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Netflix Takes Pole Position in the Oscars Race

Netflix (NASDAQ: NFLX) has long been known as a Hollywood disruptor, but the disruption may now be complete.

The 2020 Oscar nominations were announced on Monday, and the leading streamer took home more than any other studio, garnering 24 nods, up from 15 a year ago.

That compared to 20 for Sony, 17 for Walt Disney (or 23, including Fox Searchlight's six), 12 for AT&T's (NYSE: T) Warner Bros., and 11 for Comcast's Universal. No other studio had more than 10.

The news comes after a poor showing for Netflix at the Golden Globe Awards: Despite a slew of nominations, the streamer won just two awards. But the company's Oscar campaigning appears to have paid off. "The Irishman" and "Marriage Story" nabbed two of the nine nominations for Best Picture, and the company has at least one candidate up for every major award. Investors cheered the news, sending the stock up 3% on Monday.

While Netflix would like to win as many awards as it can, especially Best Picture, just coming in tops in nominations is a major victory in its own right and a validation of the company's strategy in a number of ways.

Image source: Getty Images.

Raising the bar

Most importantly, Netflix scored nominations across a wide variety of genres. While nominations for "The Irishman," "Marriage Story" and "The Two Popes" were largely anticipated and will get the most attention, Netflix also scored Best Documentary nominations for "American Factory" and "The Edge of Democracy." It also took two of the nominations for Best Animated Feature with "Klaus" and "I Lost My Body," and one in Best Documentary Short for "Life Overtakes Me."

No other studio, let alone streamer, has the breadth to win multiple nominations for Best Picture, Best Documentary, and Best Animated Film. Netflix has at times been criticized for trying to offer something for everyone, but the range of categories in which it earned nominated shows that the results of that strategy are resonating with Hollywood's tastemakers.

It's also worth remembering that movies are something of a secondary focus for Netflix. Most of the company's budget -- and most of the time its viewers spend with it -- goes to television series, and Netflix has also made its presence felt at the Emmys, where it has competed with HBO to bag the most nominations over the past few years. Again, no other studio, and definitely no other streaming service, has had so much success in both television and film.

Finally, Netflix's nomination haul is a stamp of approval for the Netflix model itself as the company has mostly resisted screening its movies in theaters, instead choosing to reward its subscribers. Though it has to show movies in theaters in order for them to qualify for the Oscars, Netflix has rejected the traditional "windowing" process, under which studios agree to wait a certain period of time after a movie is released in theaters before it's made available to view at home. Netflix's refusal to window its movies has sparked criticism from the likes of Steven Spielberg and others in the Hollywood establishment, but the industry largely appears to have gotten over its qualms.

Already a winner

Though it would be a disappointment if Netflix fails to capture Best Picture or other major awards, leading in nominations -- and coming in ahead of well-established studios like Sony, Disney, Warner Bros., and Universal -- shows how far it has come.

Netflix doesn't compete for dollars at the box office, so movie awards and nominations are the best way to measure the progress of its film division. At a time when the company faces expanding competition in streaming from the likes of Disney, Apple, and others, Netflix's 24 Oscar nominations are a reminder that it's still in a class of its own. None of its streaming competitors come close to offering such a wide range of quality entertainment across both movies and television.

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Jeremy Bowman owns shares of Netflix and Walt Disney. The Motley Fool owns shares of and recommends Apple, Netflix, and Walt Disney. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.


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