Hollywood’s ‘We’re Not in Kansas Anymore’ Second

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LOS ANGELES – When company general manager Jason Kilar explained why WarnerMedia decided to release the highly anticipated “Wonder Woman 1984” on a budget simultaneously in theaters and on streaming service HBO Max on Christmas Day, he appealed on the classic Hollywood movie “The Wizard of Oz.”

“We are no longer in Kansas,” said Mr. Kilar in a statement.

The success of a film is no longer measured solely by the box office revenues it generates in theaters. Instead, it would be measured in part by the number of HBO Max subscribers it can attract. And just as Dorothy enters the Technicolor world of Oz, Hollywood feels like it’s entering a new era – one with streaming at its center.

The year-end holiday season usually means the theaters are teeming with blockbuster crowd-pullers, award winners, and moviegoers. Not this year. With many cinemas closed because of the coronavirus and those openly struggling to attract audiences, many studios have either postponed the release dates of the main films to 2021 or created a hybrid model in which the cinemas that are still in operation can show new releases, while they are also made available via streaming or on-demand services.

“Wonder Woman 1984” is the best-known example so far that was published with the hybrid model. But when it comes out on HBO Max on Christmas Day, it will appear along with Pixar’s animated “Soul” and DreamWorks Animations “The Croods: A New Age” as marquee films this holiday season that were expected to be box office favorites, but likely now can be seen primarily in people’s homes.

For companies with their own streaming platforms like WarnerMedia and Disney, releasing movies this way is now seen as a way to create subscriptions. Both companies have stated that the measures will only last through the pandemic, but both recently changed their leadership responsibilities to make it clear that streaming is the new priority. (Disney, for example, now has a central division that decides how its content is distributed. This is a change in strategy that puts Disney + high on the studio’s priority list.) And audiences may not want the studios return to the old way of publishing films that gave theaters 90 days of exclusive rights.

“There will be a new normal,” said Jason Squire, editor of The Movie Business Book and professor at the University of Southern California’s School of Cinematic Arts. “Over the years there has been a lot of tension between the theater show and studio distribution, but not a lot of changes. The pandemic has accelerated change. “

It wasn’t long ago that Hollywood viewed streaming as an unwanted riot. A few years ago, when Netflix began seriously competing for Oscars, traditionalists ridiculed the idea of ​​giving prestigious awards to films that were only nominally released in theaters. (That year, the Film Academy announced that films could skip a theatrical release and be eligible for an Oscar examination.)

Nevertheless, the studios have long wanted to shorten the exclusive window for theaters. Theater chains aggressively opposed this, fearful that people would be reluctant to buy tickets to a movie they could soon watch at home.

The sanctity of the theatrical release was eagerly guarded even after the pandemic lockdowns began. In April, Universal Pictures had a successful video-on-demand release for “Trolls World Tour,” saying it would make more films available without an exclusive theatrical release. Adam Aron, the managing director of AMC, the largest theater operator in the world, described the move as “categorically unacceptable” and said his company would no longer book universal films.

By July, however, the two companies signed a multi-year contract that would allow Universal films to be played in AMC theaters for at least 17 days before they were available in the jargon in private households via premium video-on-demand or PVOD. Last week, Universal signed similar deals with Cinemark, the third largest theater chain in North America, and Cineplex, Canada’s largest exhibitor, adding that the exclusive theatrical window for films with ticket sales of up to $ 50 million will extend to 31 days .

The shortened window means the studio can theoretically spend less on marketing than is normally required when theater and home video debuts are three months apart. And the studios typically keep 80 percent of the premium on-demand revenue, while ticket sales from theatrical releases are split roughly 50 to 50 between studios and theater companies.

“We hope that by bringing PVOD to market, we will improve the profitability of the studio and, as a result, more films will appear in theaters,” said Peter Levinsohn, vice chairman and chief distribution officer of Universal. “The whole goal here is to make our marketing more efficient, to increase the profitability of the films and to prevent the films from selling” for subscription services such as Netflix or Amazon.

Warner Bros. chose to defend the tried and tested model of theater, hoping Christopher Nolan’s “Tenet” would bring people back to theaters this summer after the first wave of viruses ended and 68 percent of American theaters reopened. With cinemas still closed in the two largest markets, New York and Los Angeles, the film grossed only $ 56 million in its entire US run. This was a far cry from Nolan’s previous theatrical hits like “Interstellar,” which made $ 188 million domestically, and a stark warning to other distributors that the traditional way of releasing films in 2020 would not work.

Today the theater climate is gloomy. Half of the theaters in the United States are closed and the number of viruses is increasing across the country. Regal Cinemas, the second largest chain in the US, has closed all theaters due to a lack of films and audiences. Unless a federal grant program becomes available to theaters soon, John Fithian, executive director of the National Theater Trade Association, expects 70 percent of them to either close permanently or file for bankruptcy by the end of next year.

Big budget shows have also brought audiences to theaters through waves of home entertainment competitions, from VCRs to streaming. Both theater chains and studios have benefited, and few expect “Wonder Woman 1984” size films to be streamed immediately after the pandemic.

Moving away from theaters would affect the nature of the films. In short, if less money had to be raised at the box office – due to a reduction in the number of cinemas or a permanent change in consumer behavior – studios would be forced to produce fewer big budget films. For those who think Hollywood relies too heavily on cumbersome superhero films, this may be welcome news. The thousands of people who each of these films occupies would no doubt have a different perspective.

Others, however, are unsure whether the change will be as drastic, which indicates the power of the theatrical experience.

Charles Roven, producer of “Wonder Woman 1984”, said in an interview that he was confident that its release was not a sign of a new long-term strategy. “There’s no question that you want and should make HBO Max a success,” he said of Warner Bros. “But to say this particular thing is going to happen in the future would be a leap.”

Disney decided to bypass US theaters altogether and release the $ 200 million film “Mulan” on Disney + in September. Subscribers were given $ 30 on top of their monthly fee to watch the live-action adaptation of the animated film. Sales were hurt by an outcry over a filming location in China, but Bob Chapek, Disney’s chief executive officer, told analysts earlier this month that he “saw enough very positive results before this controversy began to know that we were referring to something have the main access strategy. “Disney plans to send several more large budget films to Disney +.

The calculation is a little different for studios without their own streaming services. While many chose to postpone their theatrical releases until 2021, others were selling films in an attempt to win some money back. For example, Paramount has outsourced “The Trial of the Chicago 7” to Netflix and “Coming to America 2” to Amazon. Netflix is ​​currently one of the few studios still sending products to the warring chains. From now until the end of the year, Netflix will show eight of its films in limited theatrical runs before they appear on service, including potential Oscar nominees such as “Ma Rainey’s Black Bottom” and David Fincher’s “Mank”.

Universal is the other big studio that still delivers films to theaters. This is backed up by the new PVOD offerings which allow him to distribute both of the major films such as the sequel to “Croods” and smaller films from its indie subsidiary Focus Features.

This is good news for Bobbie Bagby Ford, executive vice president of the family-run B&B Theaters, the sixth largest theater chain in the country based in Liberty, MO.

Ms. Bagby Ford said that prior to the pandemic, her company would not have accepted Warner’s plan to simultaneously release Wonder Woman 1984 in theaters and on HBO Max. Now, however, any opportunity to show a film that could actually do business would be a relief for a bankruptcy company.

“Our moviegoers in the Midwest are very excited to see you again and have been asking about Wonder Woman for months and months,” said Ms. Bagby Ford.

Mr. Kilar, head of WarnerMedia, said in his statement that the pandemic was the main reason “Wonder Woman 1984” was released in theaters and through streaming. But he also noticed how the move put control of how the movie should be viewed firmly in the hands of the audience.

“A little over four million fans in the US enjoyed the first Wonder Woman movie on its opening day in 2017,” Kilar wrote. “Is it possible that this will happen again this Christmas with ‘Wonder Woman 1984’ between the theaters and HBO Max? We are very excited to find out and do everything in our power to give fans the power of choice. “

Should that work, things are unlikely to ever be the same.

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