Netflix is making its stance unmistakably clear: it remains, at its core, a streaming-first business.
During the company’s third-quarter earnings call, co-CEO Ted Sarandos reiterated the streaming giant’s long-held philosophy that its content, anchored by a staggering $20 billion content spend last year, is fundamentally meant for its subscribers. Consequently, leadership believes that original productions should be delivered directly to customers on its digital platform as quickly as possible.
Yet, even as executives double down on this digital-first ideology, the streaming pioneer is preparing to roll out approximately 30 theatrical releases in 2027, matching its 2026 cinematic output. While not all of these features are designed for wide distribution or extended theatrical runs, Netflix is cautiously testing the waters with high-profile projects. Notably, Greta Gerwig’s highly anticipated adaptation "Narnia: The Magician’s Nephew" is slated for a wide release accompanied by a robust 49-day exclusive theatrical window when it hits cinemas in February.
This nuanced pivot comes at a critical juncture for the company. Netflix is currently charting a new path forward as it grapples with a period of viewership stagnation and a notable stock slump of roughly 30% since January. How these emerging theatrical ambitions will ultimately harmonize with a deeply entrenched streaming-first strategy, however, remains a central question for Wall Street and industry observers alike.
"Theatrical releases are a net positive for reach and streaming demand," Alicia Reese, an analyst at Wedbush, wrote in a note to clients. "Netflix’s more amenable attitude toward exclusive theatrical windows will not only facilitate better relationships with talent, but also add a new revenue stream and build interest in its streaming service. This follows the pattern we have seen with the major studios’ streaming platforms over the past several years: theatrical releases don’t cannibalize the streaming window, as Netflix fears."
This strategic re-evaluation coincides with a dramatic restructuring at the highest levels of the company. Ahead of its Tuesday earnings report, Netflix overhauled its C-suite, bringing in former Disney executive Peter Rice to take over as the company’s chief content officer, while ousting 10-year veteran Bela Bajaria.
In tandem with Rice’s appointment, Netflix dismissed Dan Lin, the company’s head of film, according to a person familiar with the matter who spoke on the condition of anonymity to discuss internal changes. That high-level departure came just days after the company laid off roughly 1,000 employees. The downsizing swept away Lin’s right-hand executive, Doug Belgrad, as well as Sheroum Kim, the director of independent film, according to various media reports. It remains unclear who Netflix will ultimately tap to permanently take over Lin’s vacated position.
The overarching objective behind these sweeping changes is to restore critical acclaim and prestige to the Netflix brand, leveraging Rice’s extensive industry expertise and talent relations to lure back big-name creators in an increasingly competitive media landscape.
Despite the profound executive turnover, Netflix executives downplayed the significance of the leadership changes during the earnings call, framing them as a routine optimization rather than a desperate pivot.
"Our business and our business flywheel are working," Sarandos told investors. "There is no need for a fundamental shift in the strategy. We do need better execution in the U.S. … It’s just not growing as fast as it could or as fast as we’d like."
Sarandos acknowledged that the streamer had delivered "some really solid doubles and triples this year," but candidly suggested that the company now needs to generate more cinematic and episodic "home runs."
Underscoring a shifting industry dynamic during Tuesday’s call, Sarandos highlighted a notable content-licensing deal with Disney, struck in October, which brought popular franchises like the "Ice Age" films to the Netflix platform. He even offered a public nod to Disney CEO Josh D’Amaro.
"We already are seeing some of those benefits from the Ice Age movies. All five of them hit our top 10. That’s really exciting," the Netflix co-CEO said. "And by the way, yes, Netflix just plugged a Disney movie on our earnings call. You’re welcome, Josh."
Netflix’s Content Strategy
In a persistent bid to capture consumer attention and broaden its subscriber funnel, Netflix has spent years diversifying its core offerings far beyond traditional television and film. The company has methodically expanded into video games, live sports events, and quick-turn documentaries focused on buzzy cultural moments.
However, in the recent past, the platform has arguably lacked some of the ubiquitous, water-cooler cultural phenomena—such as "Stranger Things," "Bridgerton," and "Squid Game"—that historically drove massive waves of new subscriptions and record viewership numbers.
"We know there’s some investor concern about our view hours growth," Netflix noted in its shareholder letter. "Engagement — which encompasses quantity, quality and variety of viewing — remains healthy."
Yet, with Netflix executives openly stating that the company requires new avenues for growth—and operating against the backdrop of a foiled deal to buy the Warner Bros. film studio earlier in the year—investors and industry onlookers are once again scrutinizing the potential of a dedicated theatrical business.
"I think there’s a place for theatrical for Netflix," Matthew Condon, an equity research analyst at Citizens, told CNBC. "Especially, as the competition for time and attention just continues to increase."
"If they really want to build stickier fan bases around some of their intellectual property, I think theatrical could be a good avenue for them to do that," Condon added. "That’s one area that Netflix has historically not been all that strong in, is building like really, really strong IP. And I think building fan bases around theatrical releases and things of that nature can help with that and then also can help them get top tier talent."
Netflix is certainly no stranger to working with elite Hollywood directors. Over the years, the platform has partnered with visionary filmmakers including Rian Johnson, Martin Scorsese, Alfonso Cuarón, Bong Joon Ho, Spike Lee, and Guillermo del Toro. However, a persistent friction point has been distribution: none of these acclaimed directors’ Netflix films received a wide theatrical release or a sustained run in commercial cinemas.
Sarandos openly admitted earlier this month that the company has lost top-tier creative talent precisely because it would not guarantee wide theatrical windows.
Most notably, the creators and lead producers behind its flagship sci-fi phenomenon "Stranger Things" have migrated to competing studios over the last year. Creators Matt and Ross Duffer signed a four-year exclusive deal with Skydance—the new home of the very same Warner Bros. film studio that Netflix nearly acquired—while director Shawn Levy joined forces with Disney to helm "Star Wars: Starfighter."
Going to the Movies
Addressing these creative departures and evolving consumer habits, Sarandos outlined a strategy built around "specialty theatrical releasing," in which each film receives a bespoke, tailor-made distribution plan. In certain instances, Netflix plays a film in theaters for the strict minimum requirement needed to qualify for major industry awards. Others appear for brief weekend stints as one-off event screenings, echoing the theatrical run of its animated smash "KPop Demon Hunters," which played in cinemas for just two days.
Greta Gerwig’s upcoming "Narnia" adaptation is among the select few titles designated for longer theatrical runs and significantly wider reach, alongside an animated feature tentatively titled "Charlie vs. the Chocolate Factory."
"Both films have big global IP and big global fandom, so we’re very excited about how they’ll play out next year," Sarandos said.
In another clear sign of its cultural and structural evolution toward traditional Hollywood norms, Netflix announced it will begin publicly reporting official box office results for films that receive longer theatrical windows. While such readouts are standard practice for major Hollywood studios regardless of their streaming strategies, the move marks an unprecedented level of financial and operational disclosure for the digital-first titan.
The arrival of incoming content chief Peter Rice may prove to be a vital missing puzzle piece as Netflix navigates this emerging theatrical model. Rice brings a wealth of deep-rooted television and film experience to the role. Since 2023, he has successfully produced theatrical films such as "Saturday Night" and "28 Years Later," and he is currently shepherding a movie adaptation of the massively popular video game "Elden Ring."
Despite these ambitions, industry analysts point out that Netflix fundamentally lacks the embedded infrastructure required for a full-scale theatrical commitment.
"Going into theatrical isn’t quite as easy as I think sometimes folks make it sound," Steven Cahall, a stock analyst at Wells Fargo, told CNBC. "You have to negotiate with movie theaters, and find spots for your films."
Cahall noted that sending the occasional film to theaters on a limited, experimental basis is manageable, but executing a sustainable theatrical strategy requires a distinct organizational muscle. A company needs a dedicated team of distribution executives, a reliable pipeline of content specifically engineered for the big screen, and a robust marketing department capable of driving traditional box office demand.
That operational reality explains why acquiring Warner Bros. Discovery’s studio assets would have been transformative for Netflix. In the absence of that multi-billion-dollar acquisition, it remains entirely unclear how quickly, or through what operational mechanisms, Netflix can successfully bulk up its own internal theatrical operations.
Furthermore, the company has historically balked at the astronomical marketing costs associated with bringing major motion pictures to cinemas, expenses that can routinely total hundreds of millions of dollars per film. Despite managing a massive content budget, Netflix has long prioritized sheer volume and endless consumer choice over individual, high-risk blockbuster bets.
A permanent shift toward a multi-pronged distribution strategy that aggressively feeds both a digital subscription platform and commercial cinemas would ultimately require Netflix to closely mimic the legacy media conglomerates it disrupted in its meteoric rise.
"So that becomes more of an existential question for Netflix: Is it time to become a media conglomerate rather than being a pure play streaming company?" Cahall said. "’Do we want to become a media conglomerate?’"
