Netflix’s Warner Bros buyout sparks fresh fears for Theatres

In 2022, Ted Sarandos, a co-CEO of Netflix, said, “We make our movies for our members, and we really want them to watch them on Netflix.” In May of this year, he called theatrical distribution “an outmoded idea”. And in October, Sarandos said on an earnings call that the company’s goal was to “give our members exclusive first-run movies on Netflix”.

Oh, well — never mind. On Friday, Netflix announced that it was jumping headlong into the theatre world by buying the Warner Bros’ studio and streaming business in a deal worth $82.7 billion. Netflix said it planned to “maintain Warner Bros’ current operations and build on its strengths, including theatrical releases for films”.

The deal is a startling about-face in strategy for the streaming giant, which has never wanted to fully commit to the business of putting movies in theatres.

The company has also not wanted to do other things — until it did them. Its former CEO, Reed Hastings, used to call password sharing “harmless” and resisted advertising for years. But in 2022, facing a slumping stock price because of a loss of subscribers, the company established an advertising tier and cracked down on password sharing. It wasn’t interested in sports and other live programming until it was. It didn’t do large-scale media mergers until now.

But perhaps no shift is as startling as what appears to be its decision to maintain Warner Bros’ theatrical distribution, which shows some 15 movies a year in theatres — movies like Superman, Dune,

Barbie – just to name a few. “Despite all of Netflix’s success, they have never cracked the movie business,” said Richard Greenfield, an industry analyst at LightShed Partners. “This feels like a sign of ‘We’re in a really good position, but we really haven’t cracked the movie business, and we can use this to crack it and accelerate what we already do’.”

Industry-wide panic

Sarandos, in a call with investors Friday, tried to downplay the change. He said Netflix had released 30 movies in theatres this year.

What he did not say was that none of those films stayed in theatres very long — having what insiders call a short theatrical window. In addition, the company did not report box-office results and rarely ran a robust marketing campaign pushing audiences to those theatres. It’s a strategy that filmmaker James Cameron called “sucker bait” in an interview.

“I wouldn’t look at this as a change in approach for Netflix movies or Warner’s movies for that matter,” Sarandos said. “I think over time, the windows will evolve to be much more consumer-friendly, to be able to meet the audience where they are quicker — all those things we like to do.”

And that is why the industry has already begun to panic. Shortened theatrical windows have been proved to be a cause of box-office declines. According to an analysis of 30 theatrical releases in 2025, releases of 25 days or fewer “produced neither theatrical benefits nor streaming gains, contradicting the idea that audiences are simply ‘waiting for home release’,” according to the Cinelytic Group, an analyst firm.

“The sweet spot is a 26- to 45-day window, which drives both better box office outcomes and higher early streaming market share.”

In the past 24 hours, many groups concerned that Netflix will eventually abandon the traditional theatrical release protested against even the possibility of a deal.

A group of anonymous producers sent a letter to Congress over their “grave concerns.” It read, in part: “Netflix views any time spent watching a movie in a theatre as time not spent on their platform. They have no incentive to support theatrical exhibition, and they have every incentive to kill it.” The producers said they didn’t sign their names to the letter out of “fear of retaliation”.

End of theatres?

Cinema United, a group that lobbies on behalf of theatres around the country, also issued a statement, calling the acquisition “an unprecedented threat to the global exhibition business”.

Should the movies that Warner Bros traditionally sends to theatres go away, the statement said, it will amount to “removing 25% of the annual domestic box office”. That big of a drop-off could serve as a death knell not only to Warner Bros films but to the entire theatrical ecosystem, which relies on a steady drumbeat of movies to keep consumers in the habit of going to theatres to watch a movie.

“Netflix’s stated business model does not support theatrical exhibition. In fact, it is the opposite,” Michael O’Leary, president of Cinema United, said in a statement. “Regulators must look at the specifics of this proposed transaction and understand the negative impact it will have on consumers, exhibition and the entertainment industry.” The theatrical movie business has been on a downward spiral since the pandemic. This year has been particularly worrisome, with a couple of long stretches of fallow times at the theatres. The box office will continue to end the year with higher sales than 2024 but down nearly a quarter from pre-pandemic numbers.

Some people in the industry are ready to declare the theatrical movie business over. Others say there need to be more movies and better movies to draw consumers out of their homes.

Movies as marketing

Over the years, Netflix has dabbled with the idea of setting up a theatrical distribution operation like Warner Bros, but it didn’t have the appetite or the right volume of films to make the case. Other priorities won out.

Instead, Netflix often puts its prestige pictures in theatres for a short window to qualify them for Oscar consideration and to appease filmmakers who want their movies on the big screen.

Netflix announced in 2022 that it would put the sequel to Knives Out in 600 movie theatres for a week, and theatre owners called it a ‘breakthrough’. But it did not become a habit for the company, and the theatrical windows for its movies remained limited.

On November 26, Netflix released Wake Up Dead Man: A Knives Out Mystery on 500 screens for 5 days, two weeks before it opened on Netflix. David A Gross, who writes a weekly box-office newsletter, said that had the latest Knives film received a proper marketing campaign and a traditional theatrical release, it could have earned $275 million worldwide.

That was based on comparisons to the first movie, which was released in theatres and grossed $313 million in 2019.

The company’s KPop Demon Hunters Singalong entered theatres this year months after it debuted on the service and was a huge hit. On New Year’s Eve and New Year’s Day, the finale of the TV series Stranger Things will screen in over 500 theatres at the same time it’s available on the service. Many theatre showings are already sold out.

“I don’t think Netflix is anti-theatre,” Greenfield said. “I think they will use the movie business as marketing for Netflix rather than as a core part of the business. Look what they did with KPop. That’s a really interesting idea. How do you eventise moments?”

I don’t think Netflix is anti-theatre. I think they will use the movie business as marketing for Netflix rather than as a core part of the business

– Richard Greenfield, industry analyst, Light-Shed Partners

What's in it for Netflix?

Warner Bros’ library has 6,650 feature films, 50,000 TV titles, 14,000 animated titles (Source: California Museum)

Film franchises: The Matrix, Harry Potter, Lord of the Rings, The Hobbit, Mad Max, Blade Runner, The Shining, The Conjuring, Mission: Impossible, Top Gun, Star Trek, Godzilla

DC Universe: Superman (1978), Batman (1989), The Dark Knight (2012), Man of Steel (2013), Wonder Woman, Justice League (2017), Aquaman (2018), Superman (2025)

Classics: Casablanca, The Wizard of Oz, Gone With the Wind, Citizen Kane, The Maltese Falcon, Bonnie and Clyde, Dirty Harry, The Shining, Chariots of Fire, A Streetcar Named Desire, Bonnie and Clyde, Ben-Hur, A Clockwork Orange, All The Presidents’ Men, Goodfellas, Heat, LA Confidential

Modern cinema: Eyes Wide Shut, Mystic River, Inception, Interstellar, Gravity, Million Dollar Baby, The Departed, The Curious Case of Benjamin Button, The Blind Side, Inception, Argo Cult TV hits: Friends, The Sopranos, ER, The West Wing, The Wire, Sex And The City

New-age favourites: Game of Thrones (including the prequels like House of the Dragon and A Knight of the Seven Kingdoms), Rome, Succession, Euphoria, The Gilded Age, The White Lotus, The Big Bang Theory, Supernatural, Two-and-a-Half Men, Dune (Part Three is slated to release December 2026), Gossip Girl, The Pitt, Ted Lasso, True Detective, Curb Your Enthusiasm, Gilmore Girls, The Vampire Diaries, Veep

Intellectual property rights of Looney Tunes – including Bugs Bunny, Daffy Duck and Porky Pig, and Scooby-Doo, Yogi Bear, Tom & Jerry and The Flintstones, The Jetsons, and other many spin-offs