Want to make a hit on streaming? Release it in theaters instead.

The New York Times just release this piece A Hollywood Twist: Streaming Success Runs Through Theaters. From the article:

Just a few years ago, media executives thought theatrical releases didn’t benefit their streaming services. Now, many of them think the opposite.

For much of the past decade, Hollywood executives striving to catch Netflix started believing that the only way to increase the subscriber numbers for their own streaming services was either by significantly narrowing the time between a film’s theatrical release and its appearance on streaming or by putting both out simultaneously. 

But the industry has now largely come to a very different conclusion: The key to making a movie a streaming success and attracting new subscribers is to first release it in theaters. 

Especially since the pandemic, this “user obsession” has driven tech-minded folks at streamers to demand that movies be released day-and-date on streaming services. “Consumer preferences” — that people should be able to watch anything whenever they want, wherever they way — dogmatically drove this agenda.

But beyond customers asking for it in surveys, there’s no evidence that this makes business sense or actually caters to the customer. The theatrical hype machine and word of mouth is part of wanting to watch something in the first place. I wrote about this in 2017 when Disney first hinted at day-and-date. No amount of streaming marketing can buy theatrical’s inherent offering: placing a movie into thousands of multiplexes across America. It’s like instantly scaling an experiential event into 5000 cities. Why pass that up?

Now imagine you’re Disney or Universal and you actually rely not just on streaming (like the example in this article, Amazon’s original “Red One”) but need to be able to sell derivative merch, products, games and parks tickets for years into the future. You need a red carpet and a theatrical release to launch the multi-year momentum required for that kind of lasting IP.