The original KPop Demon Hunters proved to be a colossal success for Netflix, dominating the platform with 325.1 million views in its initial 90 days and spending an impressive 63 consecutive weeks in the Global Top 10. While primarily a streaming hit, the animated Sony title also demonstrated surprising box office muscle. A special singalong version, released two months after its streaming debut, raked in an estimated $19 million over just two days, topping the charts in most theaters. This unexpected theatrical performance for a direct-to-streaming film evidently laid the groundwork for the sequel's ambitious big-screen plans, which are expected in 2029.

Sarandos detailed a more flexible distribution strategy, differentiating between film types. He highlighted two extremes: "art house films" like last year's Train Dreams or the upcoming La Bola Negra, which can play in theaters without negatively impacting their Netflix performance, and "four-quad family rewatch movie[s]" that benefit significantly from theatrical exposure. Other high-profile films slated for theatrical runs before hitting Netflix include Peter Berg’s Mosquito Bowl, David Fincher’s The Further Mis-Adventures of Cliff Booth, Danny Boyle’s Ink, Greta Gerwig’s Narnia: The Magician’s Nephew, and Charlie vs. the Chocolate Factory. These films will receive varying theatrical windows, from 26 days for Mosquito Bowl to 50 days for Narnia.

For the first time, Netflix will report box office numbers for these theatrically released films. However, Sarandos clarified that success won't be solely tied to the P&L of the theatrical run. Instead, the focus is on the "potential for a very big upside in the theater" for specific titles. He stated, "If you’re gonna say, pick a little risk to the Netflix performance, it should have the potential for a very big upside in the theater." This applies to major family titles like Narnia and KPop Demon Hunters, which are poised for "big, broad, global release[s]." For films in the "middle," the strategy becomes "tougher," suggesting a more cautious approach.

Sarandos also touched upon the interplay between theatrical and streaming audiences. He noted that while Netflix originals generally outperform pay-TV window titles on the platform, kids and family movies are an exception due to their high rewatchability. For other genres, he explained, "the most passionate audience went to see it in the theater, so by the time it comes to Netflix, you’ve lost that passionate audience." This suggests that for many films, a theatrical release might cannibalize the initial streaming buzz from the most dedicated viewers. Despite this, Netflix has been experimenting, putting over 30 movies in theaters last year, with some even remaining on the big screen for extended periods after their streaming debut, like Frankenstein, which played for six months.