2021, and still in quarantine. COVID-19 brought us a completely new way of life. We have had to learn how to adapt our home-life to accept our work-life, school-life, and gym-life. Companies have had to adjust to working from home, even if they were reluctant to at first. We have spent more time bathing in hand sanitizer, abiding (hopefully) by new state regulations, keeping our distance, and yet becoming more connected to people we never would have been able to before this. (YAY THIS WONDERFUL COMMUNITY!)
In order to appease our new way of life, companies have also had to adjust how they do business. This has resulted in many small businesses unfortunately closing, and large businesses completely re-doing their business plan. Movie theatres, among so many others, have been hit extremely hard. This has caused closures of theatres (in some cases permanently), large movie releases have been delayed, and the largest business that we never thought could be held back, the film business, was basically placed on hold. Due to this, one company has decided to release all their 2021 film line-ups directly to a TV near you! That’s right…Warner Brothers is releasing their entire 2021 lineup on HBO Max (you know, just like the title says). But why does this matter? We’re going to break this question down and see how this does matter, both from a consumer and a business point of view.
First, we’re going to look at the business side. Currently, the release date that has been set for the movie will be the same date that the movie will simultaneously be released onto HBO Max for one-month access. This allows studios to maintain the relationship with movie theatre distributors while adjusting for the at-home streaming needs. Those who do not have access to HBO Max, since it is localized, will have the ability to “safely” see the movie in theatres if they so desire. Warner Brothers are considering this an experiment. They released the hit, Tenet, in theatres during the pandemic, and ultimately lost hundreds of millions of dollars. Releasing their line-up to an in-home streaming service is keeping them in the game with the likes of Disney +, who released Mulan earlier this year, as well as attempting to catch-up on lost revenue from the year that is 2020.
Historically, studios have viewed streaming services as the enemy, as they were taking away an integral part of the experience, i.e., going to the theatre. Because streaming services are their own companies, if studios were to give their movies to them, the studios would then lose control of the distribution of the film, as well as lose the box office statistics. Studios viewed the theatre as the only feasible way to make money, as it is considered a 1:1 profit relationship. However, that is also because there has simply never been another option to finance box office film budgets. It could be the whole “old school” thought process getting in the way, and resistance to change. Now, though, especially due to the pandemic, studios have had to begin looking at releasing their films to streaming services. With this new option, it is thought that the only way to be profitable is by releasing it to a streaming service they own, i.e. Warner Brothers and HBO Max. This is not only an experiment but also a gesture of goodwill pointing towards the potential future, and Warner Brothers are willing to be the guinea pig. With 35 million subscribers, they will be giving audience members the chance to see hit movies, on either platform they desire (movie theatre or streaming at home), ultimately and potentially, increasing the viewer numbers.
However, will it bring box-office smash numbers? The initial thought is no, not likely. There is so much money spent on the movie theatre business that many of you may be asking how will releasing on a streaming service increase revenue? Let’s look. If there are 4 people in a party going to a theatre, and tickets are ~$8 each. That would be $32 for the box office, as food sales do not go into box office numbers. If there are 4 people in a party at home, let’s estimate that the movies will be $30 (as that was the cost of Mulan) on top of the subscription fee. That is an approximate ~$2 loss at the box office, for 4 people. The trick here is the company is ‘assuming’ that everyone will be following the pandemic rules, and not going to other people’s houses. What if a group of friends gets together, or 3 families sit in on one purchase of the movie? That will actually result in a major profit loss. If the 3 families are of 4 people, to make math easy, that would have been $96 which is now dropping to $30, resulting in a $66 profit loss. We are obviously not in the board rooms to hear the meetings; however, this potential streaming option doesn’t look to be as profitable at first glance. Will this mean the quality of movies has to drop? Has this pandemic really shaken up foundations to that extent?
Now from the consumer side. If you, like me, are thinking, “But what about the movie-going experience?! The popcorn?! The butter?! The surround sound?! The giant screen?! THE BUTTER?!,” it may be time to begin mourning the loss of that delicious popcorn and it’s butter. However, we can now think about the convenience; the comfort of our couch, home-made snacks, family movie time, and not having to put on pants or a bra to see a hit movie! It can also result in savings for a family because, as stated above, we were only discussing box office revenue. The movie theatre does its part for a family by providing the food and drinks, so a trip to a theatre for a family of 4 could easily be up to the $70 range, depending on what extra snacks and drinks are purchased (a key contributor to theatre profits).
The other side of this is, what if you don’t have that subscription service? The way it seems Warner Brothers will be looking at it is if they release a hit movie they have already spent millions on that has people sign up for the service they didn’t already have, that would be more than the price of the film. Those people would then continue the subscription service to watch some of the shows provided exclusively on that service (oh, hey Game of Thrones). Once the movies that have been made prior to 2020 are released, it could be that film production budgets reduce, TV production budgets increase, making the two more similar in production values, and the subscription service more attractive for retaining customers.
So, does it really matter that all hit films from Warner Brothers will be released on HBO Max in 2021? My thoughts are – I am stoked to see Wonder Woman 1984 at home with no bra on! What do you think? Leave a comment below!
Alexander, S.(2020, December 3). Warner Bros will release all of its new 20201 movies simultaneously on HBO Max, The Verge, https://www.theverge.com/2020/12/3/22150605/hbo-max-warner-bros-movies-2021-simultaneous-release-matrix-godzilla-suicide-squad-space-jam
Zeitchilk, S. (2020, September 18). ‘Tenet’s’ dismal U.S. debut has some calling for a change in Hollywood’s approach to the blockbuster, The Washington Post, https://www.washingtonpost.com/business/2020/09/18/tenet-box-office-hollywood-future/