San Francisco Chronicle - (Sunday)
Is it the beginning of the end of movie exhibition?
This month, Warner Bros. announced that its entire 2021 film roster will be released simultaneously into theaters and onto its streaming service, HBO Max. We’re talking about big movies such as “Dune,” “The Little Things” and “Godzilla vs. Kong.”
I was unfazed by this. I know people have been worrying about the fate of movie exhibition, like about whether the theater chains can survive the pandemic, and whether audiences will return to moviegoing once life goes back to normal. But I didn’t think this particular announcement was a big deal — until I talked to people who really know the industry.
“Holy s—. This is really bad news,” said a longtime producer, generally known for being upbeat and optimistic. “It may be the end of the world.”
Karie Bible, box office analyst for Exhibitor Relations, the Los Angeles industry authority on movie exhibition, had a similar, though milder, reaction.
“It is seismic and gamechanging,” she told me. “The pandemic has accelerated streaming and decelerated theaters, faster than what would have happened otherwise. If Warner Bros. is doing this, a lot of other places are going to follow suit.” Indeed, that is the fear. “Warner Media intends to sacrifice a considerable portion of the profitability from its studio division, and that of its production partners and filmmakers, to subsidize its HBO Max startup. As for AMC, we will do all in our power to ensure that Warner does not do so at our expense,” CEO of AMC Entertainment Adam Aron said, in part, in a statement. “As this issue gets sorted out, we are nonetheless encouraged that vaccines protecting society at large against the coronavirus are very much at hand.”
Cineworld, which owns the Regal chain of theaters, also alluded to the vaccines in its statement in reaction to the news and suggested that Warner Bros. might want to reconsider once audiences start returning to theaters.
“We are very encouraged by the giant steps achieved recently with regards to the COVID19 vaccination process. … This will generate significant relief for our industry and enable our cinemas to make a great comeback,” Cineworld said. “We believe that at such a time, Warner Bros. will look to reach an agreement about the proper window and terms that will work for both sides.”
“Window,” in this case, refers to the distance of time between the theatrical release and the streaming release. In normal times, that distance could be a matter of months, less for smaller movies. But these Warner Bros. movies aren’t small. The only exception have been Netflix’s releases, whose prepandemic windows could be as little as a week or two.
Ann Sarnoff, the CEO of Warner Media, told CNBC that she sees releasing films in this “hybrid” way as a “winwin situation,” allowing movies that might have sat on a shelf for months to become available sooner.
But what remains at issue is what will happen in 2022 and 2023. When the pandemic ends, will this hybrid release model become the industry standard — to the detriment of theatrical exhibition — or will the model return to something like that which reigned previously?
No one knows the answer, but let’s read the tea leaves.
There are a couple of factors that argue against the future of cinemas. The first is that, despite movies being particularly good in 2019, movie attendance was down, so the pandemic may have struck at a point that the theater business was already vulnerable.
A second concern was best described by Sid Ganis, former president of the Academy of Motion Picture Arts and Sciences.
“My fear is that young adults — and older adults — will quickly get out of the habit of going to the movies,” he told The Chronicle. “People might get into the comfortable place of turning on Netflix, without realizing or remembering or experiencing the greatness of going to the movies.”
This is a legitimate fear. Young people are growing up watching movies on their phones and tablets. It’s not only possible that they’ll get out of the habit of going to the movies — they might never fully develop the habit. After all, incandescent light replaced gas light, even though people look better under gas light. And halogen light, which makes everybody look 10 years older, is replacing incandescent light. Advances in technology sometimes bring on changes that aren’t improvements.
However, there are other signs that theatrical exhibition still may have a healthy future.
One important thing to remember is that the movie business, as currently constructed, is tied to theatrical box office. If you’re a movie star and your contract gives you 5% of the gross, why would you sign with a company that’s going to depress your profits by giving their product away on a streaming platform?
This also doesn’t sound like a reliable business model for either the streaming service or the filmmakers. Yes, people may sign up for HBO Max to see a particular title, but they might not stick with it. Conversely, even if they do stick with it, a streaming service might reach critical mass, where it becomes no longer profitable to finance an expensive movie.
Then there are auteur directors “like Quentin Tarantino and Christopher Nolan who demand a big screen — that’s how they roll,” Bible said. “Any director that has enough power will insist on the bigscreen experience.”
That’s because what theaters offer — the booming surround sound and crisp projection — can’t be replicated at home. The highdefinition image can come close, the sound less so. Anyway, even to the extent that the home experience can replicate it, “not everyone can afford a super home theater system,” Bible said.
Interestingly, less than two hours after Bible talked about this, Nolan himself was quoted in the Hollywood Reporter about the Warner Bros./ HBO Max deal as saying that
“some of the industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service.”
There’s something else to consider that I don’t think people are fully appreciating. People are busting to go out. They want to go out so bad that some of them are doing it now, when it’s dangerous. Just imagine what’s going to happen when movie theaters are once again safe. ( And no, I don’t believe that people will rush out to go to the movies only once and then resume their brandnew streaming habits. I think people will return to normal life with a vengeance.)
But there is a catch: Theaters have to survive until the end of the pandemic to reap the benefits.
I believe they will, and unless postpandemic audiences suddenly decide they have no interest in going to the movies anymore — something I just don’t anticipate — the safest and most sensible business course, for the foreseeable future, will be for studios to continue to release movies into theaters. The “windows” may shorten, especially for serious movies and foreign films with limited audiences, but theaters will survive. In fact, I expect that they’ll thrive.
“When radio came in, and then TV, movie studios found a way to adapt,” said Bible, adding that even when “VHS tapes were a big thing” and streaming came along, movie theaters managed to continue to survive.
“I’m going to try to take an optimistic view, that one way or another that experience will stand the test of time.”