Netflix, the Oscars & the War for Talents

In November 2018, for only 3 weeks, Netflix exceptionally released in a handful of U.S. theaters a movie called “Roma”, thereby making sure that it would be eligible for the Oscars competition. This very brief interlude in the streaming giant’s activities turned out to be quite profitable when, a couple of months later, CEO Reed Hastings, Director Alfonso Cuaron and their crew came back home with three glossy golden statues.

After the ceremony, many important people in Hollywood, among whom Director Steven Spielberg, raised concerns about the lack of distinction between theater pieces and TV-streaming pieces, the latter being traditionally awarded at the Emmy’s Ceremony. As a matter of fact, many Award Academies strongly debated on Netflix's case, for example in France where Netflix’s contents were banned from the Festival de Cannes. Of course, streaming is a global trend that they could not ignore anymore, and of course the frontier between theater and TV shows had never been less relevant. But it takes some guts to be the first to break down the barrier erected long ago between those two worlds.

The Oscars Academy held a meeting in April 2019 in order to decide upon the case. In their headquarters of Los Gatos, California, Netflix’s executives were anxiously waiting for the official statement. There was much more at stake than it seemed. If their contents were no longer eligible for the Oscars or other major competitions, it might not only damage the perception of their brand by the market, but also become a serious pain point for many talents in the film industry (authors, directors and actors). In the context of growing competition with the new streaming platforms Disney+, Apple TV, NBCUniversal or HBO Max – all of them investing in original contents – movie stars are becoming increasingly valuable. And they know it.

Since Netflix started producing its own content in 2012, many talents chose the streaming company above other producers, based on the freedom it gave them in the creation process and on the fair salary that it paid. As a reminder, compared to its European counterpart, Hollywood has a tradition of all-mighty producers who often intervene in scenarios, casting decisions and so on. Netflix decided long ago – in fact it is deeply embedded in their corporate culture – to avoid this unpleasant consequence of concentrated and capital-intensive industries, and rather offer directors and actors the autonomy and free rein that they could not experience elsewhere, at a good wage.

But how much more salary and freedom should Netflix give to its talents if their performances are banned from prestigious awards ? What would be the cost of these obscure Academies’ unfavorable decisions for the company ? Considering the massive amounts (more than 12 billions) that the company invested in original content in 2019 and the average price of a famous actor or director, we can bet on tens, maybe hundreds of millions in the long run. 

On that day of April 2019, against Spielberg’s opinion, the Oscars Academy decided that the eligibility rules would remain unchanged in 2020, hence allowing Netflix to compete again. This victory for the streaming company was broadly underestimated. However, the Academy’s decision sounded more like a status quo than a strong positioning, and Netflix should probably stay wary while disrupting the codes of a film industry that is still, to a very large extent, the old Majors’ courtyard.