Netflix is making its stance very clear: it is a company that prioritizes streaming media.

At the teleconference where the company announced its third-quarter financial results on Tuesday, Co-CEO Ted Sarandos reiterated the long-standing stance of this streaming giant: last year, the company spent $20 billion on content, which is intended for subscription users, and therefore should be delivered to customers as soon as possible through its streaming platform.

However, Netflix plans to release 30 films in theaters in 2027, a number that is roughly comparable to the number of films it released in theaters in 2026. Although not all films are expected to receive wide-scale distribution or a long theatrical run, Netflix is testing the waters with projects such as Narnia: The Magician's Nephew directed by Greta Gerwig; this film will be released on a wide scale when it hits theaters next February and will enjoy a 49-day exclusive theatrical window.

Against the backdrop of stagnant viewership growth and a stock price that has fallen by approximately 30% since January of this year, the company seems to be preparing to embark on a new path.

How its theater ambitions align with the "streaming priority" strategy remains a question mark.

Analyst Alicia Reese wrote in a report on Wednesday: 'Theatrical distribution has a net positive impact on both reach and streaming demand. Netflix is more open to exclusive theatrical windows, which will not only promote better relationships with talent but also increase new sources of revenue and enhance people's interest in their streaming services. This continues the pattern we've seen over the past few years on major studio streaming platforms: theatrical distribution will not erode the streaming window as Netflix fears.'

Before releasing its financial report on Tuesday, Netflix reorganized its executive team. Former Disney executive Peter Rice was appointed as the company's Chief Content Officer, succeeding Bela Bajaria who had held that position for 10 years.

According to an informed source, Netflix also fired the head of the film department, Dan Lin. This individual requested anonymity due to discussing internal changes. Just a few days ago, the company laid off about 1,000 people, including Lin's trusted assistant, Doug Belgrad, as well as the independent film director, Sheroum Kim; this news was reported by several media outlets. It is still unclear who will replace Lin in the position of Netflix.

The company hopes to reshape the brand's quality and leverage its experience in talent relations, represented by Rice, to attract top-tier talents in an increasingly competitive market.

However, the Netflix executives seemed to downplay the significance of this leadership change during the teleconference.

During the conference call, Sarandos stated to investors: 'Our business and our business momentum are both in operation. There is no need for fundamental adjustments to our strategy. We indeed need better execution in the US market... It's just that the growth isn't as fast as we would like.'

Sarandos indicates that this streaming media company has had "some very solid double and triple hits" this year, but it implies that the company still needs more "home runs."

In a landmark moment during Tuesday's conference call, Sarandos mentioned an agreement the company reached with Disney in October to bring the Ice Age series and other titles to Netflix, and also paid tribute to Disney CEO Josh D ' Amaro.

"We have already begun to see some of the benefits that the 'Ice Age' movies have brought. All five films have made it into our top ten list. This is really exciting," said this co-CEO of Netflix. "By the way, yes, Netflix just happened to promote a Disney movie during the financial report conference call. Josh, you're welcome."

Netflix Content Strategy

In order to attract consumers' attention and expand the subscriber funnel, Netflix has been enriching its content offerings for many years, including video games, live broadcasts of sports events, as well as documentaries quickly produced around popular cultural moments.

But recently, it has lacked hit shows like "Stranger Things," "Bridgerton," and "Squid Game," which were frequently mentioned in social settings and contributed to increased subscription and viewing numbers in the past.

In a letter to shareholders on Tuesday, Netflix stated: "We are aware that investors have some concerns regarding the increase in our viewership duration. Engagement—including the number of views, quality, and diversity—is still healthy."

However, at a time when Netflix has clearly indicated the need for a new growth path, and coupled with the setback in its acquisition of Warner Bros. Film Studios, investors and observers have once again turned their attention to the cinema business.

Citizens Stock Research Analyst Matthew Condon said about CNBC: "I believe Netflix has room for distribution through cinemas. Especially as the competition for time and attention continues to intensify."

He said, "If they really want to build a stronger fan base around certain intellectual properties, I think the theater circuit could be a good approach. This is an area where Netflix has historically been relatively less adept at, that is, creating very, very strong IP. I believe building a fan base around theatrical releases and similar formats would help with this, as well as helping them attract top-tier talent."

Netflix is no stranger to attracting Hollywood directors. It has collaborated with Rian Johnson, Martin Scorsese, Alfonso Cuar, Bong Joon Ho, Spike Lee, Guillermo, del, and Toro. However, none of the films directed by these filmmakers have achieved wide-scale theatrical release or a long theatrical run.

Sarandos admitted earlier this month that the company lost some talent due to its inability to guarantee a wide-scale theatrical release.

Most notably, the creators and main producers of the popular series "Stranger Things" have both left in the past year. Matt and Ross Duffer have signed a four-year exclusive agreement with Skydance; Skydance is now the new owner of the Warner Bros. film studio that was nearly acquired by Netflix. Meanwhile, Shawn Levy has joined Disney to direct ".Star Wars : Starfighter".

Entering the cinema

Sarandos stated on Tuesday that the company's strategy is "special theater distribution," which means each film has a tailored release method. In some cases, Netflix will ensure that the films are shown in theaters for at least the minimum time required to qualify for awards. Other films will only be released briefly as part of weekend special events; for example, their hit film KPop Demon Hunters was only shown in theaters for two days.

Gerwig's adaptation of Narnia is one of the few films to have enjoyed a longer theatrical run and wider coverage. The other is the animated film Charlie vs the Chocolate Factory.

Sarandos said, "Both of these movies have a strong global IP and a vast global fan base, so we are very looking forward to their performance next year."

As another sign of its evolution towards the theater business, Netflix indicates that it will disclose box office results for films with longer theatrical release windows. For major studios, publishing box office data is standard practice regardless of the distribution method or window arrangement, but this move marks a new level of transparency for this streaming company.

The new content manager, Rice, might become the missing piece for Netflix in the new cinema theater model.

This executive has extensive experience in the fields of television and film. Since 2023, he has produced films such as " Saturday Night " and "28 Years Later ". He is currently also working on a project to adapt the video game " Elden Ring " into a film.

However, at present, Netflix does not possess the infrastructure necessary for full engagement in the cinema business.

Stock analyst Wells Fargo told Steven Cahall: "Entering the theatrical business is not as easy as some people say. You have to negotiate with cinemas and find screening slots for your films."

Cahall pointed out that putting an occasional movie into theaters, especially for a limited release, 'may not be too difficult, but the theater distribution itself has its own set of operational capabilities... You need a team, a content pipeline specifically prepared for theater distribution, as well as a supporting marketing department.'

This is precisely where the acquisition of Warner Bros. Exploration Company's studio assets could have come in handy. Since this acquisition did not materialize, it is currently unclear how and how quickly Netflix will be able to expand its operations.

In addition, Netflix has also been deterred in the past by the marketing costs required to bring films to theaters, which can amount to hundreds of millions of dollars per film. Despite having a considerable content budget, Netflix has long prioritized providing a vast amount of content with almost unlimited choices to its subscription users, rather than focusing on single high-budget projects.

If it shifts to a multi-line strategy that serves both streaming media and cinemas, Netflix will need to become more like the companies it once disrupted.

“So, for Netflix, this becomes a question that is closer to the level of survival: is it time to become a media conglomerate, rather than just a pure streaming company?” said Cahall. “‘Do we want to become a media conglomerate?’”