Warner Bros. announced it “would release its entire 2021 slate of theatrical films simultaneously in theaters and on its HBO Max streaming service,” WSJ writes.
Woah! It’s the “most drastic” move from a significant studio to adapt to the pandemic-ravaged movie industry and spells a dark future for physical movie theaters if it becomes a prevailing trend.
- Earlier this year, Disney released “Mulan” on its streaming service in exchange for a premium rental fee, and Comcast’s Universal Pictures struck a deal for “simultaneous releases that cut major theater chains in for a film’s first three weekends.”
How is it going to work? Warner Bros. will release 17 movies scheduled for next year, including “Dune” and the “Matrix 4.” The films will be available on HBO Max for 30 days before returning to follow “their usual distribution pattern.”
- While HBO Max has struggled to find its place in the streaming world, the availability of first-run films could be “breakthrough content in a crowded marketplace” and a key driver of subscriber growth.
- HBO Max is paying a license fee for the 30-day, at-home window. A portion will go to the stars and top creative talent.
“What began as an effort to counterbalance the dominance of Netflix Inc., has rewritten the strategies at every major studio with a home-streaming service of its own. The reorientation was accelerated by a pandemic that has closed most movie theaters and all but eliminated whatever leverage their owners once had.”
And movie theaters are, for lack of a better term, pissed. AMC CEO Adam Aron said he was reaching out to WarnerMedia to “begin an urgent dialogue.”
- Aron says the only thing he signed off on was a simultaneous release for “Wonder Woman 1984” and questioned WarnerMedia’s profitability plans.
- Meanwhile, movie theatres are “seeking lifelines to bridge the time, with hopes that a post-pandemic audience is full of pent-up desire to go to the movies.”
The Bottom Line: Now, the question is whether consumers are willing to give up seeing theatrical-run at home when the pandemic ends.
AT&T ($T) is finally showing some innovation. If you believe they can catch fire and growth with HBO max to make up for its declining legacy TV business, then $T could be a strong buy trading at 6.9x EBITDA with a 12% free cash flow yield.