How Netflix delivered a $30 million gift to movie theater owners with 'Stranger Things' finale

By Lukas I. Alpert

Amid tensions between Netflix and theaters, the unusual sale of concession vouchers instead of tickets turned into a huge New Years' boon for cinemas and could lead to a thawing of relations

Netflix's screening of the final episode of 'Stranger Things' in around 600 theaters was a big hit for cinema owners over New Years. (Photo by Andrew Chin/Getty Images for Netflix)

The finale of "Stranger Things" helped deliver a huge holiday gift of up to $30 million to theater owners, potentially paving the way to warming long-chilly relations between Netflix and cinemas.

The move to screen the final episode of the hit series in theaters on New Year's Eve and New Year's Day turned into a big boon to theater owners due to an unusual arrangement of selling concession vouchers rather than actual tickets.

That was because of complex contractual limitations with the show's actors and creators on streaming-to-cinema deals. The result was that all the proceeds of the voucher sales went to the theaters, rather than being split with Netflix (NFLX).

The final draw is still being tallied, but reports in The Hollywood Reporter and Deadline estimated that theaters brought in between $20 million and $30 million over the two-day showing. The episode was shown in around 600 theaters nationwide.

AMC Entertainment Holdings Inc. (AMC), the largest cinema operator in the U.S., said it sold 753,000 vouchers for $20 in the 231 theaters where it was showing the final episode, bringing in a total draw of $15 million.

"This unprecedented theatrical event was nothing less than an absolute triumph," AMC chairman and CEO Adam Aron said in a statement.

Other theater operators, such as Regal Cinemas, sold the vouchers for $11, in reference to the name of the show's main character, Eleven.

The screenings come amid long-standing tensions between Netflix and theater owners focused around disagreements over the length of time films can be exclusively shown in theaters before becoming available on streaming platforms.

The exclusivity window has dwindled in recent years from 90-days before the pandemic, to 45-days on average now. Netflix has traditionally eschewed theatrical releases for its films entirely, or opted for shorter exclusivity windows of just a few weeks to allow its productions to be eligible for award considerations.

Netflix's recently accepted bid to acquire Warner Bros. Discovery Inc. (WBD), had set off alarm bells among theater company owners, who worry that the sale could lead to shorter exclusivity windows becoming the norm and potentially driving them out of business.

The Warner Bros.' sale is not a done deal, however, as rival Paramount Skydance Corp. (PSKY) has launched a hostile takeover effort and the sale faces potentially challenging regulatory scrutiny.

Since Netflix's offer was accepted by Warner Bros. Discovery's board, Netflix CEO Ted Sarandos has publicly stated that Netflix does not intend to make any changes to how Warner Bros.' films are released, including the existing exclusivity windows with theaters.

Aron, AMC's CEO, said the two companies have been working to ease relations for some time, starting with the theatrical release of the Netflix hit animated movie, "KPop Demon Hunters" over Halloween. Aron said he was hopeful that a deeper partnership will result.

"At AMC, our company is excited about the prospect of taking more Netflix content to theater goers, and I might add that the working relationship between the two companies in our two recent projects has been easy, creative, and seamless," he said. "It should come as no surprise then that our two companies have already commenced discussing what additional Netflix programming can be shown on AMC's giant screens."

-Lukas I. Alpert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-02-26 1100ET