Streaming outlet Netflix aims for Oscar

A movie starring Idris Elba is set to help Netflix, armed with its 65 million subscribers, upend the movie industry.

This photo provided by Netflix shows Idris Elba, left, as Commandant, and Abraham Attah, center, as Agu, in the Netflix original film, "Beasts of No Nation," directed by Cary Fukunaga. (Shawn Greene/Netflix via AP)

Idris Elba looked every inch the Hollywood leading man. At a screening of his new movie in ­Toronto last month, the British actor flashed a smile that could have illuminated a small city.

One thing looked out place, though. Instead of the dinner suit and bow tie that leading men usually wear to premieres, the 43-year-old opted for a rakish black leather jacket, woven grey tie and designer trainers. If his outfit was unconventional, so too was the provenance of Beasts of No ­Nation, a grisly tale of child ­soldiers in Africa.

Already touted as an Oscar contender, the film is not the product of one of Hollywood’s big ­studios or one of their offshoots: it will be released today under the banner of Netflix, the television and movie streaming service.

The film will have a limited cinema run so that it can be considered for prestigious industry awards such as the Oscars. But that is as far as the Silicon Valley interloper is bowing to the conventions of the movie business.

As soon as the lights dim in cinemas on the opening night, Beasts will be released on Netflix. That means that its 65 million (and counting) subscribers around the world will be able to watch the film without leaving their sofas.

The move underlines Netflix’s desire to upend the movie industry in the same way that it has wreaked havoc on the small screen with home-grown series such as House of Cards and Orange is the New Black. Netflix is moving ever deeper into production. Next year it expects to spend $US500 million ($680m) on original content. In the coming months it will release a sequel to the martial arts hit Crouching Tiger: Hidden Dragon, and movies starring A-listers Brad Pitt and Adam Sandler.

Netflix is not the only threat for an industry dominated by a host of illustrious names such as Warner Brothers and 21st Century Fox (whose executive chairman ­Rupert Murdoch holds the same position at News Corp, ultimate owner of The Australian).

Amazon, too, is pouring hundreds of millions of dollars into its TV programs and movies. That includes a reported 15 film projects. In contrast to Netflix, though, it will play by the rules of the cinema industry. Its films will be shown in cinemas before being transferred to the Amazon Prime streaming service 30 to 60 days later.

Netflix and Amazon are at the vanguard of a plethora of fast-growing digital offerings called over-the-top (OTT) services, because they are viewed digitally rather than by terrestrial or satellite signal. These pick-and-mix digital offerings pose a serious threat to the big players that have dominated the TV and movie ­industries for decades.

Relations between Amazon and Netflix, on one side, and the traditional broadcast companies are not so much antagonistic as symbiotic. The likes of ITV, the BBC and the big American TV producers earn large fees by licensing programs to streaming services. However, the relationship is becoming more fraught as Netflix and Amazon spend more on home-grown production.

Traditional broadcasters are beginning to question whether they should make their content available to the new digital platforms. Discovery, for instance, denies content to Netflix.

Just as Amazon and Netflix are battling to stock up on compelling content to lure in viewers, Apple and Google are seeking to gain control of the gateways to our living rooms. Last month, Apple unveiled a revamp of its Apple TV set-top widget, with chief executive Tim Cook proclaiming that the “future of television is apps”.

His message to TV executives was clear. Instead of flicking through a set list of channels, consumers will increasingly look to a variety of apps when they sit down in front of the TV set. If Cook’s ­vision becomes reality, the power that TV channels currently wield through their programming schedules will disappear.

It is unlikely that Amazon, Netflix or Apple can persuade TV audiences to abandon their viewing habits overnight. But the long-term threat to commercial broadcasters is plain.

Americans have become used to buying expensive cable TV packages because the country has so few quality free-to-air channels. Many households are severing cable contracts costing $100 a month or more in favour of the slimmed-down deals from ­Amazon and Netflix. Fears that this exodus of subscribers will soon escalate into a stampede have triggered a rout in American media stocks over recent weeks.

Disney recently cut guidance for its ESPN division, citing “modest subscriber losses” from the cable and satellite operators that pay to air America’s dominant sports channels. Disney boss Bob Iger argued ESPN’s array of live broadcast rights would enable it to “manage whatever disruption is going on”. Investors leapt to a very different conclusion.

Last month the boss of American media giant Viacom warned that Britain’s TV industry will have to endure a similarly brutal assault. Philippe Dauman said the “strong public service broadcasting culture” would offer only limited succour to the likes of ITV from the “clear” threats posed by the likes of Netflix: “The global media market is at a pivotal juncture right now.”

Shares in ITV, long viewed as a takeover target for a deep-pocketed American broadcaster, have fallen by more than 10 per cent since hitting an all-time high in July. The tremors shaking broadcasting companies stem, in part, from the success of digital competitors. Facebook reported a 43 per cent surge in advertising revenues to $US3.8 billion between April and June, underlining the social network’s growing share of global marketing budgets. Netflix, meanwhile, added a record 3.3 million new streaming subscribers over the period, taking its customer base to 65.6 million.

With investors in no rush for the company to sacrifice long-term growth for short-term profits, Netflix can afford to take a bet on feature-length films.

Ted Sarandos, Netflix’s head of content, recently said that the company was not relying on box-office receipts to recoup the $US12m it has spent on making Beasts of No Nation. “There’s no revenue expectation on any movie,” he said.

The success of Netflix will, instead, be judged on whether its membership figures continue to grow at breakneck pace. Its founder and chief executive Reed Hastings believes its subscriber base could climb to 200 million. Yesterday, though, the company reported disappointing US subscriber growth for the third quarter, adding 880,000 domestic subscribers, below the 1.15 million subscribers projected in July. Overseas, the company signed up more users than expected, adding 2.74 million subscribers compared with a forecast of 2.4 million.

Traditional broadcasters, such as HBO among others, have not taken the new threats lying down. They, too, are experimenting with digital ­offerings. Last month the BBC said it would launch a new paid-for streaming service in America, airing shows currently not available on American TV. The name of the game, as ever, is to stay one step ahead of viewers.

The Sunday Times

Additional reporting: The Wall Street Journal

Beasts of No Nation is released on Netflix today.