Image source: Netflix

On Sunday, ABC will broadcast the 88th annual Academy Awards. A wide variety of films have been nominated, but Netflix's (NASDAQ:NFLX) Beasts of No Nation -- about a West African boy forced to join mercenary fighters -- is not among them.

The Internet streaming giant made an aggressive play last fall, launching the exclusive film helmed by True Detective's Cary Joji Fukunaga in theaters and at film festivals while simultaneously delivering it to its streaming subscribers. Although it was widely praised by critics, Beasts of No Nation fell short of Netflix's expectations -- at least in terms of attracting the interest of Academy voters.

It's a rare loss for a company that has otherwise executed tremendously in recent years, and it serves to highlight Netflix's ongoing transformation and ambitions.

Aiming for the Oscar
Netflix is in the business of attracting and retaining subscribers, and for that, it needs high-quality, exclusive content. Beasts of No Nation certainly fits the bill. It enjoyed a limited theatrical release, but it's currently exclusive to Netflix's streaming catalog. Among critics, it's earned an impressive 91% on Rotten Tomatoes, and it was even more popular with audiences.

But Netflix wanted more. The film runs just 137 minutes -- a drop in the bucket compared to the thousands of hours of content Netflix offers its subscribers -- but it was mentioned repeatedly by management in the run-up to its release. "Beasts of No Nation is [a] very intense Oscar-caliber amazing film," said CEO Reed Hastings on the company's earnings call last July. (Conference call quotes via Thomson Reuters).

Beasts of No Nation wasn't Netflix's first exclusive film, and it won't be its last. Still, it enjoyed the rare privilege of a theatrical run (the upcoming Crouching Tiger, Hidden Dragon sequel will also play in a handful of theaters) -- a move intended to make the film eligible for an Academy Award. In order to qualify for an Oscar, films must debut in theaters, and moreover, they must be shown for at least seven consecutive days at a commercial movie theater in Los Angeles County.

By releasing it in theaters, Netflix ensured that the film would meet the Academy's criteria. Nevertheless, it earned not a single nomination, much to the surprise of a multitude of industry observers. The film, its director, and its star, Idris Elba, were popular picks for their respective Oscar categories. Last month, digital marketing company Amobee Brand Intelligence declared it the most snubbed film among this year's crop of potential nominees.

Most notably, it surprised Netflix's management. "Beasts of No Nation is in the discussion about the Oscars. It didn't quite make it there," said Netflix's Ted Sarandos on the company's earnings call last month.

Betting billions on original content
Netflix paid $12 million for the rights to the film, a paltry sum compared to the $6 billion Netflix plans to spend on content in 2016. Still, had it been nominated, Beasts of No Nation would've done something special.

Netflix doesn't report ratings for its shows, and more generally, it doesn't seem to care about their immediate popularity. But it needs to cultivate an air of quality, one that gives customers a reason to subscribe.

Netflix's chief rival, Time Warner's (NYSE:TWX) HBO, has been in the original programming and subscription businesses for decades, long before Netflix, as a company, was even founded. Over the years, HBO has racked up hundreds of Emmy wins, a fact Time Warner's management is prone to cite frequently. On the company's earnings call earlier this month, CEO Jeff Bewkes commented:

When it comes to premium content HBO remained peerless. Its 43 content Emmy awards not only led all networks for the 14th consecutive year, but was also the most Emmys received in a single year by any network in at least 25 years.

Netflix won't be completely shut out of the Academy Awards. Of the five nominees for best documentary this year, two are Netflix productions: What Happened to Miss Simone? and Winter on Fire: Ukraine's Fight for Freedom.. Were either to win, it would be notable, but not historical. HBO documentaries have won Academy Awards in the past. Yet, HBO's films have yet to win an Oscar -- scoring a best picture, best actor, or best director win would've given Netflix immense bragging rights, the sort that could form the basis of a successful marketing campaign.

But Netflix doesn't need it. Last quarter, it added more than 4.5 million subscribers and plans to add many millions more in the quarters to come. Still, it would've been another reason for Netflix investors to cheer.

Maybe next year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.