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AT&T’s WarnerMedia has decided to release all Warner Bros films on HBO Max at the same time as in theaters, for a month before their removal.
AT&T’s WarnerMedia has decided to release all Warner Bros films on HBO Max at the same time as in theaters, for a month before their removal.
AT&T made a massive choice just yesterday, announcing that all 17 of their 2021 films would be simultaneously released in theaters and HBO Max. This came as a giant shock to not only the film industry, but also the streaming industry, since this move has had no precedent.
Just a few months ago, Disney announced their decision to move Mulan, a $200 million blockbuster film, exclusively to streaming on Disney+. This incited some massive criticism and interest, since the only other major film to have been released to VOD was Universal Studios’ Trolls World Tour.
That was one film. Warner Bros is planning on releasing 17 films on HBO Max. For no extra cost. Mulan and Trolls World Tour sold for $30 and $20 respectively, still possibly creating some financial issues for the companies associated with the films.
Warner Bros’ decision to release these on streaming for no extra cost for a month at the same time as theaters is an incredibly risky move.
Any number of issues could arise, from no box office sales, to no revenue from VOD releases, to people staying on HBO Max for only few months. All of these could cause massive issues for WarnerMedia/AT&T/Warner Bros, who can rely heavily on theatrical releases.
These films with 9 digit costs (as in $100,000,000 minimum), are massive films, with an unprecedented amount of money on the line.
Wonder Woman 1984, which Statural talked about here, created a massive uproar after the studio announced its release on VOD, 9 days after international releases. The theatrical release for the film also happens to be on the same day as the streaming release, both on Christmas Day.
The studios’ executives also had no idea that this massive change was occurring, with the company shocked at the announcement that one film was moved to streaming, let alone 17.
Thursday morning, about an hour before the release of this massive announcement, Vulture, (vulture.com) received news that Tomy Emmerich and Ann Sarnoff, the chairmen of Warner Bros Picture Group and Warner Bros, respectively, had called the heads of Hollywood’s biggest talent agencies to discuss renegotiating payment.
Payment for big movie stars is sometimes an incredibly large expense for studios, with upwards of $100 million sometimes being spent on single talents. That’s where “talent deals” come in, giving stars a percentage of box office releases, or certain monetary goals when box office sales reach a certain point.
For example, a $1 billion box office hit could have a 5% marking attached to its highest talent, making them upwards of $50 million. In other cases, it could be if the film hits $1 billion, the star would make $100 million; $2 billion in box office could be $150 million; etc.
This box office disruption could mean that virtually no money could go to theaters, ruining some actors’ payments, guaranteeing no money for their incredible jobs. As a solution to this, Warner Bros is rumored to have to effectively “buy out” every deal it has made, marking an incredibly costly and exhaustive procedure.
Remember, this studio is planning on releasing 17 films, each having cost more than $100 million dollars. These films include (with dates):
The WarnerMedia CEO insists that this is “just a one year thing and we’re (WarnerMedia) going to go back next year.” That really oversimplifies this however, since the money from these potentially multibillion dollar films could make the difference between life and death for dozens of theater chains.
The world’s biggest chain, AMC Theatres is already deep in debt, and has had probably 3 bankruptcy scares this year. The company desperately needs the money from these releases, and what happens when it doesn’t happen?
Why would you go to theaters where you could get sick, when you could watch the film at home, for cheaper, and with however many people you wanted, for an entire month. The average ticket price was $9.26 last year, meaning that for less than twice the price of a ticket, you could watch a $100+ million dollar blockbuster as many times as you wanted, with as many people as you wanted, for an entire month.
There’s no going back.
You get rid of the big theater chains through lack of revenue, and they’re not just going to spring back to life when you start releasing films back in theaters.
AMC Theatres, as previously mentioned, has suffered the most from the recent shifts to streaming, and President and CEO Adam Aron has said that
“As for AMC, we’ll do all in our power to ensure that Warner does not do so at our expense. We will aggressively pursue economic terms that preserve our business. We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject.”
Warner’s sudden decision has put the entire future of theaters up in the air, even with their nonchalant “only one year” approach.
The total budget for all 17 of these films is around $1.5 billion dollar, which makes up a massive amount of WarnerMedia’s annual revenue. This shows that Warner Bros and WarnerMedia isn’t playing like they insist they are, and are instead focusing on maximizing HBO Max subscriptions to make up likely $1 billion of that total, due to theater releases being less than ideal.
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In an interview with Deadline, which you can check out here, WarnerMedia CEO Jason Kilar explained his reasoning behind this massive distribution change, which I’ll leave here to end off this article:
“We do believe, and others might have a different opinion, this is the way to do the most important thing we can for the theatrical exhibition community which is to provide them a steady stream of new and fresh movies and motion pictures that they can count on, and consumers can count on. It’s something we’re vested in and will continue to be vested in;
We’re in the middle of a pandemic, despite all of us wishing that this goes away extremely quickly, like a Band-Aid being ripped off. Everyone we talked to in the medical community suggests that this will persist in terms of consumer behavior and the medical situation for a bit of 2021, if not all of 2021. That’s the first and most important context to say. The reason why is, that’s what has absolutely shaped this decision. And to get to your question about the financials, our belief is that in the current situation, which is highly unusual, by having this release model – which is a hybrid model of theatrical and on HBO Max for the first month of the film’s release – we believe economically first and most importantly, it’s the right thing to do for fans, it’s the right thing to do for exhibition and the right thing to do for talent, considering the circumstances.”
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