(Bloomberg) — Netflix Inc. is trying a new approach in marketing its next big movie: telling people it’s coming out.
The streaming service is orchestrating one of its biggest promotional pushes ahead of the July 22 streaming debut of “The Gray Man,” a spy thriller starring Ryan Gosling. The campaign includes billboards in several cities, as well as TV commercials at major sporting events.
The campaign is a test for the world’s most popular paid video service, which has historically not prioritized marketing titles before release. Netflix executives and show creators have been pushing company executives to increase marketing budgets for its movies and TV shows. Major movie studios spend tens of millions of dollars on marketing campaigns before big releases to boost opening weekend ticket sales. Television networks do the same so that a show can attract large audiences right from the start.
Netflix spent more than $2.5 billion last year on marketing, but it never invested as much per title as its peers in Hollywood. It saves money by not spending so much on marketing upfront, which would cost billions of dollars more, considering it releases hundreds of titles a year. The company relied on its algorithm to deliver the right show to the right viewer, then spends the money to amp up an already popular project.
Netflix has reassessed its strategy, particularly after a loss of subscribers caused its stock to drop more than 70% this year. The company’s growth has slowed in some of the world’s biggest countries as services such as HBO Max, Disney+ and Hulu chipped away at its share of the streaming market.
Netflix plans to introduce a cheaper, ad-supported version of its service later this year, and this week picked up Microsoft Corp. to manage ad sales and technology. The company hopes this will entice price-conscious consumers to sign up for Netflix.
The increased competition has also made it harder for Netflix titles to stand out from the crowd. The company wants to make fewer films, but of better quality. It restructured its marketing department earlier this year, shortly after hiring a new chief marketing officer, Marian Dicus. Netflix has gone through three CMOs in the past few years.
Netflix has increased its marketing spend over time and has mounted major pre-release marketing campaigns for new seasons of hit TV shows such as “Stranger Things”, “Ozark” and “Bridgerton”. He bought national TV spots last month for “Hustle,” a basketball drama starring Adam Sandler, as well as “The Sea Beast,” an animated film.
Marketing budgets for films began to increase along with production budgets and star power. Netflix spent over $100 million to produce “Red Notice,” an action comedy starring The Rock, Ryan Reynolds and Gal Gadot, and “The Adam Project,” which also starred Reynolds. Talent contracts on “Red Notice” alone cost more than $50 million, according to reports.
“The Gray Man” is one of Netflix’s most expensive bets to date with a reported production budget of $200 million. Gosling stars as an assassin for the Central Intelligence Agency who becomes a target after uncovering dark secrets about the organization. Chris Evans, Ana de Armas, Wagner Moura and Rege-Jean Page also star in the film, which is produced and directed by Joe and Anthony Russo, the filmmakers of several major Marvel films.
When you’re spending so much money on famous castings, Netflix wants to make sure people know the title is coming out. He can’t spend $150 million on a movie that nobody sees. The talent also wants to know that the service supports the project. Dicus, along with co-CEOs Ted Sarandos and Reed Hastings, all approved of spending more to boost new titles.
Netflix executives also lobbied for the company to release its films theatrically, believing it would generate additional money and notoriety. Theaters won’t show the movies unless Netflix commits to spending money on marketing and an exclusive theatrical release of at least a few weeks.
Hastings and Sarandos remain skeptical of the benefits of movie theaters. “The Gray Man” will appear in theaters for just one week before being available on the service, and it won’t be on most major chains.
Netflix closed a block of Hollywood Blvd. Wednesday night for a premiere of the film at the TCL Chinese Theatre, a 95-year-old venue in the heart of Hollywood. The event had the feel of a classic movie premiere, as stars walked down a long red carpet and guests munched on fried chicken and donuts. After the screening, they ventured to an after party at the nearby Hollywood Roosevelt Hotel, site of the very first Oscars.
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