As of the 28th of April, the Academy Awards has temporarily removed the stipulation that a movie must be shown in a theater before it can become eligible for the coveted ‘Best Picture’ Oscar nomination. In the past there has been controversy surrounding these rules, suggesting that the Oscars are old-fashioned and out of touch. Indeed some general butting of heads has occurred between the streaming service and The Academy as they continue to overlook deserving Netflix (NASDAQ: NFLX) titles for award wins.
Netflix has been after the ‘Best Picture’ prize for several years now and it is becoming harder to ignore. Although February saw only 2 wins for Netflix, in total it had 24 nominations, more than any other studio. With this new (albeit temporary) rule it could be seen as an admission of the importance of streaming services such as Disney (NYSE: DIS), Apple TV+ (NASDAQ: AAPL), Amazon Prime (NASDAQ: AMZN) and Netflix for the maintenance of the film industry.
And all the while, Roku (NASDAQ: ROKU) will scuttle behind, riding their coattails.
Why is an Oscar so important to Netflix?
An Oscar win in the ‘Best Picture’ category would attract bigger names and other Oscar winners to collaborate with Netflix. This would encourage more people to sign up, or continue their ongoing subscription with the streaming service. With subscriptions smashing expectations and hitting 15.8 million in the first-quarter of 2020, Netflix’s shares have shot up 23% in the last month. This means that investors should take an interest in what winning big at the Oscars could mean for the company’s growth potential.
Big names such as Steven Spielberg have raised their own concerns in the past, denouncing streaming as a less valued way to watch cinema. Yet, this is the 2020’s and a trip to the cinema normally costs more than 1 month’s membership to Netflix. A subscription provides a cheaper, more sustainable alternative for us commoners, whilst its resources allow smaller budget studios to film and then show their movies to a wider audience — in direct competition with Hollywood’s mega-production titles.
And with big-name cinema stocks such as Imax (NYSE: IMAX) and AMC (NYSE: AMC) now forced to close their doors during a pandemic, streaming is the only viable option. This shift in power is firmly highlighted in the recent announcement that Universal Studios made $100 million in 3 weeks by simply renting out its newest title, ‘Trolls World Tour’. The sequel made more money for Universal in 3 weeks of streaming rentals than the first movie made in 5 months at the cinema.
How do the new rules change Netflix’s potential?
The new rules are an attempt to deal with the shifting landscape of the film industry that is struggling due to COVID-19 shutdowns. Now studios must have only planned to release their movies in theaters in order to be considered for Best Picture. This means that Netflix has a cheaper way to achieve the coveted award.
With this new stipulation in mind, it allows Netflix to buy the streaming rights to new films and thus have its name associated with many that were set to be released into theaters this year. Paramount’s ‘Lovebirds’ was released on Netflix along with an early transition to digital streaming from Warner Bros ‘Harley Quinn: Birds of Prey’. Big Blockbusters such as these, as well as the lockdown of most of Europe, the U.S., and Latin America will likely lead to even more subscribers, should the pandemic remain ongoing.
So what about next year?
Despite fears that the recession could lead people to cancel their subscription, Netflix is in a good position financially, generating a net income of $709 million in Q1 2020. Whilst Netflix has predicted that its membership growth will slow when lockdowns are removed across the world, it will be in a better position than most other studios.
With the extra revenue generated by the meteoric rise in subscribers, Netflix has been able to keep production going remotely, preparing and releasing new content to its 182 million users. It has also pledged $150 million to help keep Hollywood workers on their feet. Netflix will have more fuel in the tank, so to speak, when the Oscar nominations come around next January, as many films such as the much anticipated Sopranos prequel and the upcoming Will Smith biopic ‘King Richard’ are postponed until 2021.
Additionally, there is always the hope that the antiquated views at the Academy have perhaps seen the real relevance and opportunity that Netflix has to keep the film industry moving forward in new and innovative ways.
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Contributing Writer at MyWallSt
Poppy likes companies that go the extra mile. Her favorite stock is Amazon because she is fond of its innovation, variety, and creative solutions to sustainability.