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Special Report: Warner Bros. May Kill the Movie Theater With Plan to Stream First Run Movies

By Gary Symons, TLL Editor in Chief

Glaring headlines involving media conglomerate Warner Bros. signal a dramatic shift in the way the entertainment business is run and how the public will in the very near future consume first run movies.

The news appeared in virtually every news outlet in the world, and the headline in the industry publication Hollywood Reporter blared, “Warner Bros. Smashes Box Office Windows, Will Send Entire 2021 Slate to HBO Max and Theaters.”

In a town entirely dedicated to film production, one can understand the level of alarm.

The company itself released the news under a much less alarming banner headline, reading, “Warner Bros. Pictures Group Announces Innovative, Hybrid Distribution Model for Its 2021 Theatrical Slate.”

But, make no mistake, Warner’s plan to send all of their movies directly to HBO Max at the same time they appear in movie theaters is revolutionary, and may last far beyond the end of the COVID-19 pandemic. If this was the 1929, movie theater executives and popcorn makers alike would be hurling themselves out of high windows. 

Cutting to the chase, the announcement means that Warner Bros.’ next 17 films, including blockbusters like The Matrix 4, The Suicide Squad sequel, and Dune, will all play on TV at the same time as they appear in theaters. 

“We’re living in unprecedented times which call for creative solutions, including this new initiative for the Warner Bros. Pictures Group,” said Ann Sarnoff, Chair and CEO, WarnerMedia Studios and Networks Group. “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.”

This is not actually the first announcement of its kind for Warner Bros., which announced last month that the already delayed release of Wonder Woman 1984 would happen on Dec. 25, but would also include simultaneous release on HBO Max. However, that was considered a one-off decision—until now.

Likely well aware that boycotts by theaters could derail the cinematic launch of Warner films in 2021, Sarnoff added that the plan is temporary, and geared entirely toward dealing with the pandemic situation. 

“With this unique one-year plan, we can support our partners in exhibition with a steady pipeline of world-class films, while also giving moviegoers who may not have access to theaters or aren’t quite ready to go back to the movies the chance to see our amazing 2021 films,” she said. “We see it as a win-win for film lovers and exhibitors, and we’re extremely grateful to our filmmaking partners for working with us on this innovative response to these circumstances.”

The obvious question, however, is whether this temporary one-year measure is actually, well, temporary. Companies like Warner Bros. and Disney have shown an increasing affinity for streaming services. Just yesterday The Licensing Letter reported on the massive shakeup at Disney Television, all geared toward a more efficient exploitation of the Disney+ streaming universe. Prior to that, Disney collapsed distribution deals with other streaming services, most famously with Netflix, and now hoards its collection of Disney, Pixar and Marvel blockbusters like its own pile of dragon’s gold. 

In considering this announcement, note that Warner Bros. parent company AT&T also owns HBO Max, which is of course where all those Warner movies will be played. Neither Warner nor AT&T own movie theaters , so this move looks a lot more complex than a simple reaction to the pandemic. 

It’s common practice for journalists to reveal any bias they may have, so let me state right now that I absolutely love going to movie theaters. I am morbidly addicted to theater popcorn with double the butter, but it’s also that feeling I have that if it’s not in the theaters, it’s just not as big an event, no matter how outsized my home television screen becomes. 

I think a lot of people feel the same way, but those people have almost entirely stopped going to movie theaters, while streaming services have scooped up the financial rewards. 

Now, Warner Bros. has upset a financial model that has been in place for a century, and the prime beneficiary is HBO Max, another AT&T subsidiary. You don’t need your reading glasses to see the writing on that wall. 

Still, Warner Bros. is approaching this brave new world with all due caution. Warner Bros. Pictures Group Chairman Toby Emmerich argued, in an interview with The Hollywood Reporter, that this move is good for theaters. 

“It allows us to do a global release and a national release in what we think is going to be a checkerboarded theatrical market place for the bulk of 2021,” Emmerich told THR. “We think where theaters are open, and consumers can go, that a lot of people will choose to go to the theater, especially for big movies.”

In the short term, however, that is almost certainly not true, and the simple math of the pandemic right now does in fact justify Warner Bros. radical actions. The same day the news release came out, the United States suffered more than 3,000 deaths from COVID-19, the highest tally since the pandemic began. The numbers are expected to get much worse, as federal leadership on the pandemic response has pretty much fallen apart, so the likelihood of large crowds lining up at movie theaters through Q2 2021 are slim to none. 

The danger for theaters is that the public’s temporary aversion to congregating in crowds may become a habit, or worse, that streaming the premiere of a major theatrical release will be seen as just as good, but less expensive. 

Consider, for example, Warner’s history with its music divisions. At one time, like all other record companies, Warner Music sold records and then CDs, but as digital streaming went mainstream the company very willingly trashed its relationship with record stores and physical retailers to fully embrace streaming. In 2019 Warner Music generated more than $3.8 billion in recorded music revenues, with 63 per cent of that coming from streaming services like Apple Music, Spotify, and YouTube. 

In its own SEC filings, Warner boasted it “adapted to streaming faster than other major music entertainment companies and, in 2016, were the first such company to report that streaming was the largest source of our recorded music revenue.”

But, does Warner actually care about its streaming partners either? Not at all. Like any company, they are in the business of making money, and Warner is very rapidly embracing the next trend in music distribution through partnerships with social media networks like Facebook, Snapchat and TikTok. Their interest in these social network partnership was heightened when, as reported in The Licensing Letter, their rival Sony Music penned the first major multi-year licensing deal with TikTok. 

Revenues from these types of agreements is already generating hundreds of millions of dollars toward Warner’s bottom line, and that figure is expected to grow very quickly. 

Turning back to Warner Bros. announcement that its films will now go straight to streaming on HBO Max, it appears more likely that the already existing trend toward streaming was exacerbated and accelerated by the COVID-19 pandemic, and the almost complete collapse of theater revenue. It may well be that we are now witnessing the death of the cinema industry as a relevant cultural force, and the future will see only a few isolated theaters playing films that have already streamed, mainly for hopelessly out of touch old folks who, like me, really enjoy popcorn. 

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