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Besieged exhibitors have so far had a relatively muted response to the studio’s day and date plans for 2021: “Once the competition returns this summer, theater owners will hold out for better terms.”
Normally, Warner Bros. ‘The proclamation that its entire 2021 movie slate will air simultaneously on HBO Max and in US theaters – completely shattering the theatrical showcase for the first time in history – would spark a chorus of boycott threats.
Instead, the reaction from the exhibits community – ravaged by the coronavirus pandemic and in desperate need of content for the months to come – has been relatively muted, with the exception of AMC’s outspoken CEO Adam Aron. So far, the National Association of Theater Owners has not weighed in. But the battle is far from over, and others could ring their own rallying cry once the COVID-19 crisis ends and cinema resumes in earnest.
While some in the exhibition community felt such an important announcement came from Warners, most did not learn about the radical movement until the statement was released. Sources say The Hollywood Reporter that the bold initiative, orchestrated by Jason Kilar, CEO of WarnerMedia, was kept near the vest on the Burbank grounds. Since joining WarnerMedia in May, the former Hulu chief has undertaken a major restructuring of the AT&T division to prioritize his HBO Max streaming bet and expand his subscriber base.
AMC, the country’s largest theater tour, said it had endorsed the studio’s previously unveiled plan to release a day and date for Wonder Woman 1984 on December 25 due to the current COVID-19 crisis and widespread closures. But moving forward is another matter.
“Obviously, Warner Media intends to sacrifice a considerable portion of the profitability of its film studio division, and that of its production partners and filmmakers, to subsidize its startup HBO Max. As for AMC, we will do everything. what is in our power to ensure that Warner does not do it at our expense, “said Aron.” We will aggressively pursue economic conditions that preserve our business. ” AMC said it was currently engaged in “an immediate and urgent dialogue with the Warner’s leadership on this topic.
Insiders say that AMC receives 60-65% of Wonder Woman 1984 Ticket sales in the United States. Usually the studio receives around 60% of the tentpoles. (During the years 2017 Wonder woman grossed $ 412 million domestically, expectations are much lower for the sequel’s release in theaters given the circumstances.)
Thursday’s proclamation was particularly surprising to Hollywood and exhibitors as it encompasses the entirety of Warners’ 2021 slate. Many players in the film industry believe that film broadcasting in the United States will resume in earnest this summer, based on promising news about COVID-19 vaccinations. Warners – who pointed out that the Day and Date initiative only lasts for a year – believes differently.
“We’re excited about the vaccines and the programs that are going to be going to distribute them, but speaking to the epidemiologists who have consulted us, we think it will be towards the end of the year that it looks like movie theaters and Broadway theaters will return to normal. It could be quite long, ”said Toby Emmerich, chief of Warner Bros. Pictures. THR Thursday, adding that the company remains committed to the theatrical experience. “We thought it was best to guarantee as many films as possible for the year for the global cinema market, so that they stay open and know they have products coming up.”
Others were more willing to take a wait-and-see attitude. “We got it, for the most part. We are happy that they are positioning it as a model for a temporary pandemic, but it is troubling that they have decided that it will be all in 2021, ”said another leading exposure source who believes summer will bring a major recovery at the box office. “Once the competition returns this summer, theater owners will have better conditions.”
The exhibition sector took another hit on Wall Street on Thursday. AMC, which said it would sell 200 million shares in hopes of improving liquidity, saw its stock drop 16% as the market closed. Cinemark, the third-largest theater chain in the United States, ended the day down 21%, while Imax was down 8%.
“They got pushed around after people heard that Warner was taking their 2021 slate and doing a simultaneous release,” says Eric Handler of MKM Partners. Cinemark noted in a statement that Warner Bros. did not “provide any details on the hybrid distribution model for its 2021 films,” adding, “In light of the current operating environment, we are making short-term reservation decisions on a per-film basis. “
Warners isn’t the first studio to test movie theater windows amid the pandemic, but it has gone the furthest. “These companies are trying to scale as quickly as possible and they are all taking big steps to attract subscribers, and Warner Bros. is way behind and they had to do something big to make their sub numbers go up a lot more, ”Handler notes. “In addition, there is currently a lot of uncertainty at the box office.”
After praising the success of the PVOD release of Troll world tour in March, Universal was threatened by AMC with a ban that would prevent the studio’s features from playing the nation’s largest theater channel. In July, the studio and exhibitor revealed a landmark partnership that makes Universal’s films available on premium video-on-demand in the United States after just 17 days of playback in theaters, with AMC sharing the PVOD revenues. (A similar deal was later signed with Cinemark and Cineplex in Canada.)
In November, Disney unveiled a maintenance-focused restructuring of Disney +, which now has 73 million subscribers. The studio, which recently won the lion’s share of total Hollywood box office revenue – including more than 33% of the domestic market share in 2019 – has already sent cinema-related films like Mulan and Hamilton streaming, and Pixar Soul should arrive on the platform during the Christmas holidays. (More Disney + news is expected on Investor Day on December 10.)
In 2021, HBO Max subscribers will receive a show, as they are able to stream The suicide squad, The matrix 4, Dune, Godzilla vs. Kong and one Space jam sequel, all considered big budget tentpoles. According to Shawn Robbins, chief analyst at BoxOffice.com, “At the end of the day, it’s a risk. This is not only a risk to theaters, but it is a risk to the intellectual properties of Warner Bros. because if the experiment does not bear fruit, they have not hired some of their largest generators of potential income on a platform, [HBO Max], this is not proven.
Handler agrees that a studio could leave hundreds of millions of dollars on the table if it bypassed a traditional version for its larger tentpoles. But in Hollywood’s new arms race, all bets are off. “Investors want to think big [subscriber] growth figures and they are ready to accept losses, significant losses, for the moment in exchange for rapid under-growth, ”he adds. “But you have AT&T, which has a mountain of debt. They can’t afford big losses for a long time.”
Adds Robbins: “It’s surprising that they jumped on this new strategy before seeing how the first experiment goes with Wonder woman. They cash in their chips for next year without seeing these results. “
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