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Will Netflix Start Buying Movie Theaters?

By Rhian Hunt – Sep 10, 2020 at 2:42PM

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One of the company's CEOs provides a fairly definitive answer and talks about Disney.

According to an interview with one of the company's two Chief Executive Officers, Reed Hastings, streaming service Netflix (NFLX -2.04%) probably won't be buying a theater chain in the near future, despite persistent rumors that it might. However, while speaking to The Hollywood Reporter, Hastings revealed, or at least confirmed, Netflix is in something of a content "arms race" with Walt Disney (DIS -0.01%).

Discussing the matter of theaters, Hastings asserted Netflix remains internet-focused, and he "can't see" it ever deciding to buy out a cinema chain. He also remarked movie fans are likely to return to theaters as the pandemic recedes, and he doesn't expect a significant influx of filmmakers to switch from creating content for movie theaters to making films or shows for streaming services like Netflix.

Young man at home watching a movie being streamed.

Image source: Getty Images.

Hastings compared the difference between movie theaters and Netflix to that between restaurant dining and home-cooked meals. He remarked both are "great" without needing exclusivity for either and said "we just want consumers to have choice."

Speaking about Disney, Hastings took a much more competitive tone, noting Netflix wants "to beat Disney in family animation." He observed Netflix will probably face a long uphill battle to match the older company in its own preferred bailiwick: "[T]hey will be a challenger and a competitor for the next 50 years." He nevertheless confirmed Netflix's determination to focus resources on its animation sector.

Disney, for its part, has recently muscled into Netflix's turf with its streaming Disney+ app and service. The jury's still out on The Mouse's foray into streaming content, however, with the recent release of Mulan boosting downloads by 68% but generating only a relatively anemic $27 million thus far, dwarfed by the $200 million the movie cost to make.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Netflix and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

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