It took a pandemic to change the movie business

Why you can see Wonder Woman 1984 at home on Christmas Day.

On Christmas Day, you can see Wonder Woman 1984 in movie theaters — if theaters are open where you live — or you can watch it at home on HBO Max.

That’s a remarkable thing. It’s the first time you’ve ever been able to decide exactly when and where you want to watch a big, would-be-blockbuster Hollywood movie on opening day.

Distribution plans for a superhero movie aren’t the most important news at the moment — we are, after all, battling a pandemic that has killed 250,000 Americans. But it’s also worth noting that this modestly pro-consumer move — giving people the chance to see a comic book movie wherever they want to see it — is only happening because of the pandemic.

And the move also tells you a lot about the state of both the movie theater business (it’s in a lot of trouble) and the streaming business, which is in a desperate race for scale.

Quickish background: Hollywood movie studios and the big movie theater chains have been fighting for years over “windows”: the amount of time between when a movie comes to theaters and when you can watch it at home. Most of the studios have been trying to shrink that window. They want you to be able to rent a big movie at home weeks, not months, after it debuts in theaters. Theaters, for obvious reasons, want to keep that gap as big as possible.

And since theaters represent a big chunk of the revenue a movie can generate, they’ve been able to more or less hold the line. You could sometimes see an indie movie at home at the same time it debuted in theaters, but for big movies and big studios, it never happened.

Even attempts to experiment with alternate models — in 2011, Universal studios proposed letting you rent Tower Heist, a terrible Eddie Murphy/Ben Stiller movie, for $60 while it was still in theaters — haven’t gone anywhere.

Enter the pandemic, which closed theaters and forced studios to try different strategies. Most studios moved most of the big movies they planned to debut this year, like Dune or the latest Fast & Furious sequel, to 2021. Then they experimented a bit with everything else: Universal allowed people to rent Trolls 2 and other movies at home. Other studios took movies that were supposed to go into theaters and folded them into their own streaming services: Hamilton debuted on Disney+, The Witches went to HBO Max. Disney also tried a hybrid option by letting Disney+ subscribers watch Mulan at home — if they paid an extra $30.

But until now no one has let you pick if you want to watch a true blockbuster in a theater with other people, or at home with friends and family. (The first Wonder Woman movie, released in 2017, grossed more than $800 million worldwide, which means WarnerMedia, the unit of AT&T that owns both Warner Bros. studio and HBO Max, expect the sequel to be a giant hit as well.)

The fact that this is happening now reveals a couple things:

  • The movie theaters have completely lost the leverage they once had. In the past, WarnerMedia would have never tried this because the big theater chains would have made credible threats, including refusing to show the movie in their theaters. (This is why, by the way, you could see Netflix’s The Irishman in theaters last year only in small chains and indie theaters. The big chains, like AMC, simply refused to show the movie because they are angry at and threatened by Netflix in general.) But the big chains can’t threaten the movie studios anymore.

That’s because they’re either not open, period, or because people don’t want to see movies in theaters, even when they can. WarnerMedia did try bringing Tenet, a would-be blockbuster, to theaters earlier this year, and pandemic-scarred US audiences simply refused to go. And while movie theaters expect to open again in 2021, they will do so in a very weakened state. They have spent this year bleeding money and trying to stave off bankruptcy. There’s a good chance many of the theater chains will have to close many of their locations in the near future; there’s also a good chance some of them will end up with new owners after filing for Chapter 11.

One indication of how weak the theaters are: Earlier this year, Universal cut a deal with AMC, the world’s biggest theater chain, to shorten — but not eliminate — the theater-to-home window. That pact was considered astonishing, and it required Universal to give AMC a cut of its home rental sales.

But a PR rep for WarnerMedia says the company isn’t changing its existing deals with theaters in any way for Wonder Woman 1984. The theaters that show it can get the cut of box office revenue they always get, and nothing more. That is: WarnerMedia is betting that the big chains will show the movie, on their terms, which they hate. And that they won’t be able to do anything to retaliate.

  • Big media desperately wants to catch up to Netflix. WarnerMedia executives are fully aware that giving people the chance to watch Wonder Woman 1984 at home means that many people are going to watch Wonder Woman 1984 at home, which means they’re going to sell many fewer tickets. Meaning: This is going to cost WarnerMedia a bunch of money.

But the company clearly thinks that giving audiences a reason to subscribe to HBO Max is worth it. The streaming service — a mix of the old HBO plus a bunch of new stuff — got off to a slow start when it launched this spring, and it is hoping that a new, family-friendly superhero movie will be a reason for people to subscribe over the holidays.

And WarnerMedia needs a lot of people to do that: Its owner, AT&T, has promised Wall Street that it is going to become one of the dominant streaming services, along with Netflix and Disney. It will either ultimately be rewarded or punished based on that performance, rather than the near-term performance of its studio. So cutting off some movie revenue now — and making theaters upset along the way — will be worth it for WarnerMedia if it can turn HBO Max into a real Netflix competitor. And if it can’t, the money it loses on Wonder Woman 1984 won’t matter much anyway.


Via Recode

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