December 14, 2017

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With Manchester by the Sea’s Oscar Nods, Amazon’s Big Bet Pays Off

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This morning, Amazon Studios’s Manchester by the Sea became the first movie from a streaming service to be nominated for a Best Picture Academy Award. It also, with a half-dozen Oscar nods, validates Amazon’s counterintuitive approach to releasing its prestige films: The streaming service is all-in on theaters.

That may not be as obvious a play as it seems. Amazon’s core video business takes place online, and the budget required to market and distribute films in theaters is astronomically higher than simply pushing it onto the Internet. But putting its marquee features on literal marquees turns out to be a gamble worth taking, both for Manchester and the rest of its business.

Catch and Release

A year ago at the Sundance Film Festival, Amazon Studios acquired six films. Among the haul was Manchester by the Sea, a buzzy production from an established director, Kenneth Lonergan. Amazon spent $10 million for the rights to Manchester, making it last year’s second-most expensive Sundance pick-up behind Nate Parker’s The Birth of a Nation. From the start, Amazon was clear that its acquisitions would show up the big screen before making their way onto Amazon Prime. (It’s a strategy the company is sticking to. Over the weekend, Amazon acquired The Big Sick for $12 million, promising a full theatrical release, something co-writer and star Kumail Nanjiani wanted.)

“All [of Amazon’s Sundance] films will be released theatrically, with an aggressive marketing campaign to bring audiences to your theaters,” Amazon Studios executive Bob Berney reassured assembled theater owners at CinemaCon 2016 last April. For Manchester by the Sea, the company partnered with Roadside Attractions to handle the actual distribution.

There’s one very obvious reason for streaming services to put their prestige movies in theaters: That’s the only way to qualify for an Oscar nomination. But Amazon took its commitment a step further, though, honoring traditional, months-long release windows before plopping its hits on the Internet.

In doing so, Berney and Amazon staked out a distinctly different position from streaming-competitor Netflix. In 2015, Netflix released the critically acclaimed Beasts of No Nation in theaters, but simultaneously made it available to stream, making an already jittery group of theater owners and operators even more ill at ease.

That tension became the dominant narrative around Beasts of No Nation. And, possibly as a result, the film ended up being 2016’s most notable Oscar snub. By positioning itself as a partner to theatrical gatekeepers, Amazon helped avoid the same fate.

Risky Business

But releasing the movie in theaters didn’t guarantee its success. Sure, a Best Picture Oscar nomination definitely validates Amazon Studios’ decision-making around Manchester—and will likely give it a box office boost, and a lot of attention when it’s finally available to stream February 7—but it was still a risk.

Consider a similar push that Amazon Studios made at the end of 2015 with Spike Lee’s Chi-Raq, another film with all the hallmarks of awards season success. That time, the Oscar gamble didn’t pay off; Chi-Raq took in $2.6 million at the box office, against a reported $15 million budget.

That’s not to say Chi-Raq was any kind of failure; it was mostly a critical hit, and should still pay dividends as a part of Amazon’s streaming stable going forward. But it does illustrate that theatrical release is hardly a sure bet, especially for a streaming business.

Promoting a movie and getting it into theaters, even with the help of a distribution partner like Roadside Attractions, is a costly endeavor, and without an occasional Oscar payoff, the theater-first strategy can become a losing proposition. It’s more surprising, in many ways, that Amazon committed its full Sundance slate last year to theaters than it is that Netflix put its priciest pick-up, The Fundamentals of Caring, directly online.

The Long Tail

There’s another reason the Oscar nod will pay off for Amazon more than it would traditional studios. Because it owns both the movie and the platform on which it will stream, it can offer its subscribers Manchester by the Sea forever, all around the world, without worrying about the shifting rights issues that can make streaming services seem abundant one month and barren the next. A theatrical release may cannibalize some of its streaming audience, but not enough to matter in the long run.

“Probably very few people who watched it in the cinemas will watch it again on Amazon Video, but I would assume the streaming audience is many times larger,” Tony Gunnarsson, streaming media analyst with Ovum, “especially if you factor in Amazon Video’s global reach and the fact that the film will be on the services for years to come.”

(Using exclusive content to capture audiences is one area where Netflix has found a way to benefit—particularly when it comes to documentaries. While it still hasn’t netted a Best Picture nod, it’s had multiple documentaries capture the Academy’s attention, and Ava DuVernay’s 13th, nominated this year, is as good a reason to subscribe as you’ll find.)

So yes, it’s significant that a streaming service is within statuette’s reach of a Best Picture Oscar. What’s more interesting, though, is how it got there: By not acting like a streaming service at all.

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