Finding a great deal isn’t always straightforward, but sometimes it’s easier than expected.
Take, for example, the sequel to the hit film KPop Demon Hunters. Netflix rewarded Sony Pictures Animation with a $15 million bonus for the film’s huge success, according to insiders. This film quickly rose to become Netflix’s most-watched movie this past summer.
This bonus allowed Netflix and Sony’s movie chief, Tom Rothman, to negotiate a sequel smoothly. As a result, Sony’s overall payout for the first film increased from $25 million to $40 million. The original agreement included a $20 million fee and an additional $5 million for Netflix’s rights to keep the film on its platform. Plus, Netflix took care of the film’s entire $100 million production budget.
But the financial benefits don’t stop there. Sony also collects a share of the production budget, since Netflix pays their animation studio, Imageworks, known for the Spider-Verse series, for their work. They also earn from soundtrack sales and music publishing fees, while merchandising rights belong solely to Netflix.
While the specific financial terms for the sequel remain undisclosed, it’s likely that the agreement includes substantial increases in various categories, perhaps even bonuses tied to the film’s future success.
This sequel is an opportunity for Netflix to keep the excitement around the KPop phenomenon alive.
Both Netflix and Sony have chosen to remain silent about the specifics, as both are typically tight-lipped on financial matters.
The deal for the first Demon Hunters was made during the pandemic in 2021, as part of a larger agreement. Some industry insiders felt Sony might have benefited from a theatrical release, arguing that the film had potential to grow in cinemas. Others believed that Netflix offered the best environment for its success, pointing out that Sony couldn’t reclaim the distribution rights, which belonged to Netflix.
In terms of profitability, studios typically aim for margins of around 10% to 12%. Given the $100 million production cost, recouping $40 million from ticket sales would have been a significant challenge, especially when adding marketing expenses.
In a world increasingly shifting toward streaming, the success of KPop Demon Hunters is a strong indicator of how audiences are consuming content today.
To learn more about the impact of streaming on modern cinema, you can explore insights from the Hollywood Reporter.
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