Comcast Corp.’s NBCUniversal is considering pulling its movies from HBO Max and Netflix Inc. and keeping future new film releases for its streaming service Peacock, according to people familiar with the matter.
Currently, HBO Max pays for the rights to show new Universal Pictures movies about nine months after they leave theaters, while Netflix has a similar deal for animated films from Illumination Entertainment, the affiliated studio behind the “Despicable Me” features. Both of those deals expire at the end of this year.
NBCUniversal hasn’t made a final decision about what to do, said the people, who asked not to be identified discussing internal deliberations. Senior executives are open to new deals with third parties like HBO Max and Netflix, which generate hundreds of millions of dollars a year. But they are also struggling to rationalize giving some of their most popular titles to competitors.
The outcome of the deliberations will say a lot about Comcast’s commitment to Peacock, a year-old streaming service that has 33 million accounts. The company has yet to commit as much money to original programming as some rivals.
Both Walt Disney Co. and Warner Bros. owner AT&T Inc. have made original movies a central part of the streaming services they’re now pitching to consumers. Disney declined to renew its deal with Netflix years ago, preferring to keep its movies for its own service. AT&T is making all of its 2021 releases available on its HBO Max streaming platform the same day they hit theaters. Both companies are surrendering hundreds of millions of dollars to boost their nascent services.
Because of the pandemic, studios have shortened the time between a film’s debut in theaters and its availability at home. Warner Bros., Disney and Universal have all released movies for home viewing at the same time they debut in theaters, or just a few weeks after. The dearth of new releases in theaters has also trained consumers to expect new movies at home. That has made original films one of the most competitive arenas for streaming services.
Wall Street has bestowed higher stock prices on media companies that are investing heavily in streaming services. Shares of Disney have gained about 70% over the past two years as Disney+ emerged as a competitor to Netflix, while ViacomCBS Inc. and Discovery Inc. have both benefited from investor enthusiasm for their growing online investments, even with the recent retreat in their stocks.
As recently as last summer, Universal was leaning toward licensing its movies to other companies, but the pandemic has delayed and complicated negotiations that began more than a year ago. Some executives at NBCUniversal have also discussed a hybrid deal in which Peacock would share rights with another service, as it does with Disney’s Hulu on the sitcom Modern Family. That way, NBCUniversal could use the movies to boost its own service without surrendering all of the licensing money.
Premium cable outlets like HBO and streaming services like Netflix rely on recent movies from Hollywood studios to attract and keep subscribers. HBO has been the home for new movies from Warner Bros., Universal and Fox, now a Disney unit, for more than a decade, while Netflix has obtained lots of family films through deals with Illumination, Sony Corp.’s Sony Pictures Animation and ViacomCBS’s Nickelodeon.
Losing movies would be a blow to both services. Universal is one of the most successful studios, thanks to franchises such as “Fast & Furious” and “Jurassic World,” while Illumination’s The Secret Life of Pets 2 was the third-most-popular movie on all streaming services last year in the U.S., according to Nielsen. Movies previously released in theaters don’t attract hordes of new subscribers, but they are useful for retaining customers who show up for original series.
Yet HBO Max and Netflix have prepared for the loss of licensed movies by investing in original films of their own. Netflix released almost 60 scripted movies last year, scoring major hits with Spenser Confidential, The Old Guard and Extraction. It also earned the most Oscar nominations of any studio.
Should Universal choose not to license its films, streaming services still eager for movies still have another other option: Sony, which doesn’t operate its own streaming service. Universal and Sony have held talks with buyers such as Netflix, Amazon.com Inc., HBO Max, Lions Gate Entertainment Corp.’s Starz and Hulu. But it’s been hard to come to terms, with the industry disrupted by Covid-19.