The Current State of Theaters
Since the onset of the COVID-19 pandemic, the future of the theatrical movie-going experience has been an open question. In an industry that has increasingly moved towards a dependence on streaming services for in-home viewing, the inability for audiences to safely visit movie theaters appeared like a warp-speed injection for the inevitable shift to total streaming dominance. As the pandemic has stretched on, the updates from even the most powerful movie theater companies have been grim at best. Regal Cinemas has suspended all of its United States based operations until further notice. Even AMC Theaters, long the most dependable corporate theatrical entity, has announced that it could “run out of money” by early 2021. The closing of hundreds of movie theaters nationwide means more than just a slash to a company’s bottom line; if movie theaters as we know them go under permanently, it will mean the disappearance of thousands of jobs for all those Americans who work on the front lines of the theatrical experience. There is a devastating human toll that is often forgotten when we discuss the future of movie theaters, and it is an oversight that I hope we can collectively work to fix.
There have been varied reactions on the studio side in terms of how to deal with the present reality, accompanied of course by rampant prognostication about what each decision might mean for the long term future of the movie industry. Universal Pictures fired the first salvo by releasing Trolls World Tour (2020) on PVOD, allowing customers to pay a premium price of $19.99 to rent the film. This decision set off a string of similar actions and set up what has become the current norm of premium “Early Access” rentals for movies that would otherwise be shown in theaters. Elsewhere, studios have opted to sell off projects to streaming services to recoup some cost, such as when Paramount Pictures sold The Trial of the Chicago 7 (2020) to Netflix for $50 million when the company realized its initial fall theatrical release plan was unviable. Other studios have pushed their releases to 2021, but no matter how you approach it, the pandemic has marked a dramatic rearranging of release strategies that raise serious questions about how exactly we will or will not return to the previous ‘normal’ of theater-first distribution.
All of which leads us to December 2020, and two pockets of information from Warner Bros. and Disney that may ring the death knell for theatrical distribution as we know it. To summarize:
- Warner Bros., after previously announcing that it will make Wonder Woman 1984 (2020) available on HBO Max for Christmas Day, has decided that its entire 2021 film slate will be available to stream the same day each respective movie opens in theaters.
- On its December 11th Investor Call, Disney laid out a list of projects for the next few years that included no fewer than 35 straight-to-Disney + television shows and films.
Warner Bros. / HBO Max
The announcement that Wonder Woman 1984 will premiere straight to HBO Max was surprising, but not a total shock. Yes, it was projected to be one of the biggest box office hauls of 2020 before the pandemic decimated the release calendar, but as it was one of the most delayed 2020 releases, industry watchers expected Warner Bros. to just release it somehow. The decision was no doubt influenced by the abject failure of Tenet’s (2020) theatrical release, which director Christopher Nolan (he’ll be back in a moment) and a small group of Warner Bros. executives pushed for aggressively.The fact that even Nolan’s sway could only generate $60 million in ticket sales was undoubtedly a massive red flag for considering any other prospective releases. Tenet was the test balloon, or sacrificial lamb depending on how you view it, to feel out the viability of a theatrical run for a blockbuster in COVID-19 land, and obviously Warner Bros. was quite unhappy with the results. Even so, its decision to move the entirety of its 2021 slate to streaming, just as positive news about a vaccine suggests theatrical viewing may once again be viable in the near future, is a larger indicator about where they see the industry moving.
Warner Bros.’ 2021 slate is overflowing with massive movies, a collection of blockbusters that would normally signal huge potential for box office success, and buzzy awards fare that have Oscars written all over them. Among the titles are Judas and the Black Messiah (2021), Godzilla vs. Kong (2021), Matrix 4 (2021), The Conjuring: The Devil Made me Do It (2021), and my personal most anticipated movie, Denis Villeneuve’s Dune (2021). The new release strategy means that each of these movies will premiere on HBO Max the same day they do in theaters, and will then be available on the service at no extra cost for subscribers for one month, at which point they will be removed from the service and replaced by the next release. Variety quotes Toby Emmerich, Chairman of Warner Bros. Pictures Group, as saying that the Warner Bros. approach “enables us to best support our films, creative partners and moviegoing in general throughout 2021.” Emmerich goes on to add that “as always, we’ll support all of our releases with innovative and robust marketing campaigns for their theatrical debuts, while highlighting this unique opportunity to see our films domestically via HBO Max as well.” The subtext here seems clear: Warner Bros. is going all in on the long-term viability of its relevancy by trying to build the HBO Max subscriber base while also attempting not to completely alienate distributors because theaters could still make them some extra cash.
No matter how any executive tries to spin it, this decision marks the most aggressive move by a traditional studio in the direction of giving up on theatrical distribution. Yes, the hybrid release model that Warner Bros. is rolling out will still allow theaters to show the movies, but is anyone really under the impression that potential ticket-buyers will choose to go to a theater when they can instead subscribe to HBO Max and get the same product? Of course, there are those people, such as myself, who will always opt for the theatrical experience when the chance is there, but it is folly to think that any majority of viewers falls into that category, and a number of powerful filmmakers agree. Nolan issued a statement to The Hollywood Reporter where he said the following:
“Warner Bros. had an incredible machine for getting a filmmaker’s work out everywhere, both in theaters and in the home, and they are dismantling it as we speak. They don’t even understand what they’re losing. Their decision makes no economic sense, and even the most casual Wall Street investor can see the difference between disruption and dysfunction.”
The irony here of course is that the failed release of his own movie no doubt expedited Warner Bros.’ decision, but nonetheless Nolan did not mince words in reflecting the feelings that numerous other filmmakers and distributors echoed as the HBO Max news rippled out. Villeneuve cut straight to the heart of the economics of it in a piece he wrote for Variety, focusing on the reality that because AT&T owns Warner Bros., this decision is part of a larger move by the telecom company to prioritize earnings over art:
“There is absolutely no love for cinema, nor for the audience here. It is all about the survival of a telecom mammoth…Therefore, even though “Dune” is about cinema and audiences, AT&T is about its own survival on Wall Street. With HBO Max’s launch a failure thus far, AT&T decided to sacrifice Warner Bros.’ entire 2021 slate in a desperate attempt to grab the audience’s attention.”
Villeneuve and Nolan are two of cinema’s most respected mainstream contemporary filmmakers, and their comments represent the long-standing fear that streaming will kill the theatrical experience, and therefore undercut the artistry of filmmakers who create pieces meant to be seen on a big screen. It is hard to disagree with them. Considering that in 2019, Warner Bros. generated $1.6 billion of the $11 billion in North American box office revenue, their decision to undercut the potential theatrical revenue of 2021 represents a significant ding in the industry’s potential earnings for the year. Warner Bros. has opted for a self-survival strategy, and . if their hybrid model succeeds for them, it is easy to imagine other major studios following suit.
Disney / Disney +
Whereas the HBO Max announcement signalled a distribution shift in already existing projects, the future projects revealed on Disney’s December 11th investor call provide us with a clear impression of a studio committed to a long-term strategy focused on streaming. There has been much speculation about the subscriber success of Disney +, but the call put that to rest; Disney + has raked in over 86 million subscribers in just over a year of operation. For comparison, after 13 years of streaming, Netflix currently boasts just over 192 million subscribers. Much of Disney+’s achievement can be attributed to the great success of their flagship show The Mandalorian, which has settled into that sweet spot of fan admiration and critical success, giving Disney + a ‘must-see’ show that drives subscriptions. Pair that with the fact that Disney expertly highlighted how Disney + would be the home of all Marvel, Star Wars, Pixar, and classic Walt Disney content, and there is little doubt why the service has stormed to the front of the Streaming Wars.
During the investor call, the various heads of creative departments within Disney took turns running through their upcoming slates. All told, and thanks to Jackson McHenry over at Vulture who did this math so I did not have to, 80% of all the announced projects will debut exclusively on Disney +. For a studio that accounted for $3.72 billion (roughly 40%) of the $11 billion generated at the box office in North America in 2019, the indication that the studio is valuing its streaming service over box office success makes it stunningly clear where its priorities lie. This is not to say that Disney is completely dropping theatrical projects. On the call, a number of movies intended for theatrical distribution were announced, including the next Star Wars movie, currently titled Rogue Squadron and slated for 2023 under the direction of Patty Jenkins, who will mark the first female director of a Star Wars film in the franchise’s history. We can also look forward to a Pixar movie set in Colombia titled Encanto which will enlist Lin-Manuel Miranda to write the music. Nonetheless, having watched most of the four-hour call, I can confirm that these projects were breezed through in contrast to the spotlight given to streaming ones, announcements that revolved mostly around the Star Wars and Marvel universes.
The Marvel Cinematic Universe is called that for a reason: it is a cinematic endeavor meant for the big screen, and that does not show signs of changing anytime soon. With Black Widow (2021), The Eternals, Black Panther 2, and Shang-Chi and the Legend of the Ten Rings all slated for upcoming theatrical releases, Marvel will continue to be a major presence in movie theaters. Yet, with a comparable list of new television shows including WandaVision (2021-), Falcon and the Winter Soldier, Loki, and Hawkeye, Disney has also revealed that any fans who want to fully engage with the experience will have to subscribe to Disney + to watch shows that will actively tie into their big screen counterparts. Marvel and Star Wars possess some of the most rabid and faithful fanbases in the world, and taken together, both franchises are now set to have Disney + focused futures. It is a managerial masterstroke in terms of retaining subscribers and enticing new ones. With such a flood of content coming, there will be little reason for subscribers to cancel because there is not enough new content. Even if Marvel and Star Wars are not your particular brand, you just need to look at the full list of offerings to see how multi-faceted the Disney + approach will become in the next few years. It is a marker that one of the oldest and most successful movies studios in Hollywood history is putting all its chips on streaming, and it sure looks like it has a winning hand.
Are Theaters Dead?
My original title for this piece was “The Month that Movies Theaters Died,” but the more I thought about it, the less I thought these announcements from Warner Bros. and Disney meant the death of theaters. Really what they seem to mark is that the theatrical distribution model will never go back to what it was before the pandemic, but it will not go away. Recent years have shown an increased move towards only major blockbusters or awards bait getting broad theatrical releases with more and more smaller films finding homes on streaming services. Part of this divide is due to the fact that the risk-reward of budget vs. box office chances for a superhero movie is better than an original human drama. As the highlighted announcements show, that decision making is increasingly about how much a project offers in terms of added value for a streaming service.. The Streaming Wars are about holding eyeballs and consumer loyalty, and movie theaters simply cannot compete with that in the way they have in the past.
So no, movie theaters will not die because of these announcements, but there is no going back. December 2020 will go down in film history as the month that signalled the moment when we passed the point of no return. Even if Warner Bros. swears its hybrid model is only for 2021, if it is as successful as it hopes, chances are they will never return to a traditional release. And if the Disney + shows are as successful as I imagine they will be, Disney will only double down on that strategy. Only time will tell how other studios incorporate these changes into their plans, but it is doubtful that any of them will value the health of theaters over their own survival. Therefore I find myself preemptively mourning the fact that movie theaters, the places where so many of my happiest movie memories were formed, will close in droves. No doubt some independent theaters will make a transition to repertory showings with beloved classic and cult films, and as long as blockbusters make hundreds of millions, studios will want theaters to release them in. It is the widespread accessibility of theaters that will contract until only the most viable markets retain the big screens. No matter what the survival strategy, the likes of Warner Bros. and Disney have made sure that it is a matter of survival for theaters, and will never again be about the opportunity to thrive.