(Bloomberg) — While most of Hollywood races to get movies online at a fast pace, Sony Pictures is playing it the old way with the streaming debut of “Spider-Man: No Way Home.”
The highest-grossing movie of the pandemic era, “Spider-Man” drops Friday on the Starz streaming service, as well as on that network’s premium cable channel.
The picture came out in December, meaning for seven months fans of the comic-book hero had to go to theaters, buy a copy of the movie or pay a rental fee to watch at home. That’s a wait consumers don’t typically face these days, as every other studio competes for their attention by giving them quick and cheap online access to new films.
But Sony is the only big studio without its own streaming service, having given up on one a few years ago. And with the freedom to seek the highest bidders for its films and TV shows, the company has clinched new deals that will generate about $3 billion in revenue in coming years, according to a person familiar with the matter.
“We don’t serve multiple masters,” Tom Rothman, chairman and chief executive officer of Sony Corp.’s film division, said in an interview. “We’re not beholden to Wall Street counting subscribers on a corporate streaming service. Our master is profitability,”
The race into streaming by most of Hollywood has only strengthened Sony’s position, its CEO says.
Pre-Covid
In 2018, fast-growing Netflix Inc. was able to buy content from every major studio. The following year, Walt Disney Co. began putting its films and TV shows on the new Disney+ service. Warner Bros. launched HBO Max, NBCUniversal started Peacock and Paramount Pictures movies landed on Paramount+.
That left Sony as the sole major studio still able to squeeze out a long run in theaters for its movies and capitalize on the pay-TV market.
Under current agreements, Sony typically makes its films available for home rental and purchase months after they run in theaters. Later, they go to Starz, owned by Lions Gate Entertainment Corp., for cable and streaming viewers.
“We’re able to do what cadence maximizes the profitability of every single asset,” he said.
Rothman estimates Sony makes tens of millions of dollars more per film than its rivals. The studio can keep movies in theaters and available for home rental longer, generating additional sales, and then enter a streaming market where content fetches high prices.
That’s not true for competitors. While the Covid-19 lockdown helped their services attract subscribers, other studios have had to accept losses on their films and TV shows. When Disney+ launched, researcher MoffettNathanson LLC estimated the service would lose $11 billion and take four years to turn a profit. Disney’s direct-to-consumer business had an operating loss of $1.48 billion in the first half of fiscal 2022.
Hits Wanted
If there’s a downside to Sony’s theater-centric strategy, it’s that the company isn’t signing up paying subscribers, the way Netflix, Disney, HBO and Peacock are.
And the studio still needs to generate hits.
While Sony had a huge success with “Spider-Man,” making $1.9 billion at the worldwide box office, it has also released movies to less acclaim. “Morbius,” a Marvel movie starring Jared Leto, collected just $164 million globally this year, one of the lowest totals for a recent release under that comic-book brand. Starz CEO Jeffrey Hirsch told investors in May that, other than a few big titles, Sony’s films weren’t getting viewership for his channel.
Still, Rothman was able to get a new deal with Netflix that will replace the expiring Starz agreement. Under that accord, Netflix gets Sony films released from 2022 to 2026, after they run in theaters and are available for home purchase or rental. The studio also signed a separate deal that gives Disney its movies after Netflix.
Because other streamers “are all in an arms race, none of them can sell to each other,” Rothman said. “So we are one of the very, very few, if not only, purveyor of A-level content. So we’re awful desirable because of that.”
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