There are some limitations to the new business model. The movies will only stream on HBO Max for one month before leaving the platform for a period of time. They will also play in theaters simultaneously, keeping the relationship with movie theater distributors like AMC and Regal. The plan is to run this experiment for one year. For people who don’t have access to HBO Max in their market, it appears that theatrical releases will still be the go-to option.
The movies Warner Bros. is planning to release for now include: The Little Things, Judas and the Black Messiah, Tom & Jerry, Godzilla vs. Kong, Mortal Kombat, Those Who Wish Me Dead, The Conjuring: The Devil Made Me Do It, In The Heights, Space Jam: A New Legacy, The Suicide Squad, Reminiscence, Malignant, Dune, The Many Saints of Newark, King Richard, Cry Macho, and Matrix 4.
These titles could change depending on delays. All films will be released on HBO Max in 4K Ultra HD and HDR. The moves will also likely help WarnerMedia reach an agreement with Roku after months of fighting over a deal. WarnerMedia is also offering a limited deal, making HBO Max 22 percent cheaper for people who sign up for six months. The $69.99 price works out to just under $12 a month instead of $15.
“We’re living in unprecedented times which call for creative solutions, including this new initiative for the Warner Bros. Pictures Group,” said Warner Bros. CEO Ann Sarnoff. “No one wants films back on the big screen more than we do. We know new content is the lifeblood of theatrical exhibition, but we have to balance this with the reality that most theaters in the U.S. will likely operate at reduced capacity throughout 2021.”
On one hand, it’s a simple decision for Warner Bros., WarnerMedia, and parent company AT&T. Executives haven’t tried to hide how important HBO Max is to the future of the business. It’s also no secret that HBO Max isn’t seeing as many subscriber additions as WarnerMedia would like. Warner Bros. tried to release a movie in theaters during the pandemic — Tenet — and the studio lost hundreds of millions of dollars. These factors, on top of a resurgence of COVID-19 cases around the world that put the next several months of any group activities at risk, present the perfect opportunity for WarnerMedia to experiment. Think of what AT&T CEO John Stankey told investors just a couple of months ago about theatrical releases in 2021:
WarnerMedia also isn’t the only company using this time to experiment with things that would have played out several years from now. Disney moved Hamilton, Artemis Fowl, and Soul to streaming only exclusives. It also released Mulan exclusively on Disney Plus for $30 in September. Disney CEO Bob Chapek told analysts on the company’s recent fourth quarter call that despite the backlash the movie received, it performed well (no numbers were given) and made the case to Disney executives that a Premier Access strategy that could work. Disney will likely continue to move certain titles to Disney Plus as exclusives, but it could also decide to mirror what Warner Bros. is doing and release movies in theaters at the same time as Disney Plus.
Streaming is a balance game: there needs to be a consistent addition of new titles to attract subscribers as a platform scales, with a full library of beloved and various TV shows and movies that keep people around. You likely won’t sign up for HBO Max just to watch Friends, but you might sign up to watch Wonder Woman 1984 and then stick around to watch Friends. That’s part one. But the increased competition in the space means that competitors are doing the same thing, often with big franchise IP (Disney) or top talent (Netflix, Amazon).
The key to “winning” is demanding attention. By having a new mega release every single month, there are more reasons for people to stay subscribed. Having those constantly, on top of regular library programming that keeps people opening HBO Max in between big releases, keeps attention. (Netflix knows this and executes on it very well.) It’s a constant cycle of needing more, needing quality, and needing big.
One of the big questions this development brings up is what happens to theaters? 2020 has been one of the most devastating years for the theatrical industry. Now, it’s tougher than ever to convince people to risk their lives in a theater when studios are making films available to them to watch at home. Theater chains have pointed to studios moving their titles to streaming platforms as a big part of the problem, but the theater industry has struggled for decades.
In 2019, people, on average, visited a movie theater less than four times, according to Bloomberg — a record low since 2002. Of the movies people did go out to see, 25 of the top-grossing films made up 50 percent of the box office. Those movies are important to the studios (Avengers: Endgame brought in $2.8 billion) and the theaters. AMC needs Disney, but Disney would also like to keep its relationship with AMC.
The real question is whether Warner Bros. is working out deals with the theaters to make this transition beneficial to both sides. When Universal worked out its deal with AMC Theaters for a shorter exclusivity window (the time a movie must play in theaters before it can end up on digital retailers like Amazon or NBCUniversal’s Peacock), AMC CEO Adam Aron noted that AMC would also receive some form of revenue. Warner Bros. doesn’t want to lose its relationship with AMC, making it reasonable to assume that some kind of deal was put in place before the announcement.
Blockbusters are always going to go to theaters in some form. Warner Bros., however, is betting big that the future of theaters isn’t only going to be in theaters — and it’s going all in on that in 2021. Executives are betting on simultaneous releases to help drive as much revenue as possible, from wherever people want to watch. If that’s in a theater, sure. If it’s at home, great.
What’s increasingly clear, however, is that, despite WarnerMedia saying this is a one-year event, it’s probably not. Once the genie is out of the bottle, it’s hard to stuff back in.
Source: The Verge