KPop Demon Hunters is the smash hit of the summer, in part because it went to streaming rather than having a traditional theatrical release, but its success makes it hard not to wonder what could have been. Reaching 186.4 million views, the animated fantasy adventure about a trio of K-pop stars moonlighting as demon hunters is now the second most-watched Netflix movie of all time.

However, it has been increasingly difficult for original movies to win over the box office in recent years, and even a phenomenon as big as this might have struggled if Sony Pictures had released it theatrically. Yet it is clear that Sony has lost something huge as KPop Demon Hunters continues to top both streaming and music charts.

A report published by Puck breaks down what Sony’s potential financial losses are due to the sale of KPop Demon Hunters to Netflix. According to Matthew Belloni, the estimated budget of KPop Demon Hunters was $100 million. Per Sony’s deal with Netflix from 2021, the streamer pays back the film’s budget plus an additional $20 million for direct-to-streaming releases.

Check out the full explanation of this deal below:

KPop Demon Hunters was in development at Sony Pictures Animation in 2021, when the company signed a mᴀssive “Pay One” output deal with Netflix for its theatrical films. Concurrently, Sony forged a separate “direct-to-platform” arrangement with Netflix, agreeing to offer a first look at certain live-action and animated film projects, and Netflix guaranteed to greenlight a minimum number that the two companies would develop together and Netflix would release and control. Per the custom at the time, Sony would be paid a prenegotiated premium on top of the budgets for the films. Sources familiar with the deal tell me it was 25 percent of the budgets, capped at $20 million per film. Netflix would keep all the rights and pay no profit participation.

Back in 2021, this was a good deal for both sides. Remember, most movie theaters were still closed due to the pandemic, decimating the theatrical business. […] And even if the Netflix deal generated a hit or two that might have been successful as a Sony theatrical release, the deal also included a mandate to buy movies that would not be “theatrical” and might not have found any audience, giving Sony guaranteed upside at perhaps the low point of the theatrical business.

The report gives the impression that any potential KPop Demon Hunters sequels are among the movies that the streamer has the right to “a first look at,“ and “Netflix has no obligation to renegotiate.” So, though Sony “has the contractual right to produce any sequels or spinoffs,” it will seemingly still only make $20 million per movie.

KPop Demon Hunters Now Means For Netflix & Sony

“Though I’m betting Netflix throws Sony a few bones here,” says Belloni. As for how much KPop Demon Hunters is actually worth, the Puck reporter consulted the experts. Content Partners (which buys and sells film libraries) president John Mᴀss says:

It’s impossible to put a value on this franchise, but given the viewership numbers and plans for sequels and spinoffs, and the popularity of the music, it may end up being comparable to the Disney animated hits.

The Frozen and Moana franchises have brought Disney billions in revenue, which could be where KPop Demon Hunters is headed. However, we are also forced to ask whether, had Sony somehow known what the potential was and released it theatrically, would these supposed billions have been theirs?

Belloni comes to the conclusion that through word of mouth, KPop Demon Hunters could have been a sleeper hit in theaters, and that the real profits would have been with the sequel, once the fanbase was established. Check out the full explanation below:

[…] people will watch on Netflix for “free” isn’t what they will pay to see in theaters. Plus, the film started slow on Netflix and steadily built its audience via viral chatter, consumption of the music, and the platform’s algorithm—all of which, time after time, have proven able to create huge hits. The younger Netflix audience adopted Demon Hunters as its own and is now rewatching it and rewatching it all the way to No. 1.

[…] Not sure I totally agree. The movie started slowly on Netflix, but a traditional Sony theatrical campaign could have sold the film on its catchy music and promoted it well to the target audience in advance. […] If Sony had put Demon Hunters in theaters, the more likely scenario is that it would have performed okay—not great, maybe stronger in Asian territories—and then eventually exploded on Netflix in the Pay One window. But if that had happened, the inevitable sequel likely would have gone to theaters and—armed with a mᴀssive fan base—grossed hundreds of millions of dollars for Sony. Now, thanks to that 2021 deal, the follow-up movies will go directly to Netflix […]

Through the music performed by the fictional K-pop groups Huntr/x and Saja Boys, merchandise, and in-development sequels, KPop Demon Hunters is likely worth hundreds of millions, if not billions. And, to top it off, Netflix is now releasing KPop Demon Hunters theatrically for a special weekend event at the end of August.

It could also come back around in theaters in 2026 if it is nominated for Best Animated Feature. On the theatrical release, Belloni said: “As of tonight, I’m told there are more than 300 sold-out showings, with theaters asking for additional dates. No, Netflix is not sharing any of the box office revenue with Sony.“

Our Take On Netflix, Sony, & KPop Demon Hunters Profits

This is a brutal deal for Sony, and unfortunately reflects some harsh realities of the entertainment industry. There is no way of knowing exactly how successful a property will be and what the smartest business deals are. I’d be more concerned about what this means for the creatives involved with KPop Demon Hunters than the overall corporation — and hopefully, they will continue to enjoy and benefit from making this franchise.