Netflix’s buying spree that started at the Toronto International Film Festival isn’t over yet. The streaming giant picked up another TIFF entry this week by acquiring worldwide rights to the romance-heist movie “Tramps” for a reported $2 million. The film had its world premiere on September 10 at TIFF, which wrapped on September 18.
Netflix’s acquisition of writer-director Adam Leon’s (“Gimme the Loot”) second film comes following the company’s purchase of worldwide rights to director Vikram Gandhi’s Barack Obama movie “Barry” for a reported $4.5 million last weekend. The company also bought U.S. and select international rights to the post-apocalyptic sci-fi movie “What Happened to Monday?” from director Tommy Wirkola. The streaming giant is expected to add additional TIFF titles in the coming weeks.
Netflix ended up paying significantly more for “Tramps” and “Barry” than competitors who were interested in both titles, according to two distributor sources. “They’ve been overpaying according to how we value films, but ultimately we are doing two different things,” said one New York-based distribution executive who asked not to be identified. “The numbers they play with make little to no sense in traditional models.”
Why is Netflix overpaying for so many little movies? One possible explanation is that the company is using large acquisitions to make a statement in the marketplace after not acquiring any movies during the Cannes Film Festival. (Netflix picked up the Cannes Directors’ Fortnight entry “Divines” before the festival, and the competition title “Aquarius” two weeks after its end.) Like its competitor Amazon, Netflix likely isn’t as concerned with turning a profit on movie releases as traditional distributors are. Though it’s hard to reach a firm conclusion given the company’s lack of transparency, many in the industry agree that Netflix — as well as its major competitor, Amazon — can justify losing money on every release it puts out because of its massively profitable revenue streams.
Netflix could also view its acquisition of “Tramps” as an opportunity to start a working relationship with the young and talented Leon. Last year, Netflix signed a deal with Jay and Mark Duplass to be the exclusive distributor of four movies to be produced by the brothers’ shingle Duplass Brothers Productions. The agreement allows all four films to have a brief theatrical release, after which Netflix will make the titles available for streaming. This partnership, viewed alongside the company’s other recent investments in lower-budget titles, suggests that it sees more potential in these opportunities than in the more ambitious field of Oscar-season entries.
While Netflix has cracked that code with its documentaries (this year, it’s campaigning for “The Ivory Game” and “White Helmets,” among others), its one real attempt at an awards play in the narrative feature realm, Cary Joji Fukunaga’s “Beasts of No Nation,” came up short. Netflix bought “Beasts” out of TIFF last year for $12 million, and released the movie in 31 theaters and on its streaming service the same day. The movie was a major flop theatrically, grossing slightly over $50,000, and wasn’t a major player at the Oscars despite some aggressive campaign efforts. Awards season titles can be expensive and risky, whereas delivering movies to audiences on the platform without such lofty expectations has the potential to yield more satisfying returns.
It’s unclear whether theatrical releases will be a part of Netflix’s strategy for its recently acquired TIFF titles. (One insider suggested an awards campaign may still be in the works for “Barry,” but it would likely be limited to the Gothams and Independent Spirit Awards.) If having a theatrical release was important to Leon and Ghandi, convincing the filmmakers to go with a streaming-only release could have required paying much more than every other distributor offer.
While overpaying will continue to make it hard for traditional distributors to compete with Netflix for movies, it’s unlikely that Netflix can afford to keep outbidding its rivals forever. In the meantime, filmmakers may have to make some make hard choices about what’s more valuable — a large check from Netflix, or a theatrical release.
Though Netflix’s buying spree coincided with a number of distributors leaving TIFF with no acquisitions, the company’s acquisition activity doesn’t seem to be bothering its competitors yet. Most agree that there are enough movies to go around, and Netflix certainly isn’t the first new entrant with deep pockets to join the film-buying market.