Originally, when Warner Bros revealed that they were going to release Wonder Woman 1984 in theaters, I was a little skeptical. As Covid-19 cases continue to rise in the United States, I do not plan on going to the movies anytime soon. But luckily for me and many other moviegoers, at the beginning of December, Warner Bros and HBO announced that they were going to release all their films for 2021 on HBO Max and in theaters at the same in the United States. The films will be available on HBO Max for a month after its release date for no extra charge, and you will be able to stream the film in 4K HDR. This is a game-changing move for Warner Bros and HBO, as the Covid-19 pandemic has caused a bunch of film delays and movie theater shutdowns.
As a consumer, I was happy about this announcement, but I do wonder how this would affect the film and streaming service industry. Disney did something similar during the summer with their premiere access of the live-action remake of Mulan on their streaming service Disney Plus. On social media, Disney received a lot of push back and complaints from consumers about the 30-dollar fee to view the movie on Disney Plus. Despite the negative responses to charging an extra fee on top of the monthly streaming service fee (and the general controversy surrounding the film) Disney CEO Bob Chapek reported that Mulan performed well.
What is different about Warner Bros’ plan is that they will not be charging an extra fee to view these films. While this is good news for consumers, this decision has the film and theater industry concerned about how large-scale films would be supported. How will Warner Bros films make enough revenue, and will those who invested time or money into the film get paid? There is also concern about the future of cinema in theaters because of this decision. Business models that have been in place in the film industry for decades are being turned on its head and broken down with a move like the one Warner Bros is planning to make with HBO Max.
For the last few years, media companies have started to place streaming at the center of their business instead of traditional media forms. Streaming platforms have fragmented audiences as they cater to the individual needs of their viewers. This allows for convenient watching anywhere and anytime. As of now, Netflix is the top streaming service with over 195.2 million paid subscribers worldwide. Before the pandemic, the streaming industries did still affect the film industry as filmmakers and producers were offered large deals to make films, specifically, for streaming platforms. Streaming services were mostly disrupting cable television business models and altering cable television consumer patterns. This disruption resulted in cord-cutting, which is when subscribers stopped paying for cable completely. About 19.9% of United States households have cut the cord, and 52% of cord-cutters claim that they do not miss their cable packages.
Warner Bros releasing their films on HBO Max and theaters simultaneously could disrupt the film industry more drastically than before the pandemic. This news blindsided and shocked many in those with a stake in the film industry. Releasing movies into theaters is how directors, actors, film crews, and investors are able to be paid because ticket sales are how the films make money. People going to theaters and paying for theater concessions is how theaters make their revenue.
Warner Bros and HBO are both under the same parent company called WarnerMedia, which is an American multinational mass media and entertainment conglomerate corporation that is owned by AT&T. With the pandemic keeping people home, it seems that WarnerMedia is trying to make the best out of this situation they are currently in and that are planning for these losses in their own way. For the investors, there is concern about the sacrifice of profitability that WarnerMedia plans to make with this release strategy. For theaters and filmmakers, they are rightfully worried about the death of moviegoing and the theatrical art of film. The circumstances of the pandemic make it the perfect time to experiment with these types of releases. Toby Emmerich, Warner Bros. Pictures Group Chairman, claims that this hybrid model is the best way to support films and creatives throughout 2021. However, a change to the cinematic experience could result in theaters closing and a significant loss for the social component of the cinematic art form.
Along with media corporations, indie studios have been forced to be creative as well to combat the effects of the coronavirus. Instead of waiting and pushing all their films, indie studios have already embraced the hybrid model just like Warner Bros has planned to do for 2021. Focus Features, IFC Films, and Magnolia Pictures were quick to adapt to this model as they realized that their audience was going to be staying home. Despite their quick ability to adapt, indie studios have made it clear they still rely on theatrical distribution for gross revenue and film promotion.
A general rule of thumb for theaters during the pandemic is to play it by ear. With theater chains and independent theaters being closed, or at far less capacity due to restrictions during the pandemic, it looks like many films would take a hit in 2021 no matter how they are released. Larger theater chains like AMC, Regal, and Cinemaker were closed through June at the least. Regal even closed again in October, and AMC Theatres may declare bankruptcy to survive the pandemic. Independent theaters have been struggling as well. Some independent theaters are hoping that their small niche audience will help them through. They have also been using the hybrid release model so audiences at home can view their films.
While releasing Warner Bros films on HBO Max will not bring in the same amount of revenue as premiering the films in theaters, WarnerMedia is trying to make the most out of the situation and hopes that this plan will grow HBO’s streaming services. With all other competitors in the saturated streaming business, HBO Max has not been growing as fast as Disney Plus and Peacock, which also both launched this year. For example, Disney forecasts 240 to 260 million paid subscribers by 2024 for Disney Plus. Additionally, Peacock’s third-quarter reports claimed 22 million signups.
HBO Max failed to attract an audience with their catalog of content, and the investments have not paid off. Also, HBO Max, not being available on Roku, a device for streaming services, and being a more highly priced streaming platform contributed to its poor consumer adaption. As of October, they only had 3.6 million retail subscribers. Adding all of these films to their roster without an extra charge could give them an edge and allow them to gain millions of long-term subscribers.
It looks like WarnerMedia is hoping the loss upfront will lead to long-term benefits. However, at this point, there is no telling what will happen. It is too early to tell how well this business model will work or if the decisions made during this pandemic will continue to influence how movies are premiered in the future.
What we do know is that the release of Wonder Woman 1984 on Christmas Day was a success for HBO Max and Warner Bros. It was reported that close to half of HBO Max retail subscribers viewed the film on the day of its release, and it scored the high box office opening since March and that they are planning to make a third Wonder Woman film. We will have to continue to observe how this hybrid release model will do with their other Warner Bros films for 2021 and monitor how streaming platforms continue to disrupt traditional models for the film industry, theaters, stakeholders, and moviegoers.
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