Sometimes the hunt for a deal is easier than others.
In the case of the sequel to the cultural sensation KPop Demon Hunters, Netflix decided to take the easier route and awarded Sony — which made the acclaimed animated film — a $15 million bonus for the astonishing success of the pic, according to a source close to the streamer.
From Sony Pictures Animation, KPop Demon Hunters quickly became the most watched film of all time on Netflix this summer.
The bonus was a mutually agreed upon olive branch that allowed Netflix’s movie executives to hammer out a deal relatively quickly with Sony movie chief Tom Rothman and his team for a sequel.
It also means Sony’s cash payout for the first film is now $40 million, instead of the original $25 million. The $25 million included a $20 million fee, plus $5 million for first-option rights for Netflix to retain the pic on the platform. In addition, Netflix covered the entire $100 million budget of the pic.
It doesn’t end there. Sony also collects a margin of the production budget, as Netflix is paying the Sony-owned animation company Imageworks, home of the Spider-Verse franchise, for work on the movie. Sony also receives a piece of soundtrack sales, as well as music publishing fees for certain songs. Merchandising rights, however, belong solely to Netflix.
The exact financial terms of the Kpop sequel have not been revealed, but it’s safe to say there are increases in every category, including some sort of success metric built in when it comes to bonuses.
Whatever they are, the deal is also a boon for Netflix, which can use the sequel to keep the KPop movement alive and thriving.
Sony and Netflix declined comment. Both companies known to be loath to discuss numbers.
The deal for the first Demon Hunters — which was part of a larger, multi-title pact — was struck during the depths of the pandemic in 2021.
Amid the film’s breakout success earlier this year, some said Sony should have held out and taken the full-blown theatrical route, even if it was a financial risk. Other rival studio execs disagreed, saying the movie had the space and time it needed to grow on Netflix. Even if it wanted to, Sony could not have taken Demon Hunters back, as Netflix owns the distribution rights.
And theatrically, recouping $40 million in profit from a movie costing $100 million to produce before spending as much, or nearly as much on a global marketing campaign, would have been tough. When it comes to profit margins, a studio hopes for a range of 10 percent to 12 percent.
