It’s been more than a decade since Netflix began its assault on the theatrical window with the very limited theatrical release of its first original film, Beasts of No Nation. That set off a prolonged battle with major theater chains. AMC and Regal, which together control nearly 40 percent of screens in the U.S. and Canada, refused to play Netflix movies unless the streamer adhered to a traditional theatrical window. Eventually, Netflix—thirsty for Oscars—grudgingly began to offer very limited releases in the theaters that would play its movies.

To many filmmakers, Netflix’s willingness to leave millions in potential box office on the table has always seemed like irrational stubbornness. “They’ve changed their minds multiple times on multiple things,” said a producer who, having worked on big projects with the streamer, still dreams of a Netflix that embraces theaters. So why hasn’t it? When asked about theatrical, Ted has always said simply, ‘It’s not our model.’”

The question I posed to various producers is… why? What has previously made Netflix so hostile to yielding on this now-existential issue, despite the pleas of the auteurs it has ardently pursued, from Martin Scorsese to Rian Johnson to Guillermo del Toro to Greta Gerwig? “Part of it is the ethos of tech,” said the source who has a history with Netflix. “The tech community is built on Break it, and worry about it later. They’re brilliant and they’ve made a ton of money, but they’re not thinking of ramifications in any shape or form.”

I started to wonder whether Sarandos’s indifference to theaters had something to do with his getting his start as a clerk in a video store, where he watched many movies on a small screen and clearly found the experience to be more than satisfactory. When he ultimately took over the Arizona Video Cassettes West chain, he told Forbes, “It was an MBA course and film school all wrapped up into one.” Going a bit further down that rabbit hole turned up this quote, from a 2024 interview in The New York Times, about his childhood: “Our house was always chaos. And my only escape from that chaos was that little box.” Is it possible that Ted’s Rosebud is his parents’ old RCA?

In the same interview, Sarandos contended that both Barbie and Oppenheimer would have worked just fine on Netflix. “There’s no reason to believe that the movie itself is better in any size of screen for all people,” he said. “My son’s an editor. He is 28 years old, and he watched Lawrence of Arabia on his phone.” Surely this would be sacrilege to many of the top-tier directors whom Sarandos has courted, as well as non-industry people who believe in the sometimes culture-shaping impact of the big-screen experience. And let’s not forget those box-office millions.

Whatever the reason, Sarandos’s opening comments regarding Warners movies gave Paramount Skydance a strong talking point: David Ellison will protect the theatrical model, while Netflix will destroy it. (There’s a reason that exhibitors’ stocks slid when the Netflix–WBD deal was announced.) Before that impolitic statement, it was Netflix’s game to lose for many in Hollywood. “Everyone hates the Ellisons so much because of Trump that people are trying to justify rooting for Netflix,” said a producer with no particular ties to Paramount or Netflix. “Like, maybe it won’t be so bad. It’ll be better than Larry Ellison.”

But this producer nonetheless came down in favor of the Ellisons. “I think Ted does love movies, but I think he loves money more than movies,” he said. “If there are no movie theaters in the world, Netflix makes so much money.” Maybe true, but as my colleague Julia Alexander has recently pointed out, Netflix is looking over its shoulder at competitors that aren’t in the movie business at all.

Indeed, Sarandos has already begun his charm offensive to convince the industry, and antitrust warriors in Washington, that Netflix’s true competitors are TikTok and YouTube, not Paramount or Peacock. And for all the talk of the Ellisons’ bonds with Trump, Ted met with the president in mid-November ahead of the deal’s announcement, which elicited some praise from the White House. Not that Hollywood’s potential support for Netflix would necessarily influence Washington, but Trump does have a few Hollywood friends. (Jon Voight’s “Make Hollywood Great Again” proposal—remember that?—included subsidies for theaters.)

The Ellison-favoring producer brought up one thing about the tech-bro “consumers first” mantra that has always bothered me: “No one’s saying, ‘What about people who want to go to the movies?’” In his mind, you have to at least credit Netflix for its possibly inadvertent honesty in the opening salvo: “They are telling the truth. We just don’t want to hear it. It’s all right there. The quickest way for Netflix to get bigger is for theaters to shut down.”

On the other hand, Ted’s claim that Netflix now sees the world differently as the presumptive owner of a legacy studio, despite his stumble out of the gate, may be sincere. Certainly, the filmmaking community has long hoped that he would, at last, have an epiphany about the value of movie theaters. Even if that hasn’t happened, maybe the exercise of sending the existing Warners movies into the world—hopefully, with success—may effect a change.

What if Netflix concludes that it might be better off changing its model? Or maybe federal or state regulators will demand that Netflix commit to releasing movies with a decent marketing spend and a real window. Or, it might find that dealing with marketing and releasing films merely distracts from its core business. Many known and unknown unknowns here. Hollywood will be watching.

Thanks, Kim. I’ll be back tomorrow.
Matt