Netflix’s Biggest Flex of 2023: Partnering with Pixar 2.0

Spellbound and John Lasseter – Pictures: Skydance Animation and GettyImages Skydance Animation, which ex-Pixar head John Lasseter currently heads, unceremoniously dropped its seemingly homely, animated feature deal at Apple TV for a partnership with Netflix back in November 2023. Netflix’s Original animated feature output has long been a discussion point of the industry.  It’s an area that Ted Sarandos has addressed numerous times, most recently citing the re-watch value this type of content delivers for subscribers, and his view that Netflix are “underpenetrated” in the genre.  This was as the streamer came off arguably its biggest flex of the year, swiping Skydance Animation from its output deal at Apple TV+.    Despite restructuring and layoffs that recently impacted the internal Netflix Animation division, animated family movies seem to be a key part of the future strategy.   Netflix already has a partnership with Skydance Media at large, with recent output on the kids side, including Sky Kids: Armageddon. That being said, this development had to have been a massive kick in the teeth for Apple. Spellbound, which had already been announced at Apple TV+, is the first to head to Netflix in 2024. The animated musical boasts a plethora of high-end talent. In musicals, it doesn’t come higher than Alan Menken. A content gazump for the ages. Confusingly, Variety reported that: “… the companies had mutually agreed that Spellbound was not a fit for Apple’s expanding narrative slate, thus necessitating its move to Netflix.” Given the success of high-end, music-driven animated features in streaming (Encanto, Moana, and Frozen), what’s not to like? From the outside, you’d have every reason to think that John Lasseter was cozy and settled with Apple. There’s a strong history there. Steve Jobs founded Pixar with Lasseter (plus Ed Catmull) and was simultaneously CEO of both companies for 20 years. They were concurrently betting hard on the capabilities of computers. The synergy seems obvious. There have been oceans of water under the bridge since then. Pixar sold to Disney, where Jobs remained on the board until his death in 2006. It went on to the great success that we’re all familiar with. Lasseter would be ushered out of the company in 2017 under a cloud of sexual misconduct. His subsequent appointment as the head of Skydance Animation in 2019 caused upset, but this ultimately settled. At the studio, Lasseter took up the reins of Luck, an animated feature in development. This caused numerous changes among cast and crew, unhappy with his appointment. I never pass up the chance to link this devastatingly perfect letter from Emma Thompson on the matter. Between this turmoil and COVID, the film would ultimately be a straight to streaming for Apple TV+ as part of a multi-year deal. Why the move from Apple to Netflix? Apple TV+ has a number of specific things going for it as a streaming service. Not least of all, the pressure of profitability is a dot, as Apple continues to cream in the profit from their core tech business. Granted household penetration is low. In the US, it’s around 12% to Netflix’s 51%, according to Entertainment Strategy Guy’s latest estimate. Having said that, the service has managed to curate an impressive and exclusive (also read: limited) offering of high-quality content. Ted Lasso is the standout crowd-pleasing hit. Plenty of other shows and movies have had critics’ mouths watering. In animation, the platform gave a home to the Oscar-nominated Wolfwalkers from Cartoon Saloon in 2020. It’s fair to say Apple TV+ is fully prestige TV without the chaff. Perhaps most crucial thing, as far as Lasseter might be concerned, is that it doesn’t have a CEO who has banged on and on about the fact that… sing it with me, Taylor… he’s NEVER EVER EVER putting movies in cinemas. And herein lies the crux. The additive nature of a theatrical release for animated features in streaming is a matter of intense debate. From the data we can see that movies released in cinemas drive the same or, more usually, higher viewership on streaming compared to their direct-to counterparts. So what might Lasseter hope for Skydance? Perhaps the former Disney exec is betting that Netflix, which undoubtedly remains the dominating streaming platform, will be able to deliver that critical mass of audiences and success to his studio’s output. There could even be marketing commitment, plus a guarantee of proper consumer product activation in the newly announced brick-and-mortar “Netflix House” stores. These would want to both be there as a baseline. Going back to his Pixar roots for a minute, Lasseter is used to working in “the machine” that is Disney. This includes big league marketing budgets and teams across every area of the business that activate IP across consumer products, retail, media partnerships, parks, stores, social, digital, gaming, music, you name it. That’s called a franchise. Sure, it drives sweet, sweet revenue, but it also acts as a flywheel, solidifying characters in the minds and daily lives of kids and families. The absence of this “machine” at Netflix was potentially a point of undoing for some of their preschool Original animation. In a golden age, Netflix enticed proven creators onto their roster, often in multi-year deals. Disappointment abounded, however, as shows failed to cut through the noise without the launch pad of marketing and franchise. This was particularly the case for Chris Nee, who joined Netflix after a platform-defining run of franchise slam dunks at Disney Junior. From the beginning, her shows struggled to find an audience on Netflix. Could there be something else in the pipeline? Is there a softening happening? Might Sarandos be coming to the position that a proper theatrical run would elevate certain movies? I often say we end up at the pointy end of the stick in kids’ media. Countless times, change hits us first, before our compatriots on the broader entertainment landscape. I wonder if this could be another one of those instances and we might see Skydance Animation movies in theatres before too long. Check out What’s on Netflix’s full slate coverage of upcoming Skydance Animation movies. A version of this post originally appeared on The Kids StreamerSphere. In this regular newsletter, we look at the latest news, deals, and performance data for kids’ content within global streaming.