Why Netflix and HBO drop movies when they’re ready for release

After HBO Max, which had created controversy by abandoning the film BatgirlNetflix has given up two films: The legacy and Housewife. An increasingly common practice in Hollywood, but not always for the same reasons.

With good financial health since the launch of its more affordable formula thanks to advertising, Netflix seems to want to save money to continue making money. On the website of The Hollywood Reporter, on January 27, 2023, we learn that two films ordered and produced by Netflix, The legacy (Alejandro Brugues) and Housewife (Danis Goulet), was finally discontinued by the streaming service, without knowing exactly what motivated this decision. The opportunity to take stock of these increasingly common practices in Hollywood, such as “tax write-offs” (tax deductionpp).

After a surge on HBO Max, it’s Netflix’s turn

The Hollywood Reporter understands The legacy and Housewife could be resold to other broadcasters, which differs from the strategy of HBO Max, which has no qualms about removing a work entirely to obtain tax compensation. However, we can assume that Netflix has the same motivation as its competitor, namely to save money by removing these two contents from its future schedule. His goal is probably to pay less tax to increase his profits. (And nothing says these two movies will be sold, because we don’t know the Netflix terms).

John Oliver, who has a show on HBO, poked fun at his group’s practices in August 2022. He accused them of favoring the tax credit over television.

In a difficult economic context, the audiovisual giants are increasingly resorting to what are called “tax write-offs”, which could simply be translated as tax deductions.

To put it simply, to abandon an expensive film under the pretense that it is a failure a priori, a company can get a tax break to compensate for self-inflicted financial losses. This allows him to declare less and therefore pay less. This practice was highlighted in August 2022 by the film Batgirl, to everyone’s surprise when it was ready to be aired. HBO Max did not judge its quality to be worth the cost and therefore removed it without the writers being able to save it. The group has since confirmed that scrapping completed projects is part of its strategy to increase revenue. HBO has become the specialist in abandoning movies and has already saved several billion dollars while allowing itself to resell certain abandoned content to third-party services to increase its profits.

One of the only pictures of Batgirl that will never see the light of day. // Source: Warner

Since then, the practice has been regularly condemned by specialists in the sector, who see it as a means of silencing artists. AMC, Paramount, Disney, Universal… All are regularly singled out for the millions of dollars in savings they achieve by killing completed projects, sometimes without allowing them to return elsewhere. Enough to leave production teams who have spent months on a project on the floor as if their work was worthless.

Source: Numerama edit

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