Netflix has never been opposed to releasing its films in theaters, but Netflix was busy managing its fast-growing streaming business before agreeing to buy Warner Bros., company executives said.
Co-CEOs Ted Sarandos and Greg Peters said during the company’s fourth-quarter 2025 earnings call that the company had previously discussed internally whether to launch a business to distribute Netflix original movies in theaters. However, it was always low on Netflix’s list of priorities as the streaming side of the company continued to grow rapidly.
Of course, the realization that Netflix doesn’t think theater is great business was made clear by Sarandos’ comments last year that moviegoing was “outdated.” At the Time100 Summit in April 2025, Sarandos called the communal movie-going experience an “outdated idea.”
But that was then and now is now, Sarandos told analysts Tuesday. “We weren’t in the theater industry when I made these observations,” Sarandos said. “Remember, as I say again and again, this is a business, not a religion. So things change. Insights change. And we have a culture of reevaluating things when they change.” He pointed to Netflix’s previous “pivot” around advertising, sports rights and live events, areas the company previously said it had no interest in developing.
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According to Sarandos, “We debated many times over the years about whether or not we should build a theatrical distribution engine. And in a world of set priorities and limited resources, we simply couldn’t prioritize.”
Once the deal with WB is complete, he said, “we will benefit from a large, world-class theatrical distribution business with over $4 billion in global box office revenue, and we are excited to retain and further strengthen that business.” Sarandos has promised to keep Warner Bros. films in theaters for a 45-day window as part of a campaign to woo opponents of the mega-deal.
Netflix’s default position in negotiations with Warner Bros. Discovery is that “we are not a buyer,” Sarandos said. “But we went into this with our eyes and hearts open, and when we came on board, both of us (Sarandos and Peters) were very excited about this amazing opportunity.”
Peters said he already knew based on Netflix’s film production deal that the theatrical model was “an effective complement to the streaming model.” But when the question of building a theatrical distribution business came up again, “we were busy investing in other areas,” he said.
Netflix has seen a turnaround with special event releases of originals in theaters, including the final screening of Stranger Things 5 on New Year’s Eve (which grossed more than $25 million) and a limited screening of its blockbuster KPop Demon Hunters.
Spence Newman, Netflix’s chief financial officer, said the company sees the deal with WB as accelerating its existing business. He said about 85% of Netflix and WB’s combined revenue comes from their core streaming business on a pro forma basis, with additional benefits from Warner Bros.’ film and TV studios.
Earlier Tuesday, Netflix announced it was converting its $83 billion deal to acquire Warner Bros. Discovery’s studios and HBO Max streaming business into an all-cash offer. This was due to pressure from Paramount Skydance, which is pursuing a hostile takeover attempt for Warner Bros. Discovery, claiming the deal is favorable to WBD shareholders. Netflix and WBD expect the deal to close within 12 to 18 months, but it’s unclear at this point how much resistance the deal will face from regulators.
