In the short term, everything WarnerMedia is doing makes sense. Even with a COVID-19 vaccine in the early stages of a rollout, the American theater industry is unlikely to bounce back to anything close to normal before the summer of 2021—that’s a long while to wait for some of these films, which were completed ages ago. Other cinema markets, particularly in Asia, are booming because of their countries’ better management of the pandemic. This simultaneous-release strategy is a way for Warner to tap into box-office grosses worldwide while strengthening the appeal of HBO Max at home. Insiders at the studio are insisting that this is just a temporary change that can easily revert after 2021.
The only, tiny issue is that theaters may not be able to survive that long. AMC, the biggest cinema chain in the United States, has warned investors that it could be out of cash by early 2021. Regal, another major chain, has closed its theaters indefinitely. These businesses need product to survive, and even if they’re running in any form in 2021, it will be hard to sell most audiences on returning if they can already watch many big movies in their living rooms. So far, no other studio has proposed anything as dramatic as WarnerMedia’s plan, but changes are already afoot. Disney previously announced that it would be shifting more attention to its streaming platform, and NBCUniversal is similarly trying to build out Peacock. Even Paramount has announced that it will convert the TV-focused CBS All Access streaming service into the movie-branded Paramount+.
In short, other studios could conceivably make the same move as WarnerMedia. Until now, WarnerMedia had been the distributor most focused on theatrical releases; in September, it notably pushed out Christopher Nolan’s Tenet, a major release that most cinema chains worked to reopen for. Though the film grossed some $60 million domestically (far more than any other pandemic release), it couldn’t single-handedly rejuvenate the industry; theaters in the major markets of New York and Los Angeles never opened up as Hollywood had hoped.
Read: Hollywood’s ‘Tenet’ experiment didn’t work
Unsurprisingly, the major chains greeted WarnerMedia’s latest news with derision and despair. “Clearly, WarnerMedia intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max startup,” said AMC CEO Adam Aron in a statement. “As for AMC, we will do all in our power to ensure that Warner does not do so at our expense. We will aggressively pursue economic terms that preserve our business. … it is our expectation that moviegoers soon will be able once again to delight in coming to our theaters without any worry.”
WarnerMedia wouldn’t have made this decision lightly. Its earlier announcement that Wonder Woman 1984 would debut on HBO Max likely led to a big subscriber boost, giving executives confidence that other big films such as Dune could bump numbers even more. But these movies still all need major marketing campaigns to roll out, and cost hundreds of millions of dollars to produce. The first Wonder Woman made about $820 million worldwide in theaters alone; to “gross” that for a streaming service, any one movie would have to add tens of millions of monthly subscribers all by itself. HBO Max currently has about 57 million subscribers worldwide; that kind of growth would be hard to achieve, and even harder to sustain.