Netflix's Oscar-Nominated 'The Irishman' Cost a Reported $175M - Here's Why It Might Have Been Worth It

Netflix content chief Ted Sarandos said that big-budget feature films like 'The Irishman' boost Netflix's value in the eyes of consumers.
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It's awards season again -- and if Oscar nominations are any indication, Netflix is already a big winner. 

Netflix's recently released feature film, the 3 1/2 hour, Martin Scorsese opus "The Irishman," scored ten total nominations including Best Picture and Best Director. “Marriage Story” and "The Two Popes" also earned nominations, as did two animated features and the feature documentaries "American Factory" and "The Edge of Democracy" and the short documentary "Life Overtakes Me." 

Netflix (NFLX) - Get Report shares were up 3.3% on Monday to $339.85.

Netflix’s 24 total Oscar nominations marks a high point for the streaming giant -- it earned 15 nominations last year -- and it also launched it ahead of Disney (DIS) - Get Report, which earned 23 total nominations.

According to The Hollywood Reporter, "The Irishman" -- which earned plenty of buzz when it went live on Netflix over Thanksgiving weekend -- had an eye-watering budget of $175 million. So what exactly did Netflix get for the money? 

As noted during prior awards seasons, part of the value in Hollywood awards is that it sends a message to talent that their work will be seen and recognized for its quality. Nominations and awards have established Netflix as a premium Hollywood distributor, not just a tech company -- and also raise its appeal for consumers, who perceive the content as “part of the zeitgeist,” in the words of Ted Sarandos, Netflix’s content chief.

Netflix said in early December that 26.4 million accounts watched "The Irishman" within the first week, and that it expected 40 million views in the first 28 days. The company defines a view as watching at least 70% of the program.

Sarandos explained at a recent UBS Global conference that it's difficult to measure how much a specific piece of content drives subscriptions in a given period, but the strategy behind big-budget feature films lies in boosting the “value proposition" for consumers. 

He compared watching "The Irishman" to “a $100 night out” that viewers can enjoy at home instead.

“I think it translates into how they value Netflix,” he said.

Sarandos also pointed to the business case for mingling big-budget content in with syndicated and less-costly programming: It “leads to pricing power,” as well as lower churn, he said. Netflix currently costs $13 per month for the most popular tier of service. Disney and Apple's (AAPL) - Get Report recently-launched streaming services cost less, at $6.99 and $4.99 per month, respectively, while AT&T's (T) - Get Report forthcoming HBO Max will cost $14.99 a month.  

“We're not seeing an inflection point or one on the horizon that says we should be investing less than we are now and we just want to, so we're continuing to see positive results from the investment,” Sarandos said. 

Netflix spent about $15 billion on content in 2019, and is expected to meet or exceed that in 2020.