From all indications Warner Bros believes that the future of the global entertainment industry is in homes and not theaters.
The AT&T owned Hollywood studio that was founded as a Pennsylvania nickelodeon as back as 1903, has made it known that it will be releasing its movies scheduled for 2021 on its HBO Max streaming service and in theatres, at the same time. Even with the ongoing Coronavirus pandemic making the entertainment industry look more towards indoor streaming services, this is still the most radical move taken by any major studio so far.
Warner Bros’ new plan of action, will include all 17 movies that have been scheduled by the studio for release. These include a brand new installment in the “Matrix” franchise, and a science fiction adaptation called Dune. The HBO Max streaming service will only have the movies for the first month of release. After that, each film will proceed to go through their routine distribution channel(s).
With this move, it appears more and more likely that subscriptions are becoming a lot more important than the Box Office.
It is interesting to note that what first began as an attempt to Netflix’s dominance, has evolved into a restructuring of the strategies used by all major studios with entertainment streaming services of their own. The ongoing Coronavirus pandemic and subsequent closing of movie theaters all over the world, has only served to speed up the evolution.
The head of the world’s biggest theater chain; AMC Entertainment Holdings Inc., revealed that it has reached out to WarnerMedia for a pressing dialogue over its decision. The Chief Executive of AMC Entertainment Holdings Inc.; Adam Aron revealed that he had put pen to paper to accept concurrent theater and streaming releases for only one film; Wonder Woman 1984, this Christmas.
He also made it known that WarnerMedia must be ready to part ways with “a considerable portion of the profitability” of its studio arm in order to subsidize HBO Max. He added that, “We will do all in our power to ensure that Warner does not do so at our expense.”
What remains unknown right now, is which ‘temporary’ changes right now, will be made permanent after the Coronavirus pandemic. Especially as major studios continue to make streaming their main priority, and more and more consumers get used to watching new release movies from the comfort of their homes.
This decision by Warner Bros alongside similar moves by other major studios will not only affect the distribution chain, it will also lead to a reassessment of what we see as success in today’s Movie World. Owners of theaters who have been battling low finances due to the Coronavirus pandemic, might now have to rethink their entire business model even further moving forward.
Executives at Warner Bros have pointed out that the new changes announced will only apply to their 2021 movies and that said movies outside of the United States (U.S) will still be released exclusively in movie theaters, before moving on to streaming services.
The Chief Operating Officer of Warner Bros; Carolyn Blackwood said, “It’s threading a needle in the middle of a pandemic.”
She added that, “We weren’t comfortable sitting on our hands or punting these movies into oblivion.”
In the past movie enthusiasts had to wait until 2 to 3 months after a movie’s debut before being able to consume on streaming platforms. It is now slightly different. Universal Pictures (owned by Comcast Corp) reached a deal for simultaneous releases. This deal essentially sidelined major theater chains for the first 3 weekends of a movie’s release.
Walt Disney Co. also made its movie; Mulan, available on its streaming service for a premium rental fee.
The Chief Executive Officer (CEO) of WarnerMedia; Jason Kilar while explaining the company’s decision made it known via a memo that, “We see an opportunity to do something firmly focused on the fans, which is to provide choice. Whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both.”
Although HBO Max has been battling with delivering content that will help grow its subscriber numbers, having exclusive high budget movies released on its streaming service, might do just that.
A number of Warner Bros’ major releases that are scheduled for 2021 for instance, can get to up to 150 million dollars (16.7 billion Kenyan Shillings) in production costs. Marketing campaigns aimed at enticing moviegoers could also run into tens of millions of dollars.
With this in mind, a movie like; Dune would have to rake in hundreds of millions of dollars at the box office in order to make a profit. With the new development, movies will be judged on two points; subscribers brought to HBO Max and of course, the box office returns.
A number of observers are of the opinion that major studios like Warner Bros, Universal Pictures and co, will eventually begin to compete with Netflix which has always gone for a streaming first approach from the get go. But while Netflix has over the years, made and acquired films, it is yet to have a name brand movie franchise that it can call its own.
Warner Bros opting to release top franchise movies like Dune, Godzilla vs Kong, and Matrix 4 on its HBO Max streaming service, will definitely be a Game changer.
Information floating online revealed that HBO Max will be paying a license fee for the 30 day window. A portion of that fee, will be shared with the top creative talent and stars who have deals with terms that entitle them to a cut. This is seen as WarnerMedia’s way of preventing the occurrence of complicated formulas aimed at figuring out the financial success of a movie based on how it performs on a streaming service.
Even though HBO Max’s 14.99 dollar (1670 Kenyan Shillings) fee is seen in some circles as a little steep, the prospect of it having block buster movies available via its platform, might make it much more enticing, despite its price point and also put it ahead of the competition.
Warner Bros’ decision will also most likely affect the future of the movie theater industry on the global scale, beyond its current low numbers worldwide and the growing demand for entertainment options that can be consumed from the comfort of users’ homes.
A number of movie theater chains, are already looking for other revenue points and sourcing for investors, pending when the Coronavirus pandemic is over.
With the growth of streaming, smaller theater chains might not survive. The co-founder of Emagine Entertainment Inc.; Paul Glantz, stated that “All the leverage we have is to decline to play the film.”
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