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By betting big on HBO Max, Warner Bros. has hastened the future of the movie business

By betting big on HBO Max, Warner Bros. has accelerated the changing nature of the movie business and streaming.

Credit: Warner Bros. Pictures

A mere two weeks after announcing Wonder Woman 1984 would be released in movie theaters and on HBO Max simultaneously, Warner Bros. has upended the film business again. In a jaw-dropping move, the studio declared Thursday that its entire 2021 film slate would do the same, including such boldfaced titles as DuneThe Suicide Squad, and The Matrix 4. It's a strategy with massive implications for the future of the industry — but also one clearly born out of desperation and a dearth of options, as the COVID-19 pandemic looks likely to keep many movie theaters shuttered well into next year.

"It's probably most shocking because they're doing it before Wonder Woman's release, and not opting to at least see how that strategy plays out, and are committing themselves to a full year of what is a massive, arguably risky experiment," says Shawn Robbins, chief analyst at Boxoffice Pro. "Obviously I can't speak for the studio, but to me, what it suggests is that they were in the position of either doing this or just committing to more delays."

Ann Sarnoff, Chair and CEO of the WarnerMedia Studios and Networks Group, essentially said as much in a statement, calling the strategy "a unique one-year plan" intended to serve both theaters and consumers amid the pandemic.

“We’re living in unprecedented times which call for creative solutions, including this new initiative for the Warner Bros. Pictures Group,” said 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."

“After considering all available options and the projected state of moviegoing throughout 2021, we came to the conclusion that this was the best way for WarnerMedia’s motion picture business to navigate the next 12 months,” added WarnerMedia CEO Jason Kilar. “Our content is extremely valuable, unless it’s sitting on a shelf not being seen by anyone. We believe this approach serves our fans, supports exhibitors and filmmakers, and enhances the HBO Max experience, creating value for all.”

Short-term strategy or not, however, this is a decision with likely long-term consequences for the film business, confirming beyond all doubt (as if there was any at this point) that studios are all-in on streaming going forward. Both WarnerMedia and Disney have recently restructured to prioritize their streaming platforms, and Warner is clearly hoping to prove HBO Max can play in the same league as Disney+.

"[WarnerMedia] had already cut a lot of people, they were streamlining their business, the same way that Disney had done to make Disney+ the flagship product," says Jeff Bock, a senior box-office analyst at Exhibitor Relations. "And now that's what HBO Max looks to be becoming. Direct-to-consumer content is the wave of the future, and all major corporations are already pivoting in that direction."

In that light, Warner's move to bring a blockbuster film slate to streaming hardly seems surprising. HBO Max has been a victim of clumsy rollout and branding; the name belies the fact that the streaming service hosts much more than HBO content, and only added confusion to a streaming landscape that already included HBO Go and HBO Now. Evidence suggests many HBO subscribers remain unaware they already have access to HBO Max, and more than six months after its launch, the service is still unavailable on Roku devices. (It was also unavailable on Amazon devices until last month.) The subscription numbers speak for themselves: 8.6 million as of October, a pittance compared to Disney+'s 73.7 million and Netflix's 195.2 million.

"If they wanted to make a splash and a huge subscription drive to HBO Max, this is the way to do it," Bock said in the wake of Wonder Woman's move to the streaming service.

With all of that in mind — plus WarnerMedia's stated goal of 50 million HBO Max subscribers by 2025 — the studio's assertion that their new film strategy is temporary looks a good deal more questionable. Still, "to include theaters in that plan says a lot about [Warner's] commitment to theatrical," Robbins says. "The good news for theaters is, they don't have to worry about major films being delayed for Warner Bros. again next year. There is a strategy now to see through the rest of the pandemic. But it obviously hurts on some level at the same time."

Indeed, theater owners are clinging to the promising news of an imminent COVID vaccine as evidence that a return to normalcy is quickly approaching — and a reason to register their disapproval with Warner Bros.

Adam Aron, CEO of AMC Entertainment, said in a statement, "These coronavirus-impacted times are uncharted waters for all of us, which is why AMC signed on to an HBO Max exception to customary practices for one film only, Wonder Woman 1984, being released by Warner Bros. at Christmas when the pandemic appears that it will be at its height. However, Warner now hopes to do this for all their 2021 theatrical movies, despite the likelihood that with vaccines right around the corner the theatre business is expected to recover.

"Clearly, WarnerMedia intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max start up," he continued. "As for AMC, we will 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."

"Movie theaters are really interested in getting new movies however they can right now," another exhibition executive tells EW. "We don't expect this to be setting a precedent or for a model that should exist after the pandemic has passed. We think that the theatrical business and what it contributes to the rest of the studio business is fundamental and hasn't changed."

Universal, which struck a deal with AMC this summer to allow its movies to play on VOD after 17 days of theatrical release, might disagree. (Will the theater chain's "dialogue" with Warner lead to a similar deal for that studio?) And it remains doubtful whether theaters can stay afloat until a vaccine arrives; AMC has publicly declared it is close to bankruptcy. The sheer amount of variables in play make it almost impossible to divine whether studios will, or even can, return to their pre-pandemic playbooks once theatrical releases are viable again.

Robbins, for one, is doubtful Warner Bros. would maintain its HBO Max approach for event movies like The Batman, should the world be back to normal by its March 2022 release date. "It's very hard to imagine this incredibly important piece of IP for the company losing that event status by being available in homes at the same time it's in theaters because that is one of those communal movies that people go see together," Robbins says.

That said, "It's a very different story for any of the lower- to mid-budget films," he continues. "Those are the ones, I think, we will see going more and more to streaming. That's been very clear this year."

In other words, the future could look very similar to what it looks like right now: Blockbusters still play far and wide on the big screen, while mid-range and smaller movies go to streaming, perhaps with a limited theatrical run to qualify for Oscars (if they still need one). If that's the case, Warner Bros. hasn't exactly changed the game. But they've helped get the pieces in place much faster than anyone expected.

Related content:

  • Warner Bros. to release every 2021 movie on HBO Max at same time as theaters
  • Disney CEO hints at plans for more PVOD releases on Disney+ in wake of Mulan
  • Warner Bros.' Wonder Woman 1984 strategy won't kill theaters, but it won't save them, either

This story originally appeared on: EW - Author:Tyler Aquilina

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