When Rivals Become Partners

Here's something you don't see every day: Netflix Inc. (NFLX) and movie theaters are actually working together. The final episode of "Stranger Things" drops on New Year's Eve at 8 p.m. ET for Netflix subscribers at home, but it's also playing in movie theaters across the country. And not just a handful of art house cinemas—we're talking over 620 theaters with more than 3,500 showtimes, featuring chains like AMC Entertainment Holdings (AMC), Cinemark Holdings Inc (CNK), and Regal.

What started as a plan for a few hundred theaters has exploded into something much bigger. Over 1.1 million people have already reserved their seats, which is pretty remarkable considering the episode isn't even a traditional movie. It's the finale of a streaming show that you could just watch from your couch for free if you're already a Netflix subscriber.

The Popcorn Economics

Here's where it gets interesting from a business perspective. The episode itself is free to watch in theaters, but moviegoers pay a reservation fee for their seat. That fee then converts into a concession voucher. For AMC, that's reportedly a $20 reservation that becomes $20 worth of concession goods.

This matters because AMC has been posting strong food and beverage numbers lately. In the third quarter, the company reported $7.74 per person in food and beverage sales, the second-highest average in company history. If you're getting people to essentially prepay $20 for popcorn and candy, that could give fourth-quarter concession numbers a serious boost. And unlike ticket sales, where studios take a hefty cut, concession revenue goes mostly to the theaters.

A Thawing Relationship

The bigger story here might be the partnership itself. When Netflix released its animated film "KPOP Demon Hunters" in theaters earlier this year, AMC initially refused to show it. The movie still pulled in an estimated $18 million over two days on roughly 1,700 screens—imagine what it could have done with the world's largest theater chain on board from the start. AMC eventually came around and showed the film during a second theatrical run.

Now Netflix has a working relationship with AMC, which could open doors for future theatrical releases. For a streaming company that's spent years being viewed as the enemy of traditional cinema, that's not nothing.

Perfect Timing for Both Companies

The timing couldn't be better for the theater business. AMC recently reported that 5.5 million people watched a movie on one of its screens worldwide during the week of Christmas (Thursday through Sunday). The company called it the second busiest week of the year globally and the busiest weekend for its international markets.

The fourth quarter is shaping up to be exceptional for theaters. "Avatar: Fire and Ash" has already grossed $216.9 million domestically and $761.6 million worldwide, ranking 10th domestically and 6th worldwide for 2025 despite only premiering in December. November releases "Wicked: For Good" and "Zootopia 2" rank fifth and sixth respectively for domestic gross in 2025.

AMC CEO Adam Aron said after third-quarter results: "We expect the fourth quarter industrywide box office will turn out to be the highest-grossing fourth quarter in six years. We also continue to believe that the size of the 2026 box office will be dramatically larger than that achieved in 2025."

Netflix's Strong Quarter

Netflix is also setting up for a strong finish to 2025. The company is guiding for fourth-quarter revenue of $11.96 billion, up 16.7% year-over-year. That's above the Street estimate of $11.902 billion. The company expects growth to come from higher membership figures, higher pricing, and increased advertising revenue.

On the earnings side, Netflix is guiding for $5.45 per share compared to a Street estimate of $5.42. The "Stranger Things" finale is just one piece of a loaded fourth quarter that also includes new seasons of other hit shows and the live broadcast of two National Football League games on Christmas Day.

The company is on track to more than double its advertising revenue in 2025, which is significant as it continues building out its ad-supported tier.

A New Model Worth Watching

Whether this theater-streaming hybrid model catches on remains to be seen, but the early response to the "Stranger Things" finale suggests there's appetite for it. People want to experience big cultural moments together, even if those moments originated on streaming platforms. And if theaters and streaming services can figure out how to split the economics in a way that works for both sides, we might see more of these partnerships in the future.

For now, it's a rare win-win scenario in what's usually portrayed as a zero-sum game between streaming and theaters.