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Will Netflix Start Buying Movie Theaters?

According to an interview with one of the company’s two Chief Executive Officers, Reed Hastings, streaming service Netflix (NASDAQ: NFLX) probably won’t be buying a theater chain in the near future, despite persistent rumors that it might. However, while speaking to The Hollywood Reporter, Hastings revealed, or at least confirmed, Netflix is in something of a content « arms race » with Walt Disney (NYSE: DIS).
Discussing the matter of theaters, Hastings asserted Netflix remains internet-focused, and he « can’t see » it ever deciding to buy out a cinema chain. He also remarked movie fans are likely to return to theaters as the pandemic recedes, and he doesn’t expect a significant influx of filmmakers to switch from creating content for movie theaters to making films or shows for streaming services like Netflix.
Image source: Getty Images.
Hastings compared the difference between movie theaters and Netflix to that between restaurant dining and home-cooked meals. He remarked both are « great » without needing exclusivity for either and said « we just want consumers to have choice. »
Speaking about Disney, Hastings took a much more competitive tone, noting Netflix wants « to beat Disney in family animation. » He observed Netflix will probably face a long uphill battle to match the older company in its own preferred bailiwick: « [T]hey will be a challenger and a competitor for the next 50 years. » He nevertheless confirmed Netflix’s determination to focus resources on its animation sector.
Disney, for its part, has recently muscled into Netflix’s turf with its streaming Disney+ app and service. The jury’s still out on The Mouse’s foray into streaming content, however, with the recent release of Mulan boosting downloads by 68% but generating only a relatively anemic $27 million thus far, dwarfed by the $200 million the movie cost to make.
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Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

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