December 7, 2020
Warner Bros., one of Hollywood’s biggest studios, plans to release all of its major films next year at the same time—both in theaters and on HBO Max—a dramatic indication of just how much the pandemic and streaming video have sapped the movie industry.
According to a report by Fortune Magazine, the 17 films affected by the shift include the new installment of the “Matrix” franchise, the Lin-Manuel Miranda musical “In the Heights,” and the DC Comics superhero feature “The Suicide Squad.”
Each movie will run on the HBO Max streaming platform for one month at no additional charge—an approach that the AT&T streaming division of Warner already was planning for the debut of “Wonder Woman 1984” on Christmas Day.
Such a move would have been considered unthinkable a year ago, but the pandemic has obliterated industry norms. Theaters traditionally have had exclusive rights to films for up to three months, an arrangement they’ve defended vociferously. Now—with COVID-19 still raging and theaters either shuttered or thinly attended—studios are taking increasingly dramatic steps to protect their investments in would-be blockbusters.
The announcement slammed shares of theater chains, including industry leader AMC Entertainment Holdings Inc. Its stock dove 16% to $3.62 in its worst intraday slide since Oct. 14. Cinemark Holdings Inc. dropped as much as 16%.
“We know new content is the lifeblood of theatrical exhibition,” said Ann Sarnoff, chief executive officer of WarnerMedia Studios. “But we have to balance this with the reality that most theaters in the U.S. will likely operate at reduced capacity throughout 2021.”
The new model could rapidly increase signups to HBO Max, a cornerstone of the long-term strategy for AT&T’s WarnerMedia. The platform launched this year, entering a crowded field that includes Netflix and Disney+. Although pandemic lockdowns have helped fuel industrywide growth for online services, AT&T is under pressure to show it can transition to the streaming era.
Warner was expected to compensate some of the larger cinema chains for their decision to put the new “Wonder Woman” film on HBO Max the same day it was released in theaters. It’s not yet clear what arrangement they could potentially strike for the 2021 films, but any deal will be important to their survival. Ticket sales year to date are down 78% to $2.2 billion, according to research firm Comscore Inc., leaving many cinemas teetering toward bankruptcy. That compares with more than $10 billion at this time a year ago.
Jason Kilar, WarnerMedia’s CEO, told Fortune that the important thing is to get movies out in front of audiences. “Our content is extremely valuable, unless it’s sitting on a shelf not being seen by anyone,” he said in a statement. “We believe this approach serves our fans, supports exhibitors and filmmakers, and enhances the HBO Max experience, creating value for all.”
Research contact: FortuneMagazine