Top Film Industry Stories of 2014 #5:
Netflix Poaches Sandler
By David Mumpower
January 7, 2015
BoxOfficeProphets.com

Is he taunting Sony? He might be taunting Sony.

Over the course of his career, Adam Sandler has proven to be one of the most dependable lead actors in the industry. Beginning with his first lead role in 1995’s Billy Madison, the comedian has starred in 20 comedies while also broadening his range in five dramatic roles. Additionally, he has provided the lead voice in a pair of animated movies and made numerous guest appearances in other films starring Sandler’s buddies. There was even a failed attempt to convert him into an action star in a long forgotten buddy cop movie called Bulletproof.

Adam Sandler has accomplished everything a person can in Hollywood with regards to box office success. He is the rare name above the title that will put butts in the seats. A dozen Adam Sandler movies won at least one weekend of domestic box office. Some of the titles that finished in first place may surprise you (Just Go with It and Funny People) while some of the ones that never did probably shock you (The Wedding Singer and Grown Ups).

In total, Adam Sandler’s movies as a lead actor have earned almost exactly $3.9 billion, which is only $600 million short of the storied Star Wars franchise. Sandler is a safe, reliable draw in addition to being universally regarded as one of the kindest men in Hollywood history. People love him, they love working with him, and their careers are improved by the constant success of his releases.

At the end of 2013, Forbes Magazine declared Adam Sandler to be the most overpaid actor in Hollywood. Their argument is that he provides the least bang for the buck in terms of salary compared to return on investment. Here is the precise wording, “We estimate that for every dollar Sandler was paid on his last three movies, the films returned an average of $3.40.”

To be clear, they are not arguing that Sandler’s movies are a bad investment but rather than he is overpaid relative to his current market value. Using a baseball metaphor, Sandler overachieved early in his career, which allowed him to acquire a lucrative long-term contract. Now that he is past his prime, he is still a solid performer but wildly overpaid. Adam Sandler is the Derek Jeter of Hollywood. Unlike baseball, nobody retires in Hollywood when their skills are in decline.

I consider the above to be a harsh assessment of what Sandler brings to the table, as he has accumulated a more loyal fan-base than any actor over the past 25 years. Even his biggest clunkers such as That’s My Boy, Blended and Little Nicky have opened to double digits. In fact, only two out of 20 Adam Sandler comedies have failed to recoup their budgets. People who make movies would kill to have a 90% success rate in their craft.

On October 1, 2014, Netflix shocked the industry with their announcement that they had signed Adam Sandler to a four-picture deal. One of the most popular and proven actors in the industry will release a quartet of movies that will never experience a theatrical release. Instead, they will all debut on Netflix’s streaming video service. While the move is far from a death knell for movie theaters, it certainly has the feel of the beginning of the end.

For Sandler and Netflix, this deal represents a match made in Heaven. Throughout his career, Sandler has discovered new ways to keep casting the same people in his movies. He effectively created careers for his friends in addition to himself. In recent years, a new generation of movie goers has demonstrated less satisfaction with the filmography of Sandler. After all, he is the comedian their parents enjoyed. Rebelling against him is natural behavior. Plus, Sandler has not done himself any favors with sub-par projects such as Jack and Jill and That’s My Boy. Sandler’s dwindling box office in combination with his constant salary demands north of $15 million a picture has reduced his popularity within the walls of Sony.

We know this for certain due to the Sony hack, a recurring theme throughout this year’s Top Film Industry Stories. Sony’s younger execs and bean counters had expressed frustration with regard to the company’s tight relationship with Sandler. Many employees vented that his brand of cinema damaged the Sony brand. A blunt quote that has been leaked states, “…we continue to be saddled with the mundane, formulaic Adam Sandler films.”

Another, even harsher evaluation argues, ““There are a lot of term deal personnel as well as creative personnel, yet we only release a dozen or so Columbia Pictures a year, for example. And will we still be paying for Adam Sandler? Why?” And the killshot quote is, “[T]he studio needs to change deal structure that has been in place with Happy Madison [Sandler’s production company], as this arrangement has disproportionately benefited Adam Sandler and his team, relative to SPE.”

Is the above a blueprint example of the maxim be careful what you wish for? We will find out over the next few years as Sony is no longer in the business of Adam Sandler. Happy Madison’s consistent production of money-making movies has been devalued due to the salary demands of its proven star. Netflix, a company flush with cash and desperate to break down the walls of conventional movie making, has fleeced Sony of its most reliable and loyal celebrity.

The broad strokes of Sony and Sandler are not even the most interesting part of this story, though. For years now, the National Association of Theatre Owners has maneuvered in every way imaginable to prevent consumers from watching new movie releases at home. The employees of this organization realize that the majority of movies are watched this way. If a consumer suddenly decides that they would prefer to watch all films in the comfort of their own living room, the participants in NATO will soon be putting Out of Business signs in their windows. So, they have heavily pressured movie studios to avoid early digital distribution of recent releases.

In 2010 and 2011, some movie studios announced the intention to provide digital on-demand tiles for $30-$50 starting 30 days after the release of the film in cinemas. Exhibitors flipped out over this news and rightfully so. Studios receive a much larger portion of a film’s box office during the first week then distributor/exhibitor split grows relatively equal by the fourth week. A 30-day window would have meant that by the time exhibitors were earning decent money on a movie, people could have bought it at home. That idea was considered a doomsday scenario by movie theater chains.

Fast forward to October of 2013. Ted Sarandos, the chief content officer at Netflix, outright stated during a speech that his company “might kill movies.” You can watch the full video here, but the central theme was that Netflix wanted to share day and date titles with theatre owners. In the process, consumers could decide on their own whether they want to attend a movie at the theater or watch it at home.

At the time, most people considered Sarandos’ commentary to be saber-rattling from a company trying to negotiate their way into a better deal. With Sandler and his dutifully loyal audience in tow for four films, Netflix finally has the opportunity to demonstrate to Hollywood that they are just as viable a business partner as theater chains in the movie release system.

The amount of the investment they have provided to attempt this ambitious endeavor has not yet been disclosed. Given that Adam Sandler’s last four live-action movies cost approximately $272 million ($68 million per film), it is safe to say that they have wagered at least a quarter billion dollars in an attempt to prove their argument.

Even if Netflix is proven wrong on the point, there is an ancillary benefit to the Sandler deal. Most of the actor’s films have performed quite a bit better overseas than domestically. Netflix is currently available in only 19 countries with two more scheduled in early 2015. Having the Sandler library as a selling point will entice more movie fans across the globe to try the company’s streaming video service.

At face value, Netflix’s new marriage with Adam Sandler appears to be nothing more than another series of predictable but comfortable comedies starring a middle-aged man. Given what Netflix has to gain and NATO and Sony have to lose in the process, however, it is a daring attempt to fundamentally alter the nature of consumer content consumption of first-run cinema.