Behind Scott Stuber’s Netflix Exit: A Battle Over Theatrical and Costly Disappointments

As distributors, executives and filmgoers entered the Eccles theater in Park City, Utah on Monday for the Sundance screening of Netflix’s buzzy rom-com “Hit Man,” discussion wasn’t on the movie so much as on the news primed to shake up the streamer’s entire film unit: Netflix’s Chairman of Film, Scott Stuber, is leaving the company in March.

The move, on the surface, seemed surprising. Stuber ushered in Netflix’s entire original film strategy after joining the company in 2017. Just this past November, he and Netflix CEO Ted Sarandos stood together at the unveiling of the newly renovated Egyptian Theatre in Los Angeles, a continuation of the company’s attempt to give films from some of their most esteemed filmmakers a semblance of a theatrical release.

But to many in Hollywood, Stuber’s exit was inevitable. Several individuals who spoke to TheWrap pointed to Stuber’s string of big-budget, star-studded features, either produced or acquired for the studio, that failed to win much enthusiasm on the service or in the zeitgeist. Stuber also routinely butted heads with Sarandos over the theatrical presentation of Netflix’s films, as Sarandos has frequently stressed that theatrical is not the streamer’s business. Netflix declined to comment for this story.

A top Hollywood manager told TheWrap that while Stuber made plenty of bets that worked and got the streamer into business with esteemed filmmakers, few of Netflix’s original films have “staying power.” He added, “It’s about whether the titles will create lasting impact and rewatch value.”

The theatrical window

Back in November during the opening of the Egyptian, Stuber told TheWrap, “We want to work together to make sure that we’re telling modern stories, but also telling all those great stories and making sure that they ignite the community around a great movie house.” Stuber wanted to return to Hollywood’s roots, it appeared. According to several individuals who spoke to TheWrap, there was no bigger battle waged than that of Stuber’s desire to bring Netflix movies to theaters. “Stuber wanted more theatrical plays but constantly ran into walls,” said a producer who has done work for hire projects for the studio.

Stuber routinely clashed with Netflix leadership over how to distribute the company’s movies. Stuber’s mentality, bolstered by his work as an executive at Universal Pictures, was to prioritize the theatrical experience. Stuber routinely pushed Netflix to put their big titles in theaters before adding them to the streaming service (something that Amazon Studios and Apple TV+ do). And while Netflix does this, too, it’s far more limited and usually reserved for awards-contending titles.

The Alfonso Cuaron-directed “Roma” had a three-week theatrical window when it debuted in 2018. Martin Scorsese’s “The Irishman” was released November 1 in New York and Los Angeles and made its way onto the service on November 27. And in Netflix’s widest theatrical release to date, Zack Snyder’s “Army of the Dead” was in nearly 600 theaters a week before it hit the streamer. But when “Rebel Moon” rolled around, the sci-fi film played in only a handful of theaters.

Not that Stuber didn’t try to experiment with giving a genuine blockbuster a robust theatrical window.

According to the New York Times, Stuber “often tried to appease filmmakers by pushing for wider theatrical releases than Mr. Sarandos was willing undertake.” Two veteran exhibitors told TheWrap that one of the Netflix films that came closest to reaching Stuber’s vision of a full theatrical release was “Glass Onion,” the sequel to the 2019 Rian Johnson murder mystery “Knives Out.” Netflix paid $469 million for Johnson to write and direct two sequels for the streamer. The third film is in development.

The exhibitors said that in 2022, Sarandos sent “major signals” to executives at several theater chains that Netflix would consider releasing films in theaters with longer theatrical windows, something Stuber had championed for years by compiling data to prove his case that an exclusive theatrical release for films would increase Netflix subscribers’ interest in watching or rewatching the film on streaming.

Given that “Glass Onion” was a sequel to a film that grossed $312 million at the global box office, Netflix viewed it as an ideal test case. Sarandos and Stuber signaled this in several meetings with theater owners, and while Stuber was denied his push for a release in 2,000 theaters, it did open in approximately 700 locations owned by national theater chains.

But in October 2022, the month before “Glass Onion” opened, Sarandos infuriated theater owners with comments he made in an earnings call in which he doubled down on Netflix’s non-theatrical strategy. “There are all kinds of debates all the time, back and forth. But there is no question internally that we make our movies for our members, and we really want them to see them on Netflix,” Sarandos said in the earnings call. “Most people watch movies at home.”

One exhibition source said Stuber had to field several calls with angry theater execs who felt that Sarandos was backing off of the promised “Glass Onion” experiment. “Theaters were ready. ‘Knives Out’ worked in 2019 and we wanted ‘Glass Onion’ too and thought for months that Netflix was willing to let us show that putting their films on our screens would pay off for them,” the exhibitor said. “I know there were some execs that wanted to pull ‘Glass Onion’ because of what Sarandos said, and they probably would have if Scott hadn’t convinced them otherwise.”

In the end, the major chains AMC, Regal and Cinemark, who were facing a fall box office depleted by pandemic production backlogs, took part in the 700-screen release of “Glass Onion,” but the windowing experiment was tossed out as the film only ran for a week theatrically before hitting streaming in December.

The state of Netflix Original films

Stuber prioritized features with big stars like Ryan Reynolds and Gal Gadot, as well as filmmakers like David Fincher and Zack Snyder. But those films came at a cost. In the case of Netflix’s latest big original, Snyder’s two-part “Rebel Moon,” the budget was $230 million; The Ryan Gosling/Chris Evans thriller “The Gray Man” cost $200 million; Michael Bay’s critically maligned “6 Underground” was made for $150 million; Martin Scorsese’s “The Irishman” had a budget of $150 million; and the Ryan Reynolds/Gal Gadot/Dwayne Johnson heist thriller “Red Notice” was made for $200 million.

According to Netflix, “Red Notice” remains the streamer’s most-watched original movie of all time with 230.9 million views, but the fact that two planned sequels to the 2021 release have yet to materialize speaks volumes about the film’s impact. “Rebel Moon,” positioned as a sci-fi blockbuster akin to Netflix’s own “Star Wars,” amassed 23.9 million viewers in its opening week, which fell short of the opening numbers for the much cheaper thriller “Leave the World Behind” (41.7 million views) and the Adam Sandler animated film “Leo” (34.6 million views).

Netflix’s most-watched original of 2023 wasn’t a big-budget bet, but instead the Jennifer Lopez-fronted thriller “The Mother,” made for an estimated $43 million.

What’s more, Netflix’s Top 10 most-watched films at any given moment is usually filled out with licensed titles, not originals. As of this writing, eight of the top 10 are licensed films. “The writing was on the wall. ‘Rebel Moon’ dropping off after three weeks is consistent with the Project Popcorn study Warner Bros. conducted a couple of years ago [saying] that films that go direct to streaming have significant decay,” a top agent told TheWrap. “And films that are released theatrically, even if they bomb in the theatrical window, do so much better when they go to streaming.”

Financially, Netflix remains strong. In Q3 2023, Netflix reported a 7.8% increase of revenue year-over-year to $8.54 billion, and the streamer’s ad-tier continues to grow with over 10 million subscribers globally. In total, Netflix is up to around 247 million subscribers worldwide. The streamer is due to report Q4 earnings on Tuesday.

And studios are jumping back into licensing with Netflix. In December, Warner Bros. licensed 12 DC movies to Netflix, which performed well on the streamer through the holidays, and David Zaslav has said licensing to Netflix is good for WBD’s business.

In December, Netflix announced that it planned to spend $17 billion on original content in 2024 which, the top agent said, isn’t necessary if viewers are only watching licensed content. “Netflix realized they don’t really need to spend $17 billion on original content now that the legacy studios are licensing their titles again,” he said.

Where does Netflix go from here?

Stuber will stay with the company until March and after that it’s unknown when his new company will launch. The studio’s slate of 2024 films includes the aforementioned “Hit Man” (which they acquired at TIFF last fall), a “Beverly Hills Cop” sequel starring Eddie Murphy and the second “Rebel Moon” film.

Netflix Chief Content Officer Bela Bajaria will fill Stuber’s role until a replacement is found. But many are wondering if that short-term role could become long-term, as sources said that Bajaria and Stuber often were at odds. According to a producer who has worked with Netflix before, Bajaria being in the CCO role (she had previously served as Netflix’s global head of television) above Stuber might have hastened his decision. “I think Netflix wanted him to leave and made it clear when Bela was put above him,” the producer said.

While Netflix isn’t talking about succession right now, Bajaria’s name is already on everyone’s lips, even at that screening in Park City on Monday. “Bela won that battle,” one audience member was overheard saying upon hearing the news of Stuber’s exit.

The post Behind Scott Stuber’s Netflix Exit: A Battle Over Theatrical and Costly Disappointments appeared first on TheWrap.