Tuesday, January 31, 2023
HomeMarketOscar Nominations Are In. Netflix and Streaming Services Are Already Winners.

Oscar Nominations Are In. Netflix and Streaming Services Are Already Winners.

Felix Kammerer in Netflix’s ‘All Quiet on the Western Front.’

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Courtesy Netflix

The Academy Awards aren’t scheduled for nearly another two months, but this year’s nominees were announced on Tuesday. Predictably, the internet is filled with strong opinions about who did—and didn’t—get a nod, but ultimately streaming services look like the real winners again.

At this point, it’s no surprise that films that entirely bypass the theater—like
Netflix
‘s (ticker: NFLX) All Quiet on the Western Front—are on the shortlist for the prestigious Best Picture award and others. Yet it’s still a relatively new phenomenon, and one that’s a welcome gesture for streaming services.

“There is clear boost from an industry credibility [standpoint] when streaming players get Oscar nominations,” says Wedbush Senior Equity Analyst Daniel Ives. “This is an arms race streaming vs traditional Hollywood studios.”

Indeed, it was only last year that
Apple
‘s (AAPL) CODA was the first streaming movie to win the award for Best Picture, a move that “put Apple on the map in traditional Hollywood circles,” says Ives.

It may be a welcome respite for moviegoers as well, who have increasingly complained that mostly sequel-prone blockbusters and reboots have gotten the green light for theatrical releases in recent years.

Indeed, as KeyBanc Capital Markets analyst Justin Patterson previously wrote, Apple’s success with CODA could be “viewed as a changing of the guard,” but it also reflects simple economics. “[F]ilms likely to garner smaller audiences and those with more creative risks are increasingly launching on streaming services. What remains to be seen is whether subscribers consistently view direct-to-streaming films and are willing to pay more for services offering them,” he wrote.

Naturally that’s less of an issue for a company like Apple than for Netflix, given the diversity of its revenue streams.

However it’s worth noting that all of the nominees for Best Picture, with the exception of Women Talking, are available to stream, either as part of a regular or premium subscription, or for a one-time fee.

That’s true even of films like Avatar: The Way of Water, which is still attracting crowds in theaters. Last week,
IMAXCorp
(IMAX) said that the movie was one of the top three IMAX releases of all time, drawing $215 million globally; at that time, the film had grossed nearly $1.9 billion at the box office in total.

As Benchmark’s Mike Hickey noted of the news, “At this pace, Avatar 2 is close to crossing $2 billion worldwide, a nearly impossible benchmark in Covid times.” The film crossed that threshold this past weekend.

Of course, any discussion of streaming must include the Covid-19 pandemic, which shut down theaters and other nonessential services in 2020. While they have long since reopened, some people have found that they prefer to watch movies at home—a choice that’s increasingly convenient, given the shortening lag times (if any) between theatrical and streaming releases.

Years ago, if a film had left theaters but hadn’t yet been released for home viewing on DVD (or even a VHS tape!), movie lovers had no way to see it, even if its Oscar nomination caused a buzz. Now almost any Best Picture nominee—and many others—are easy to access online. That means Oscar headlines could provide a small boost for streaming services that carry the movies.

Ultimately, even if Netflix’s All Quiet on the Western Front were to capture the top award, that alone is unlikely to undo the damage that the company’s stock suffered in mid-2022, on worries of slumping subscribers and ad demand.

Yet with Netflix stock surging well ahead of the
Nasdaq Composite
so far in 2023—and over the past six months—it would be another welcome piece of good news for the company. Indeed, Netflix shares are rising today, even as the Nasdaq slips and tech layoffs continue to dominate the news.

In a sector with plenty of worries, the Oscars could again provide at least one happy ending for streaming services.

Write to Teresa Rivas at teresa.rivas@barrons.com

Credit: marketwatch.com

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