet-to-be announced Apple product. For Apple, which has already committed to spend $1 billion this year on content, A24 represents an asset that, at least theoretically, you can’t buy in the movie business: taste.
“Apple is projecting an aesthetic by committing first to A24,” says Jason Squire, author of The Movie Business Book and professor at USC’s School of Cinematic Arts. “They’re making a statement that they are committed to these mid-range, independent movies.”
Though the A24 deal is a tiny transaction for Apple, the largest company in the world, it’s part of a pivotal retrenchment in the movie industry — how Apple and Netflix deploy their billions is already reshaping the next generation of film.