News Analysis: Streaming Movies Does Not Mean Movie Theaters are Going to Die Any Time Soon

A person walks past a Warner Bros. Entertainment Inc. sign at the company’s studios in Burbank, California, USA. EPA, ETIENNE LAURENT

By Andreas Ignatiou

It’s easy to think that the film industry is forever going to change following this pandemic. How could it not? We can’t convene in public places safely and the thought of being trapped in a dark room with recycled air and strangers currently seems so outlandish that we can barely fathom the idea. But many of us miss going to the movies and worry that we will forever be forced to watch films at home.

Warner Brother made a bombshell announcement Thursday that it will be releasing its entire 2021 slate of movies simultaneously in theaters and on its new streaming service HBO Max. Suddenly the idea that we may never venture into a theater again did not seem so far-fetched. It’s easy to jump to the conclusion that this move is the nail in the movie theater industry’s coffin. It isn’t and here’s why.

Any time a game changing move like this occurs, it spurs countless alarmist think pieces ruminating on the potential fallout. And the Warner Bros. announcement certainly spawned an onslaught of stories laying out that argument.  But many of them miss the bigger picture.  The theatrical sector is facing, like many industries, unprecedented challenges due to the pandemic, to be sure. Theaters have largely remained shuttered throughout the world for most of the year, resulting in record low revenue. Many have closed for good.  So, it’s easy to assume this is the death knell for the industry.  But because it’s happened, it doesn’t mean it will always be the case.  The pandemic will end at some point in the future and when it does, moviegoers, hungry for the experience of watching a movie on a big screen will return to the theaters.  And besides, streaming movies has been a challenge the industry has lived with for a while now. It’s nothing new.

  • Prior to the pandemic, all signs signaled towards streaming becoming more and more prominent in the entertainment sphere. In the current marketplace, where all of us have been relegated to our living rooms for movie watching, it seems all but assured that we’re going to see more and more releases on streaming services like HBO Max, Hulu, and Netflix.  Yet, the notion that these two spheres—movie theaters and movie streaming–cannot co-exist is completely manufactured. They have been mingling for years. Indisputably, overall theatrical revenues in 2019 did drop domestically, but the worldwide box office game was very strong.

And even though this year has slowed to a crawl, the box office worldwide began the year on a promising note, and an analysis of the future will likely show that growth will continue.

At the surface level then, instead of jumping to apocalyptic conclusions, we should take Warner’s announcement for what it really is: a studio adapting to the crazy and unpredictable landscape of the COVID-19 pandemic by trying to mitigate its losses and generate alternative revenue in 2021. Add to this the fact that Warner Brothers and its parent company Warner Media is still trying to recoup lost investments from two recent projects. The first, Christopher Nolan’s Tenet, was unleashed to theaters this past summer, even though all signs pointed to audience reluctance to return to theaters; its subsequent financial disappointment was almost all but assured. The second is the rocky launch of HBO Max itself, which began in May. It has been struggling to attract high subscriber numbers based on the HBO name alone ever since.

Execs at HBO Max and Warner Brothers must have realized that something had to give, at least until a semblance of normalcy returned. So, they decided to do something that would unclog the release pipeline while also rocketing their streaming platform right up to the ranks of its competitors. They decided to do the previously unthinkable: send their tentpoles, an industry term that describes studios biggest, most bankable releases, to streaming platforms — but not just any platform, their platform.

This decision was a shrewd, calculating move for a number of reasons. While the Warner Brothers 2021 slate is admittedly varied and exciting, featuring big franchise titles, like Godzilla vs. Kong and The Matrix 4, adult-skewing dramas like Denzel Washington serial killer thriller The Little Things and genre fare like horror stalwart James Wan’s latest Malignant as well as another installment in his Conjuring franchise, none of the films on the slate are guaranteed to be billion-dollar hits.

Contrast that with MGM and United Artists’ decision to delay the latest James Bond film No Time To Die, originally scheduled for April 2020, from theaters until further notice, and, likewise, Paramount’s choice to hold A Quiet Place Part II, the sequel to the breakout 2018 horror film, and Top Gun: Maverick, the long awaited sequel to the 1986 Tom Cruise hit, for theatrical releases next year. All three of these films will enjoy exclusive time on the big screen … and all three are certified slam dunks, according to industry observers. Of note, though, is that Paramount’s film slate hasn’t been entirely immune from the streaming alternative either—it did sell two high profile titles to Amazon this year: the highly anticipated sequel to Eddie Murphy’s Coming to America and the Tom Clancy franchise hopeful Without Remorse, as well as awards hopeful, The Trial of the Chicago 7, the Aaron Sorkin drama about the infamous 1969 trial about countercultural protests at the Democratic National Convention, which went to Netflix. Both sales were a direct effect of the pandemic.

  • Now let’s take a look at the rest of Warner Bros’ 2021 film slate, which under normal circumstances would be a killer lineup. There are a number of franchise pictures with strong, built-in fanbases, but who’s to say that audiences will return to theaters to see them in the midst of a pandemic, and in the numbers needed to make these films the billion-dollar hits that WarnerMedia needs them to be? We have no idea what 2021 will look like and playing it by ear is a huge risk in and of itself. It is not surprising then that the executives calling the shots at Warner embraced the idea of streaming them simultaneously.

For example, while The Matrix 4 has been heavily discussed online and the excitement factor is high, the previous installment hit theaters in 2003. That’s a long time ago — and we all thought that story already reached its natural conclusion. And, sure, The Suicide Squad is based on a DC comics property and has already spawned one film incarnation in 2016 that, while it was a huge financial success, audiences and critics were universally critical of it. It’s also unclear whether this new film is a sequel or a reboot, and how it relates to 2020’s underperforming Birds of Prey, which featured franchise stalwart character Harley Quinn, played by Margot Robbie. Godzilla vs. Kong is also a dubious bet, given the fact that 2019’s Godzilla: King of the Monsters underperformed its predecessor by a stunning $200 million worldwide. Space Jam: A New Legacy starring LeBron James following in Michael Jordan’s footsteps is likely the surest bet of the bunch, but there’s no guarantee it will catch on with young audiences the way Jordan’s version did. Finally Dune, the much anticipated (at least in some circles) re-do of Frank Herbert’s epic novel, made waves when trailers dropped earlier this year, but tracking theory on the movie suggests that it may perform closer to director Denis Villeneuve’s Blade Runner: 2049, which isn’t good news for the studio because, despite high anticipation leading into the release, it underperformed.

The only real outlier here is Wonder Woman 1984, which, with a traditional theater release, would’ve undoubtedly become a massive box office success. When Warner Brothers and HBO Max made the announcement two weeks ago that the movie would premiere simultaneously on big and small screens on Christmas Day, it was seen as a game changing move and industry watch dogs jumped at the chance to catastrophize the move. The reality is that the money sunk into Wonder Woman 1984’s promotion is already sizable and the expense of delaying it yet again too great, following the underperformance of Tenet.

So how do you save the situation? You use the existing promotional push to bolster the struggling HBO Max. All of a sudden, HBO Max is in the big leagues with a high profile tentpole of unmissable status that can still channel the momentum of its predecessor into high viewership. Not only does this move help HBO Max make headlines and enter the superstrata of its competitors, but thanks to the streaming platform’s suddenly expanded slate of 2021 feature films, it also has a chance at sustaining its new subscribers — something Disney+ wasn’t able to do with the bungled Mulan release. Oh, and did I mention HBO Max got rid of free trials leading into the release of Wonder Woman 1984?

The takeaway here is simple: WarnerMedia made a calculated decision based on its need to offset recent losses, bolster its new streaming platform, and maximize the success of a film slate that, in a normal year with normal stakes, would look absolutely stellar. The company saw an opportunity to jump ahead of the pack and hit its competitors where it hurts by releasing movies built for theaters at home, in turn sending the message that these titles are a “cut above” other streaming catalogues. This move will likely provide Warner Bros. the much-needed financial and profile boost for HBO Max, while also giving consumers peace of mind and the option to return to theaters when they feel safe to do so, on their own terms. It takes the pressure off of the audience.

As things start to return to normal — and they will eventually return to normal — the question remains, will we want to remain at home glued to our TV’s, watching the latest movies? After a year of doing just that, I’d bet on no. Theaters will bounce back. The first economic rebirth we will see will be in restaurants and bars, places where we can safely socialize with friends and family once again. After that initial push, though, people will want to go and do other things that don’t involve staying home, and what’s that perennial cheapest form of entertainment? The movies. We all just need to hang on for a little longer.

*Andreas Ignatiou is a film development executive for York Films, a film production company based in Los Angeles and New York City.

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