AT&T-owned WarnerMedia stunned the entertainment world on Thursday when it announced its intention to put all 17 of its 2021 Warner Bros movies on HBO Max on the same day each movie hits theaters.
The announcement sent shares of movie chain AMC (AMC) down 16%. And now AMC is responding.
“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 startup,” AMC CEO Adam Aron said in a statement sent to media on Thursday evening. “We will do all in our power to ensure that Warner does not do so at our expense. We will aggressively pursue economic terms that preserve our business. We have already commenced an immediate and urgent dialogue with the leadership of Warner on this subject.”
Urgent dialogue notwithstanding, Aron may not have much leverage amid the intensifying era of direct-to-streaming movie releases. (Cinemark, for its part, only said that it is “making near-term booking decisions on a film-by-film basis. At this time, Warner Bros. has not provided any details for the hybrid distribution model of their 2021 films.”)
AMC has been hammered by the pandemic, and just this week filed with the SEC to offer 200 million shares in order to raise $844 million as its latest step to stave off bankruptcy.
Although movie theaters have reopened across most of the country (with mask rules, blocked-off seats for social distancing, and strict cleaning protocols), a Yahoo Finance/Harris Poll survey last month found that 81% of Americans have not gone to a movie theater since March. More than half (56%) of respondents said they are concerned about getting COVID-19; 20% said they fear theaters will not be clean enough; and 12% said they don’t want to wear a mask during a movie.
Those are all pandemic-related concerns, but another 22% said there was no movie in theaters that they wanted to go see, and 19% said they’d rather stream movies at home.
Warner Bros., with its 2021 experiment, is reacting not only to the pandemic, but also to that last group. WarnerMedia’s announcement frames the stunning move as a “consumer-focused initiative,” and CEO Jason Kilar (the founder and former CEO of Hulu) said it will give consumers “the choice and the power to decide how they want to enjoy these films... We believe this approach serves our fans, supports exhibitors and filmmakers, and enhances the HBO Max experience, creating value for all.”
Of course, the approach does not support exhibitors. The movies will only stream on HBO Max for the first month, then will leave the streaming platform and continue their theatrical run, but anyone eager to see one of the movies will certainly want to watch in the first month, and they’ll be able to watch it at home on their couch (with a $14.99 monthly HBO Max subscription) and skip the theater.
Movie theaters were losing ground to streaming options even before the pandemic accelerated the trend dramatically. Now there is legitimate concern that even beyond the pandemic, moviegoers may never return to theaters at the same levels as before the pandemic. WarnerMedia’s new strategy could ensure it, if other studios follow suit. (What will Disney do? The company holds its next investor day on Dec. 10, and all the attention will be on streaming.)
The traditional 70-day “theatrical window” between theaters (“exhibitors”) and studios was bound to be a casualty of the streaming wars. Studios no longer feel it’s their responsibility to prop up the distributors of their films, since they’re investing billions in their own digital distribution platforms.
AMC already signed a new multiyear deal with Universal in July that shrinks the window to 17 days for theatrical exclusivity on all Universal and Focus Features movies. And AMC had happily agreed to WB’s plan to put “Wonder Woman 1984” on HBO Max on Dec. 25, the same date it will hit theaters.
But AMC never agreed to the deal for all 17 WB movies in 2021, a slate that will include highly-anticipated titles like “Dune,” “Matrix 4,” “In the Heights,” and the “Sopranos” prequel film “The Many Saints of Newark.”
AMC CEO Aron sounds hopeful that COVID-19 vaccines will signal the end of the pandemic and a comeback for theaters. “It is our expectation that moviegoers soon will be able once again to delight in coming to our theaters without any worry,” he said, “viewing the world’s best movies safely in our big seats, with our big sound and on our big screens.”
There’s good reason he repeats “big” so many times there. A sci-fi epic like “Dune” simply won’t be the same experience at home on the couch as it will in a theater on a huge screen. But his hope that vaccines will bring Americans rushing back to theaters is also a big if.
Daniel Roberts is an editor-at-large at Yahoo Finance and closely covers the streaming wars. Follow him on Twitter at @readDanwrite.