Warner Bros. Finally Looks Beyond the Movie Theater
The studio has embraced a
digital future. The rest of the industry would do well to pay mind.
By Kara Swisher
Ms.
Swisher covers technology and is a contributing opinion writer.
- Dec.
4, 2020
The
windows are now smashed, and that’s a good thing, broken glass notwithstanding.
At
least that’s the case at Warner Bros. This week, the entertainment giant
finally shattered Hollywood’s way of doing business, perhaps for all time. The
company said its entire slate of movies for 2021 — 17 in
all — would drop onto its HBO Max streaming service on the same day they appear
in theaters, abandoning the old system of “windowing” its cinematic releases.
Even
now, making theater owners think they still mattered was a necessary bone that
WarnerMedia’s chief, Jason Kilar, had to throw to those who had not yet
grasped the depth of the digital revolution, which has only accelerated during
the pandemic.
But
WarnerMedia has finally embraced the inevitable future, even if they’re not
saying it explicitly. The rest of the entertainment industry would do well to
pay mind.
Or at least keep up with Mr. Kilar, who is doing this to light a
fire under the underperforming HBO Max. The streaming service has been too
little, too confusing and too late, which is why subscribers have not been
racing to sign up and pay $15 a month for it. HBO Max is limp with only 8.6
million activations, even though the traditional HBO cable service has 38
million subscribers.
Thus,
along with new originals like a “Gossip Girl” reboot, WarnerMedia needs to lard
up HBO Max with its upcoming slate of possible blockbusters, like “Dune,” “The
Matrix 4” and Lin-Manuel Miranda’s “In the Heights.” The studio had already
sent out a clear signal last month that the ground was shifting when it said
its “Wonder Woman 1984” would debut on both HBO Max and in theaters on
Christmas Day.
In
Olden Times — last week — streaming services would have to wait 90 days while
the movies played in theaters exclusively, a retrograde policy given how much
the audience has changed in the last decade and, especially, in the last six
months.
Mr.
Kilar is calculating correctly that even the impending rollout of Covid-19
vaccines will not be enough to boost movie-theatergoing until at least next
fall.
But if
I know him well — and I have known him for many years, since before he was
pioneering the Hulu service, where he was forever hamstrung by old rules of the
entertainment industry — he is also assuming that Warner’s future lies
primarily in making its streaming service the center of the action. And that
means making the studio’s reliance on big theatrical releases a thing of the
past.
This is not unlike the huge shift the software and hardware
industries underwent long ago, moving on from splashy big analog debuts.
Remember the Windows 95 extravaganza and when things actually were launched at
the Consumer Electronics Show? Me neither. Now, new tech products come out
every which way and in the manner that befits whatever they need to thrive.
Much of
what has befallen the movie-theater business is about secular change related to
technology. But the industry has done itself no favors by offering terrible
customer service, ever-higher prices and precious little in the way of
innovation, even as home theater experiences have drastically improved.
While
several of Mr. Kilar’s underlings tried not to answer the question of whether
the Warner 2021 movie-slate move was temporary or permanent — one called it a
“unique, one-year plan,” and the always shifty term “hybrid model” was tossed
around — it’s just a feint to protect a lie that Hollywood has told itself for
far too long. Which is that it can no longer avoid the wrenching changes to its
business fueled by the rise of digital technologies and changing consumer
practices. These have been clear to anyone who has watched the relentless and
impressive march of Netflix.
HBO
Max, which debuted in May, is hardly a competitor to the persistently
innovative Netflix, which has 200 million monthly subscribers on its global
service, with 73 million in the United States. And throughout the pandemic,
Netflix — because it has been perfecting its original-content machine for years
— has been churning out the hits, including “Tiger King,” “The Queen’s Gambit”
and an even spicier fourth season of “The Crown.” Netflix’s level of excellence
has demanded that others follow it.
Warner
is not the only one. There have been increasingly aggressive efforts to put
streaming in the lead by the Walt Disney Company, which took the well-timed
plunge with its Disney+ service earlier this year. Disney just reported an
impressive 73.7 million subscriber tally, helped by its creative “Mandalorian”
franchise. And it is making its live-action remake of “Mulan” available to subscribers after
having experimented by charging $30 extra to watch it on the service.
By
making these dramatic shifts, Disney and Warner may be giving up hundreds of
millions in box office revenue from theaters, of course, but it’s pain that is
necessary, even if it means complaints from those owners.
And
how, with the howling. Stocks of theater chains plummeted even further after
the Warner news, which was apparently not signaled ahead of time to the chains,
and after Warner and the theaters had tried to put a happy face on the initial
“Wonder Woman 1984” news.
“Clearly, WarnerMedia intends to sacrifice a considerable
portion of the profitability of its movie studio division — and that of its
production partners and filmmakers — to subsidize its HBO Max start-up,” AMC
Entertainment’s Adam Aron said in an email to The New York Times. “As for AMC,
we will do all in our power to ensure that Warner does not do so at our
expense. We have already commenced an immediate and urgent dialogue with the
leadership of Warner on this subject.”
Talk
all you want, Mr. Aron, because no one is actually listening and your company’s
stock is sinking, even if some people are profusely apologizing and sending you
the $795 Christmas morning breakfast box from ROE Caviar. Eat up, because
there’s a lot less where that came from. The theater business a very shaky
prospect in the long term.
Or just
read between the lines of what Mr. Kilar told The Times: “I have a lot of
confidence in the theatrical model, and I have a lot of confidence in the
subscription model. In many ways, you could see a future where budgets and
ambitions continue to grow because that which you make more convenient tends to
be used more often.”
Let me decode that for those who don’t yet get the narrative:
You have to break a lot of windows to let in the air blowing in from the
future.