the industry

'You Just Screwed Up the Film Business': Panic Over the Warner Bros. News Sets In

The company's decision to premiere its 2021 titles on HBO Max has major segments of the movie industry up in arms. Photo-Illustration: Vulture and Warner Bros.

Arriving at the calendar end of a bizarro-universe year that has seen North American movie-ticketing revenue free-fall by more than three quarters from 2019 levels, a recent and unprecedented changeup to the 2021 theatrical release corridor sent a seismic jolt across Hollywood. On Thursday, Warner Bros. announced plans to release all 17 of its 2021 films via an experimental "hybrid model" that will see them premiere in theaters as well as on HBO Max, at the same time — for one month domestically, at least. Among those films: impending blockbusters and starry event titles with nine-figure budgets (and equally gargantuan marketing costs) including Dune, The Suicide Squad, The Matrix 4 and Space Jam: A New Legacy — films that were never intended for a so-called day-and-date release scheme and whose coexistence as a home-sofa viewing option threatens to provide a death blow to major movie-theater chains like AMC, Cinemark, and Regal, which were already hanging on by a financial thread thanks to malingering pandemic-related closures.

Following closely on the heels of Warner Bros.' recent announcement that director Patty Jenkins's Wonder Woman 1984 would sidestep standard movie-distribution protocol by opening first in cinemas internationally on December 16 and then streaming on HBO Max on Christmas Day (while releasing in domestic theaters the same day), the move caught many in the entertainment industry by surprise — not least executives at production companies behind films on Warner Bros.' 2021 corridor. According to an insider with knowledge of the situation who spoke to Vulture on condition of anonymity, top brass at Village Roadshow, the company making The Matrix 4, and Legendary Pictures, the company producing Godzilla vs. Kong, were neither consulted nor warned of the studio's impending distribution upheaval. And they were shocked to discover their tentpole releases were going day and date by reading about it in news reports.

Likewise, many filmmakers with movies in Warner Bros.' "coming attractions" queue were caught off guard by reading the news. "HOLY SHIT," one texted to his equally flabbergasted agent. "This is ridiculous that they wouldn't even make one phone call," another said in a message to an executive at a rival studio. "They didn't even try to reach out. And they just assume that we would go along with this."

On Thursday morning, about an hour ahead of the studio's bombshell announcement, however, Vulture learned that Toby Emmerich and Ann Sarnoff, chairman of Warner Bros. Pictures Group and chairman/CEO of Warner Bros., respectively, called the heads of Hollywood's top talent agencies — CAA, WME, UTA, and Paradigm — to discuss renegotiating certain "talent deals" attached to films on the 2021 calendar. That is, deals along the lines of WW84 star Gal Gadot's $10 million payday, which comprises a back-end component that would have taken effect only when the movie earned a certain dollar amount at the box office. Such deals needed to be extensively amended given the movie's shared-custody theatrical/streaming release. According to sources, Warner Bros. will have to "buy out" every such deal on every movie it plans to release next year, a hugely costly and exhaustive process.

Across the entertainment diaspora, you could feel a shock of realization that the industry's long-standing "window" — of at least 70 days between when a movie first appears on the big screen and its migration toward at-home consumption — had been forever smashed. Jason Kilar, the chief executive of Warner Bros. parent company WarnerMedia, attempted to downplay the day-and-date shift's halo effect on the movie biz, casting it more reductively as "the best way for WarnerMedia's motion picture business to navigate the next 12 months" in a statement. But the Hollywood hand-wringing had already begun. "[Kilar] said, 'This is just a one-year thing and we're going to go back next year,'" a senior executive at another studio says. "And it's like, 'Are you kidding me? You're changing the whole dynamic. It's going to screw up everything. You just screwed up the film business.'"

Thanks to ongoing theater closures in major markets such as Los Angeles and New York, drastic reductions in seating capacity for the remaining theaters in operation, and a severe drought of new movie product (as studios catapult almost all of their high-draw titles into next year), the country's largest cinema chain AMC Theatres is currently seeking $800 million in outside capital just to stay afloat. Still, the company took time out Thursday to all but declare war on Warner Bros., indicating it would penalize the studio's attempt to close the theatrical window — presumably by limiting the number of Warner movies AMC programs in its theaters. "Clearly WarnerMedia intends to sacrifice a considerable portion of the profitability of its movie division, and that of its production partners and filmmakers, to subsidize its HBO Max start-up," AMC's chief executive Adam Aron said in a statement Thursday. "As for AMC, we'll 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. We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject."

To be sure, other studios have tested similar waters during the coronavirus scourge, with Universal striking a historic deal with AMC to stream its films on video-on-demand platforms a mere 17 days after arriving in theaters, and Disney foregoing the theatrical releases of such high-stakes films as Mulan and Soul, sending them straight to Disney+ in a bid to jump-start new subscriptions. Of the remaining studios, Paramount has sold off most of its 2020 releases to streaming services (booting splashy titles — including Top Gun: Maverick and A Quiet Place Part II — into next year). And neither Paramount nor Sony yet has its own proprietary OTT service to mount a similar day-and-date offensive even if it wanted to, making the Warner Bros. move unlikely to spawn copycat competition.

Still, Hollywood executives, studio bosses, and top deal-makers feel that the upheaval of an entire year's worth of theatrical product all at once — The Conjuring: The Devil Made Me Do It, the Sopranos movie prequel The Many Saints of Newark, the Black Panther biodrama Judas and the Black Messiah, and the filmed adaptation of Lin-Manuel Miranda's In the Heights are all aimed at both HBO Max and theaters concurrently next year — could irrevocably rewire moviegoers' ticket-buying patterns, forever changing the way people turn out for films.

"You're going to set up a consumer pattern that they'll expect this stuff," says an exec at another studio. "You're going to have event movies that you have to see in a movie theater, and have to experience on a big screen. If I can only see [blockbuster X] because it's not available on any streaming service, I'm going to get in my car, pay my ten bucks, and go to the theater. Every movie that is not an event movie, you're just not going to go."

Historically renowned as one of Hollywood's most filmmaker-friendly studios thanks to long-standing creative partnerships with Christopher Nolan, Clint Eastwood, and Stanley Kubrick, Warner Bros. has grabbed headlines in recent weeks for drastically culling its ranks of movie marketers as part of a reorganization toward an all but inevitable future where streaming revenue overtakes box-office returns. Still, for the studio's day-and-date gambit to make any kind of financial sense, sources contacted by Vulture feel that subscribers to HBO Max would have to jump from its current base of fewer than 9 million to between 25 million and 30 million subscribers over the next year to avoid being perceived as a "loss leader."

Moreover, due to a relative lack of familiarity with the movie biz's unique social mores and behavioral expectations, top Warner bosses Kilar (who previously served at Amazon and Hulu) and Sarnoff (whose background is in television) are said to have handled the day-and-date paradigm shift with a lack of finesse. "The constituencies are exhibition — they just fucked exhibition; talent — they just fucked talent," says a source with insider knowledge of the studio's business dealings and executive turnover. "Okay, if they had released Wonder Woman like they were going to in October when 85 percent of movie theaters were open, the movie still would have done some real business. But they're betting on streaming. They're going, 'We have to model our thing on Netflix because our live business is messed up.'"

Reflecting a sense of sputtering outrage that has pervaded multiple strata of the movie industry since the news broke, this person continues: "If they were smart, they would have called everybody beforehand — called the major talent, the producers, the directors, the whole thing — and said, 'We want to do this. We want to launch our thing. We want to figure this out and make it work with you.' Instead, they did this. They're fucked. Now they're sitting there, and they have all these dates with movies coming out, and all these people are going to go, 'I'm not promoting these movies unless you pay me.'"

Panic Over the Warner Bros.–HBO Max News Sets In