Digital Editor Alex McDonald dives into the nitty gritty world of box office returns and profit margins to examine Netflix’s acquisition of The Cloverfield Paradox

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On Sunday 4th of February, Netflix stunned the world by debuting the trailer for their recent acquisition from Paramount, The Cloverfield Paradox, during the Superbowl. But not only did they shell out the estimated $5 million just to air the ad during ‘The Big Game’, but they announced that you could stream it as soon as the game was over. While trailers for Solo: A (Poorly Titled) Star Wars Story and Mission Impossible: Fallout have to sow the seeds and continue the hype train for months to come, Netflix could turn interest into an audience immediately. It’s an unprecedented move, and it’s a shame that the film doesn’t live up to the marketing genius.

But we aren’t here to discuss the merits of the film. Although if you’re interested in my take, I’d say it’s not a terrible way to spend two hours if you have Netflix, but I wouldn’t subscribe just to see it. Instead we’re here to get into the nitty gritty world of box office returns and profit margins, and whether this unprecedented move by Netflix could change everything forever. Boy, are you in for a treat this afternoon.

It’s an unprecedented move, and it’s a shame that the film doesn’t live up to the marketing genius

First things first, a little bit of context: The Cloverfield Paradox was not initially written with the intent to tie it into the Cloverfield universe, much in the same way that 10 Cloverfield Lane was its own project until it was absorbed by the franchise machine. The film was originally to be called God Particle, yet early in its shooting, Paramount Pictures decided that it would be the next Cloverfield film, in the hopes that it would make more money. Rewrites and reshoots ensued and the third instalment of the series wrapped shooting in September 2016 and slated for a January 2017 release. And then an October 2017 release. And then February 2018. And then April 2018. Paramount’s lack of confidence in the project was evident.

Last month, rumours began to surface from Deadline that Netflix were looking to purchase the distribution rights to the film but there was no official confirmation from either party. This would be the second deal between the two companies, following Netflix’s deal to stream the Alex Garland’s sci-fi film Annihilation worldwide just 17 days after it’s US release later this month. A deal was struck in secret and the release date of the film was also set in secret.

So, why did Paramount make this deal? The Cloverfield Paradox is estimated to have cost Paramount around $45 million to make, and, again according to Deadline, the deal with Netflix made the film “immediately profitable.” Ultimately, Paramount cashed out on its investment. Looking back at the box office returns of their tentpole films of 2017, it’s easy to understand why they made this decision.

They are estimated to have grossed $1.72 billion at the international box office last year, having spent $823 million in the accumulated budgets of their films. At first glance, this looks like a good year for Paramount. But the general rule of thumb when calculating a film’s profitability is its budget times two and they only exceeded that by just over a combined $70 million; that is buttons to a major movie studio.

For a company in desperate need for a win, doing a deal with Netflix can seem like the best option; it certainly removes any element of chance in an already crowded blockbuster market

For a company in desperate need for a win, doing a deal with Netflix can seem like the best option. It certainly removes any element of chance in an already crowded blockbuster market. If Paramount knew that they had a bad film on their hands, which I suspect they did, the chances that it will be profitable would be severely damaged. Netflix were able to dodge a lot of the damage of early reviews that could cripple a film like this at the box office. At the time of writing, The Cloverfield Paradox only has an 18% rating on Rotten Tomatoes, which compared to its predecessors (Cloverfield has 77% and 10 Cloverfield Lane has 90%) is embarrassingly low. The cult status of the franchise certainly wouldn’t carry it to profitability, and word of mouth wasn’t going to help either.

Netflix has already launched, according to staunch defenders of the cinema experience, a wholesale attack on film itself. Could this be the next step? Are we about to see a wave of mediocre films with little hope of box office success finding their way to streaming services like Netflix and Amazon Prime? It definitely represents an exciting prospect for studios; if you can instantly turn a profit without having to worry about which superhero film you will have to compete with for box office, it seems like a no brainer.

Selling to streaming services, and in doing so side stepping an expensive marketing campaign, could be the new normal

In an age that is seeing Disney monopolising all of its competition as they struggle to keep up, selling to streaming services, and in doing so side stepping an expensive marketing campaign, could be the new normal. Personally, I think this is only beneficial to film fans and filmmakers the world over, those who want to have their cake and eat it too, without worrying about how expensive the cinema can be these days. Films shouldn’t be shelved and left to collect dust (or worse still released in January!) because a studio doesn’t think that it will be a big money earner. That’s how creativity is stifled. With this new model, studios can take more risks knowing that it will pay off in the end regardless.

The only loser in this scenario that I can see is Netflix: This was an ingenious marketing campaign for sure, but it’s a trick they will never be able to pull again. The Cloverfield Paradox would not have the attention that it does on merit alone, even if I feel some of the criticism is unjustly harsh. And if Netflix plans to sweep in and take the distribution of films that studios aren’t confident in, they could be awash with middling films at best, and that is unlikely to draw in any new subscribers. If they want to be taken more seriously at film festivals and during awards season, they can’t just go around buying any old rubbish.

Netflix may have changed the box office game forever, but they won’t be winning it any time soon.

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