In an unprecedented move that shook Hollywood to its core, Warner Bros. Pictures announced that its entire 2021 film slate will debut simultaneously in theaters and on the HBO Max streaming service. This disrupts decades of tradition and reflects monumental shifts in consumer behavior that have been accelerated by the pandemic.
For movie lovers, it offers a lot more choice. But for the future of movie theaters – it’s their worst nightmare. Let’s break down this bombshell decision and what it signals for the future of the movie business.
Cutting Straight to Streaming: The New Normal?
Giving consumers direct streaming access to big-budget blockbusters like Dune, The Matrix 4, and Space Jam 2 would have been unthinkable not so long ago. For decades, Hollywood studios relied on exclusive theatrical runs lasting 90 days or more.
But the pandemic has rewritten the script. With box office revenue down 80% and nearly 65% of U.S. theaters closed, WarnerMedia CEO Ann Sarnoff said this hybrid model will allow films to reach consumers while also generating some much-needed revenue.
This follows Disney’s move to release Mulan directly on streaming in September. But unlike Mulan’s $30 rental fee, the Warner Bros films will be available at no extra charge for HBO Max subscribers.
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Sarnoff stated: “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.”
The (Potentially) Fatal Blow to Movie Theaters
While the hybrid release is positioned as a win-win for consumers and Warner Bros, it‘s devastating news for movie theater operators.
After losing months of business to COVID-19 closures, theaters were counting on big blockbusters to drive a rebound in 2021. Instead, they now face the loss of exclusive access to films like Godzilla vs Kong, The Suicide Squad, and the Sopranos prequel The Many Saints of Newark.
To gauge the potential impact, look at AMC Theaters – the world‘s largest cinema chain. AMC‘s stock plunged 16% following Warner Bros‘ announcement. Hours later, Regal Cinemas announced the temporary closure of all its U.S. theaters.
This one-two punch reveals how vital blockbuster films are to theaters‘ survival. A 50% capacity limit was already straining their business model. The loss of blockbusters could completely decimate their income and result in mass theater closures.
According to Variety, insiders predict Warner Bros‘ move could collapse theatrical windows entirely. Some analysts believe AMC may now need to file for bankruptcy.
The Rise of Streaming Video – And the Slow Death of Cinema
To understand why Warner Bros made this move, you need to follow the money. And the money is increasingly flowing to streaming services rather than movie theaters.
The global streaming video market was valued at $42 billion in 2019. It‘s forecast to nearly triple to $184 billion by 2027, per Allied Market Research.
The pandemic has only increased demand for streaming as home entertainment options. Services like Netflix added more subscribers in 9 months of 2020 than in all of 2019.
Disney+ gained an astonishing 86.8 million subscribers in its first 14 months, a pace no one predicted pre-COVID.
With streaming subscribers and stock prices surging, studios are shifting focus. Disney prioritized streaming by restructuring operations around Disney+. AT&T went all in by purchasing Time Warner for $85 billion and launching HBO Max.
The Death of The 90-Day Theatrical Window
Streaming‘s rise reflects changing consumer attitudes. Millennial and Gen Z audiences have grown up accessing content on-demand via the internet. The allure of the theater experience has faded.
In 2019, box office revenue in North America hit a 6-year low. Movie theater attendance in the U.S. and Canada has plunged nearly 25% in the last decade per The Wrap.
In recent years, major studios have been disrupting traditional release patterns by premiering films on streaming during theatrical runs. The 90 day "window" of exclusivity for theaters has been shrinking.
Disney tested the waters in 2019 by releasing Frozen 2 on Disney+ just 2 weeks after theaters. With COVID shutting down theaters entirely, it‘s apparent that exclusive theatrical releases are no longer economically viable.
Warner Bros‘ 2021 slate on HBO Max completely shatters old distribution models. While described as temporary measure, the theater industry may never recover from this paradigm shift.
Which Films Are Impacted? Warner Bros 2021 Slate Revealed
Here are the movies that Warner Bros currently plans to release in 2021 via the simultaneous hybrid model:
- The Little Things
- Judas and the Black Messiah
- Tom & Jerry
- Godzilla vs. Kong
- Mortal Kombat
- Those Who Wish Me Dead
- The Conjuring: The Devil Made Me Do It
- In The Heights
- Space Jam: A New Legacy
- The Suicide Squad
- The Many Saints of Newark
- King Richard
- Cry Macho
- The Matrix 4
This list includes major tentpole films and potential blockbusters spanning action, sci-fi, horror, family films, crime dramas, and more. The diversity reveals how crucial streaming debuts have become to Hollywood‘s future.
What This Means for Consumers: More Choice
For movie fans, Warner Bros‘ strategy offers a lot more choice in how to experience its latest films. Customers can easily stream top new movies as part of their $14.99 monthly HBO Max subscription.
Rather than paying for theater tickets, consumers can now watch highly anticipated films like The Suicide Squad spinoff and the next Conjuring horror chapter from the comfort of home.
This offers greater flexibility for parents, groups of friends, couples and consumers cautious about COVID risks. However, for diehard cinephiles who live for the immersive theatrical experience, streaming remains a poor substitute.
Will This Continue Beyond 2021? What‘s Next for Theaters and Studios
Warner Bros described its 2021 hybrid release strategy as a temporary solution driven by unique pandemic circumstances. But the theater industry fears the damage will be permanent.
If consumer response is overwhelmingly positive, will Warner Bros and other studios continue to favor streaming? Or will they return to traditional theatrical windows as the pandemic (hopefully) subsides?
One thing is clear – the distribution models that existed for decades are obsolete. Consumers now have more choice in how to access content. With streaming services proliferating, studios have more options to monetize films directly.
While the theater experience still offers unique magic for many movie lovers, that magic has a hard dollar value. And right now, the dollars are increasingly flowing from streaming.
If other studios follow Warner Bros‘ lead, the future of movie theaters looks grim. But some analysts say pine for an eventual rebound, citing pent-up consumer demand for outside entertainment.
After being deprived of new movies for so long, will some consumers flock back to savor the escapism of immersive cinema? Or are at-home streaming habits now entrenched for good?
Nobody knows for sure. But Warner Bros’ bombshell has likely accelerated changes that were already reshaping Hollywood. The days of studios relying on theaters to maximize new film revenue? Quite possibly…fade to black.