Why ‘KPop Demon Hunters’ Is a Fascinating Hollywood Experiment

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1:54It's K-pop Demon Hunters, of course, with an estimated 18 million to 20 million in ticket sales. That's playing only on a Saturday and Sunday and only in about 1 ,700 theaters. That works out to about$11 ,000 per location, a pretty great per-screen average, considering Netflix only announced the sing-along version of the animated movie would be in theaters about two weeks ago, right around the time a song from the soundtrack hit number one on the Billboard chart. The movie didn't play in the country's biggest chain because AMC Theaters refuses to play movies from Netflix, which doesn't give its titles a meaningful, exclusive theatrical window.

2:29And we only know the box office numbers because rival distributors and exhibitors are leaking the numbers. Netflix, which loves to talk about how transparent it is with data, refused to release box office data for this movie. So lots of issues here. First, why did Netflix do this? K-pop Demon Hunters is already on track to become the most viewed movie in the history of Netflix. It's at about 210 million views and counting. And the company's views on movie theaters are pretty well known. Co-CEO Ted Sarandos has said many times that people prefer watching movies at home. Theaters are a, quote, outdated concept, end quote, for most movie fans, he said at a conference earlier this year.

3:09And second, do the numbers this weekend suggest that K-pop Demon Hunters could have been a massive hit in movie theaters when it was released in June? If so, then Sony Pictures, which made the movie and sold it off to Netflix during the dark days of COVID, they left a lot of money on the table. Or is this a phenomenon uniquely situated for Netflix? Yet another example of the platform creating the sensation rather than the content itself. Lots of room for debate here, so we've got Lucas Shaw back to discuss it all. Today, it's K-pop demon hunters, the phenomenon, and what it means for Hollywood.

3:42From The Ringer and Puck, I'm Matt Belony, and this is The Town.

3:49Okay, we are here with Lucas Shaw from Bloomberg. Welcome back, Lucas. Are you excited for our live show this week? I'm so excited. Yeah. Oh, you sound absolutely thrilled. Yeah. Are we going to pregame it? Are we going to like, what is the plan? I'll send you some topics like a normal show. But people don't realize we don't go back and forth a whole lot before the shows. We decide on the topic and we maybe say what our take is, but usually not. You're keeping the special guest until then? You don't want to divulge in advance? We are keeping the special guest secret because I think the reveal is going to be just such a jaw dropper for the town super fans that they are going to love it.

4:32And we're sold out, so we don't need it to juice sales or anything like that. So for those coming to the El Rey, you are in for a big surprise. I don't want to oversell it here. It's not like Rupert Murdoch, but it's going to be fun. What are the odds that this appearance ends in Fisticuffs? I don't know. I'd say strong to quite strong. Okay. Pretty strong odds. All right. But until then, let's talk about my favorite subject, K-pop Demon Hunters, which has been a fixture in my household for a few weeks now since my nine-year-old discovered it. We did not go to the sing-along this weekend. I don't think he knew about it or had other things going on, but big deal.

5:17Up to$20 million,$19 -$20 million at the box office, depending on which estimate you believe. My question to you is, why did Netflix do this? Why did TED, theaters are an outdated concept for most people, Sarandos, authorize theaters here? Marketing and buzz. Like, why not? Because movies and theaters are considered a bigger deal and a cultural moment, the two things that he says they don't need theaters for. Look, it's not about money, right? because making an extra$20 million from this title doesn't really mean anything to them. They've already gotten... You say that, although that's all that Sony made off the entire movie, but we'll get to that.

6:00But I say that because the amount that they have benefited from sort of people coming on to watch it, like the engagement, any probably new subscribers who signed up, this project has more than paid for itself because it was so cheap. I just think that they wanted to continue the momentum, right? But that's the argument for theaters in general. That's why people say you should put your movies in theaters before they go on the service, because you build momentum, you build awareness, all the things that theaters offer. Yeah, but this is an inversion of that. This thing became a sensation without theaters.

6:35It did not need theaters to become it. But because of the musical element, because it's kids, and because of the kind of meek summer, especially August, I think they saw an opportunity. Look, it's the same way in which they would have loved to have a bunch of consumer products around this title, right? It's a kid's project. They were sort of caught with their pants down there. No, they weren't. They were. They didn't have them ready to go when the movie was the biggest hit. But not because they didn't want them. They went to toy companies a couple years ago. None of the toy companies saw the promise in the project.

7:10And so they couldn't get a lot of partners for it. And then when it blows up, it's then all of a sudden too late. Oh, so the fault is the toy companies, not Netflix. Yes. Like Netflix goes to toy companies with a bunch of its kids' properties and say, what do you think about this? What do you think about this? And the toy companies like Sony, like perhaps even some people at Netflix, didn't really believe in it. And so then when it becomes a sensation, you can't kind of fast respond because toys take a while to develop. Well, they have stuff on their website. They are selling a lot of merch. If it comes out next year, suddenly you've sort of missed the moment and they're not going to, they wouldn't have a sequel ready for a few years.

7:46Yeah, they'll sell, they sell like some nice extra things on their website, but that's not like having a proper toy line in Target or Walmart or whatever it may be. Yeah. So I think the other thing going on here is they see a future for this property. They now have a real, honest to God, family franchise on their hands. And the best way to boost that franchise and get a little bit of extra juice out of it is to put it in theaters where you do get more awareness and it becomes part of communities and people remember things more when they are loading the kids in the station wagon and taking them to the multiplex on an afternoon.

8:23It's the same reason Taylor Swift put her movie in theaters, her heiress tour. She, as a brand of Taylor Swift, had this enormously successful tour that went way beyond what they even thought it could be. And they decided to capitalize. And I guess for them, they were more excited about making money on it. But it was also a brand solidifier. You put that movie in theaters, it becomes a cultural moment. Everybody is talking about it. And the Taylor Swift brand benefits from that. And that's what I think they're thinking about here for Demon Hunters, because this is going to be a property with multiple spinoffs and sequels, consumer products, probably in real life experiential moment at some point.

9:06So that's what they're doing. So I think the Eras Tour is probably the apt comparison, right? Because when the Eras Tour came out, there was all this noise about, oh, wow, movie theaters, like concert tours and movie theaters. Taylor Swift sort of did the deal on her own. Is this a new model? And it kind of turned out it wasn't. Yeah, also, but keep in mind, that movie made$261 million worldwide. That's a little bit more than a two-day stunt that generated$20 million. They also chose to try to make it an extended event. Yeah, we're not seeing Netflix try to make 200. I'm not saying it would. I think there's a big difference between taking something that was in live and putting in theaters.

9:48There were a lot of people who wanted to see the Taylor Swift tour who couldn't. And so going to see it in a theater was the next best thing. Or they did and they wanted to be part of this moment. And that latter part is what's happening with this. I don't think you're going to see millions and millions of fans go to see it in theaters when they can just watch it at home. So the ancillary questions here are many. And first and foremost, does this change the Netflix stance on theaters at all? Probably not. I agree there. I don't think all of a sudden they are going to start putting movies in theaters either before they're on the service concurrently or two months after.

10:23This is a pretty unique situation. Their response to this would be, you guys talk all the time about how we need theaters to create a cultural moment. Guess what? We just did it. Well, they would say we did it and then we dropped in theaters as a little bonus. Like we did it on our own. Like they had probably the movie of the summer on their service. Oh, see, that's interesting. They claim they had the two movies of the summer on their service with Happy Gilmore 2 and Demon Hunters. And I would still argue that they had the TV movies of the summer. I think Demon Hunters was the movie of the summer.

10:58I don't think Happy Gilmore 2 was the movie of the summer. But the more I've thought about it, the more it feels sort of incontrovertible that K-pop Demon Hunters was the biggest movie of the summer. And you can say it's a TV movie and that's fine, but it's a movie. It costs$100 million. I don't want to say most TV movies do not cost$100 million. Yeah. But I do think that we will see Netflix use theaters for more stunts. I mean, you could call the Greta Gerwig IMAX thing a stunt. And I think that they will be a little bit more open to that kind of thing in the future, perhaps. It just feels obvious to me.

11:29like the vast majority of Netflix movies don't belong in a theater, right? If they tried to put them there, they would fail. And so I get it. But if they continue to go with this, like we're going to do sort of a big event movie every quarter. And I think anytime Netflix spends more than$100 million on a movie, it's like worth the experiment with theaters. Well, we think so, but Ted doesn't think so. No, I know. But I've had this argument with plenty of people at Netflix. It's like, if you're making like a$70 million thriller or a$40 million romantic comedy, I mean, I'm making these numbers up.

12:06Like, fine, release it at home. I totally get that. But if you're making Narnia with Greta Gerwig, if you're making one of these massive movies... Even Frankenstein, the Guillermo del Toro movie. Yeah, like that movie would probably look and play great in a movie theater. And it will for the cultural elites who live in New York and LA, where Netflix makes you see it in a theater for awards consideration, because they know that you will take it more seriously if you see it in a theater. And that's the difference there. They want that movie to be considered for awards. I think you're right. When they put things in theaters, it's either to placate talent or to maybe jump on a...

12:42This is a unique case where they're sort of like jumping on a wave and trying to light even more fire and keep it going. Because this is the most popular movie Netflix has ever released. Yeah, amazing. And nobody had even heard of it a year ago. and nobody at Netflix thought it would do these numbers. Certainly not at Sony, which we'll get to. Yeah, think about a lot of the biggest Netflix hits, right? Whether it's Squid Game or Stranger Things. It's not that they come out of nowhere, but nobody ever thinks they're going to be as big as they are. Probably one of the few ones where they were like, yep, that was it, was Bridgerton, just because it's like, okay, it's Shonda Rhimes, it's the first big show, it's great.

13:16In TV, but in movies, you look at that top 10 list and it's a lot of the movies that they spent a lot on, like Red Notice, what's the Sean Levy movie with Ryan Reynolds? Which one of those? There's the one that... The Atom Project? Yeah, the Atom Project. They made that thinking it would do well. But then there's also like Carry On, which is sort of, you know, or Damsel. Should AMC have played this movie? My good friend Adam Aaron chose not to play this movie. This is one of the reasons why this only debuted in 1600 theaters was AMC refused to play it. They're the largest theater chain. They have the biggest and most profitable theaters for the most part.

13:56He does not play Netflix movies because they won't adhere to an established window of exclusivity. But Regal and Cinemark made an exception here. And maybe AMC should have too? Yeah, they clearly should have. Well, why do you say that? Why not draw a line in the sand and say, if you don't play our business game, then we're not going to play your stunt game. The problem for the theaters is that they don't have any leverage. Netflix doesn't need them. Do they or do they not? You know, the Duffer Brothers left Netflix for Paramount in part because Netflix wouldn't offer them theaters. The Duffer Brothers, the makers of which movie that has ever been released in theaters.

14:37I hear you, I hear you, but it was a deciding factor. Paramount offered them the chance for movies in theaters. That only matters if Netflix decides, okay, we have to do theaters. And until Netflix feels like they have to, and they may decide that at some point, but until they do, they don't need the theaters at all. But you know what the theaters do need? Product that people want to see. Yeah. You know what this weekend would have been without this movie? The number one new movie would have been Honey Don't, which grossed$3 million. Third weekend of weapons did 15, but there was not a lot of alluring product this weekend other than this movie.

15:16Yeah. So I'm not saying, look, it's not devastating to AMC that they didn't have it, obviously, but it would have been nice for them to have show the number one movie, right? Like people had to choose to go see this movie. Yeah. If you have a 10-year-old daughter and you aren't going, like you're in the doghouse. And is$20 million really going to move the needle for AMC? Maybe these days. No, not at all. Not at all. But we did just get numbers for the summer and the summer is not going to crack$4 billion like most thought it would during the heyday of the July blockbusters. It's going to be down.

15:48I need all the annoying social media accounts that come at us for being too pessimistic about the box office to like eat crow. You need that? I don't. I like that they're out there. Oh, no, I'm fine with it. I just think that they should acknowledge that they're wrong. I embrace the haters. I'm like Shohei Otani with the Padres hater guy. Yeah, that was great.

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16:50Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a$250 credit for the next one. Just go to linkedin.com slash the town. That's linkedin.com slash the town. Terms and conditions apply. This episode is brought to you by Netflix presenting Beef. Now nominated for 16 Emmy Awards, including Outstanding Limited or Anthology Series. Esquire raves, it's hands down the best TV show of the year. From Emmy-nominated creator, writer, and director Lee Sung-jin. Starring Emmy-nominated lead actor Oscar Isaac, lead actress Carey Mulligan, supporting actor Charles Melton, and supporting actress Yoon-ya Jung.

17:32IGN hails it a masterpiece. Lee Sung-jin's series remains an untouchable force. Beef, the most nominated limited series of the year. we have the AMC angle, but the question then is, would this movie have done well in theaters if it had been given an exclusive window? Pre-Netflix. Impossible question to answer. I don't think it would be nearly as big. It wouldn't have the same distribution. What's the biggest movie that Sony's released this year? Oh, I have those numbers and it's not pretty. It is 28 years later, which got to$150 million worldwide. So it is the last place studio for the year, I assume, behind Paramount's the second to last, but Sony is last.

18:17Because Paramount had Mission, so it has to be ahead of them. Yes, it is. They had no franchises. They tried to yada yada a franchise out of Karate Kid, and that movie grossed$112 million worldwide. The opening weekend for Karate Kid Legends was about the same as K-pop Demon Hunters two months after being on Netflix. It's totally possible that this movie takes off and is a big hit, but it does have the feel of like of an only on Netflix type phenomenon. I agree. And I think when you have these movies like Encanto is a perfect example with very catchy music, that movie didn't really perform in theaters.

18:53It was a different time, still COVID stuff, but took off on Disney Plus because it's got very repeatable music in it. That is this movie. And it's a good story and it appeals to girls and boys as well. But the music is what is powering Okay, so let's flip your earlier question a little bit. Because we've all seen how poorly original animation has been doing at the box office, right? Should companies launch original animation franchises at home and then put the sequels in theaters? I would still say no, mostly because of the cost of most of the original animation. A Pixar movie costs$200 million.

19:31You can't just drop it on Disney+. I mean, and I think that even when movies don't perform in theaters that well, they still have the aura of theatricality around them that caused them to be bigger on the service. Even something like Elio, which did not perform in theaters, will be big on Disney Plus because people know about it. And when you are marketing a movie for theaters, you create awareness that transfers to the digital release. And it's not like these movies are doing nothing. Like migration got to like 300 or something. And that was original animation. Right. And none of these other companies have a streaming service with the scale of Netflix.

20:07So it would be harder to just make them a hit. I actually disagree a little. I think that K-pop Demon Hunters had a chance to become a theatrical hit if Sony really nailed the marketing for it and leaned into the K-pop element, leaned into the music, put the music out early, perhaps had twice out there. like they could have turned this into something that would have appealed to girls and families right from the beginning and then maybe built it over time they did turn anyone but you into a sleeper and they were helped a lot by social media and tiktok and a lot of the things that helped this movie take off so it is possible i don't know why you're saying we disagree i agree it could have been i just think that the odds of it are less certainly less than 50 there's a reason Sony didn't release it, right?

20:56Yeah, well, there's lots of reasons. So let's get to the Sony angle here because I wrote a whole thing about this in my Puck newsletter a couple weeks ago. You can check that out. But Sony, which conceived and developed and produced this movie, will only make$20 million on this movie. It was part of a macro deal that Tom Rothman, the studio head, did in 2021 with Netflix at the height of the depths of the pandemic. The height and the depths of the same one. Yeah, the height and the depths, I know. They sold a bunch of movies. Netflix guaranteed to buy movies just for the service. And Sony would be able to keep the lights on and keep people employed.

21:40And they had movies to make. But the downside was Netflix would control those movies, control not just the release on Netflix exclusively, but also control sequel and ancillary rights to the property. The only thing Sony gets out of this is$20 million fee upfront for this. It was a percentage of the budget capped at 20. And they have the right to produce additional K-pop Demon Hunter movies in the future. But all of the value of this movie, including the box office receipts for this past weekend, goes to Netflix. so you're Tom Rothman in hindsight do you do this deal all over again no in hindsight the benefit of hindsight of course not no you do not you reserve some rights if this happens to become the biggest movie of all time on Netflix we get a 50 you know 100 200 million dollar payment and we get the right to put this movie in theaters for sequels but that's the whole problem here because we're not talking about this movie you can never predict what is going to be a smash hit like this They come out of nowhere.

22:47That's why everyone loves Hollywood. It's a great, interesting place to work because of phenomenons like this. But you can protect yourself. You can say if it becomes the biggest hit on Netflix, we have the right as Sony Pictures to produce the sequel for theaters because that's where the value is here. Even if Encanto became a phenomenon on Disney +, Disney, if they do it in Encanto 2, sure as hell is going to put that movie in theaters and not just on Disney+. And if Sony had the right to put K-pop Demon Hunters 2 in theaters, now it would probably make$500 million at least. You think so? Oh, yeah.

23:23You don't? Probably. But the new movie wouldn't come for three or four years. So will there still be as much interest in it? I don't know. And see, I mean, it's the earlier question I asked about like what studios should do. What is, have we seen an example of an at-home property that is really successful in theaters? And let's not go back to Mission Impossible was originally a TV show. I mean, like recent property that was either a TV show or a TV movie that then blew up at theaters. I don't know the answer. If there's a really obvious answer, someone can tell me and I'll say it. Yeah, I mean, the best, like, I know it's not the same, but like Moana is a perfect example.

24:04I know it was released in theaters and it did well. But that was a theatrical movie. I know it did well, but that movie became a phenomenon on Disney Plus and in home video. and it grows 640 million worldwide, the original. The sequel got to a billion, not because it was a great movie, but because every kid has watched it on home video. Yeah, I guess the answer to that, and this is the boring answer, but it's what most people would agree with, is like, it's about execution, right? If they make a good sequel that has a bunch of catchy songs again, then yeah, I think it would do well in theaters.

24:34See, I disagree. I think the sequel is not execution dependent. That's why you do the sequel. I think that because the first one is so beloved, it's going to get to$500 million, even if it's okay. That's why you do it. Fair. I think that's true for some things, but not all. Yeah, you're just saying maybe in three years when all the 10-year-olds or 13-year-olds care about things other than K-pop, that it will be different. This is the equivalent of Minion nostalgia that powers those movies. For the next 10 years, there's going to be K-pop Demon Hunter movies in theaters, and kids that were 10 when they saw the original are going to be in college and be like, you know what, I'd like to relive that.