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Movies: How the streaming/theaters hybrid release experiment played out in 2021

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Yahoo Finance's Allie Canal details the defining movie trend of 2021 — hybrid releases — and how that affected box office numbers.

Video Transcript

[MUSIC PLAYING]

BRIAN CHEUNG: The movie industry deployed multiple experiments to combat the pandemic in 2021, most notably, those hybrid streaming releases. And Yahoo Finance's Allie Canal joins us now to break down the day-and-date trend and what it means for the box office heading into 2022. And Allie, you know, 'Dune' was a hybrid release, some others weren't. I think 'The Princess Switch 3', which was my favorite of the year, wasn't out in movies. I don't know what was going on there. But tell us about how the strategy of that hybrid release was implemented this year.

ALEXANDRA CANAL: Brian, 'The Princess Switch', that was only on streaming but yes, you're right. The hybrid release was an experiment this year and it really first made waves at the end of 2020 when Warner Brothers came out with that bombshell announcement saying all of their 2021 films will be released on streaming on HBO Max the same day as theaters. Now, this sent shockwaves through the industry, experts are saying that this means the death knell for movie theaters. And Warner Brothers really did keep up with that promise, releasing some of their top titles like 'Dune' as you mentioned, 'Godzilla vs. Kong', 'The Matrix Resurrections'.

And then after that, we saw another major studio, Disney, come to the fold and say you know what, we are going to release 'Black 'Widow on Disney+ as a premium VOD offering the same day as theaters. That of course led to that high-profile lawsuit with Scarlett Johansson, who said the decision affected the potential earnings that she could have made from the box office. She also said that she was promised that this film would be a theatrical exclusive. But Disney, they defended the decision, saying, look, at the box office, this made $80 million. And then we also made an additional $60 million on Disney Premier Access.

But fast forward just a couple of months later and things began to change. We have the release of 'Shang-Chi and The Seven Rings', another Marvel film. This is a theatrical exclusive and was really the first major test for Disney to see whether or not an audience was still there at theaters. And that film performed very well, bringing in $75 million in that domestic debut over the Labor Day weekend holiday, which was already challenged due to the Delta variant.

So after that, Disney sort of changed its tune and said the rest of our 2021 slate will be released exclusively in theaters. So this was a big sigh of relief for theater chains. Warner Brothers also came out and said in 2022 they are going to revert back to an exclusive 45-day theatrical window before any type of movie hits HBO Max or a streaming platform.

And I spoke with Boxoffice Pro chief analyst, Shawn Robbins about this, and he said that it really speaks volumes, the fact that these studios are going back to a theatrical-first strategy rather than continuing this hybrid experiment, it shows that the demand is there for the box office, and it's going to be a good thing heading into 2022. Especially for all of these theater chains that have had to grapple with a lot of challenges and hurdles amid the pandemic. That doesn't mean we're going to see no films go direct to streaming. I think other genres like dramas, indies, rom-coms, we could see those go direct to streaming like 'The Princess Switch 3'. However, I do think the box office is alive and well. And those superhero films, they consistently do well in theaters. So we're going to see that continue.

ZACK GUZMAN: Yeah. It was a hell of a year for Marvel as we talked about earlier this week, 'Spider-Man' crossing that $1 billion mark here too in box office, and as you said, that was theatric release. I mean, how do you see that panning out when you look into the data between hybrid releases and theater-only and how I guess, some of these companies are looking at their yardstick for success?

ALEXANDRA CANAL: Yeah, it was interesting to dig into this because obviously, the highest returns were theatrical exclusives. If we take a look at the top five domestic openers this year, they were all Marvel superhero films. But we did have 'Black Widow' in the mix here. That was by far the most successful hybrid release. So it's hard to say whether or not a hybrid release has a direct impact to box office ticket sales. And that's something that experts have struggled with. It's sort of like comparing apples to oranges. A view on streaming is not the same as a box office ticket sale, especially if I watch something on Netflix or HBO Max. I can get up, go get a sandwich, I could turn it off halfway through. So it's really hard to quantify that data and how that impacts profitability.

Obviously, 'Black Widow' did well, we also saw 'Dune', 'Godzilla vs. Kong', those were both hybrid releases that did pretty well in the box office. But if we take a look at 'The Matrix Resurrection', that severely disappointed, only bringing in $12 million in its domestic debut at the box office. However, you really can't just blame the hybrid release for this disappointment. There are other things that impacted this film. Not only do we have the Omicron variant, but we also had two previous sequels that didn't really hit the mark with audiences. So perhaps the fans just weren't there at that point. However, this film is always going to have an asterisk on it due to that streaming component.

So I think if we head into 2022 and we see more streaming releases, more hybrid formats, all of these streamers are going to have to be more transparent when it comes to the numbers that they release. We saw Netflix do that with their top 10 lists that they released weekly. However, I think we need to go a step further, what do these numbers mean? How does that translate to audience demand? And what films are actually performing well? That's really, really important for studios. So that's something to watch heading into 2022.

I also think we're seeing a world where streaming and the box office are coexisting simultaneously together. And that is defying the narrative that we heard earlier this year and last year, which said you know, streaming is the enemy of the box office, that that is not going to allow the box office to thrive but we're seeing that's not the case. And obviously, that's a great thing for consumers heading into 2022.

ZACK GUZMAN: Yeah, definitely not wrong to point out that there were some weak sequels in that 'Matrix' line of storytelling there. Not a lot of fans were happy about some of those earlier on. But Alexandra Canal bringing us the latest there at the box office. Appreciate that.