For nearly a century, Warner Bros. has been in the big-screen business. From the gangster pictures that defined its Depression-era offerings to the “Batman” movies that ushered in its blockbuster phase, the studio has focused on creating stories so action-packed, so need-to-see, that they are tailor-made to lure people from their homes and separate cinema-goers from their hard-earned cash. In the process, the studio helped establish Hollywood as the movie capital of the world.
But a pandemic has a way of drastically changing things. Last week, Warner Bros. announced that due to the COVID-induced shutdown of most cinemas in key cities across America, it would release its 2021 slate simultaneously in theaters and on HBO Max. That includes sprawling, special-effects-heavy tentpole pictures such as “The Suicide Squad,” “Matrix 4” and “Dune,” as well as awards season hopefuls like “Judas and the Black Messiah” — all representing some $2 billion in production costs. It’s a blow to movie theaters, which were already reeling from audiences’ skittishness about visiting multiplexes during a public health crisis, and a sign that the film business is being subsumed by the streaming revolution.
“It’s shifting sands and changing times,” says David Permut, the Oscar-nominated producer of “Hacksaw Ridge.” “I still think theaters are the best way to see movies, but we’re an art form that depends on commerce, and commerce dictated this decision.”
Indeed, Warner Bros.’ HBO Max move may have been announced out of the studio’s Burbank headquarters, but it’s a decision that was eagerly endorsed by its Dallas-based parent company, AT&T. Since buying Time Warner in 2018, the telecommunications giant has prioritized the launch of HBO Max above all else, only to see it debut last spring in a buzz-less haze. This needed shot in the arm gives the streaming service its own answer to Disney Plus hits like “The Mandalorian” and Netflix water cooler favorites like “The Crown” and “The Queen’s Gambit.”
“Warner Bros. was the crown jewel of the organization,” says Joe Pichirallo, a former studio executive and a professor at NYU’s Tisch School of the Arts. “I don’t want to be one of those people clinging to outdated models, but it is sad to see the movie business treated as just a vehicle for building up a streaming platform.”
The move was made so hastily that studio executives were able to have only cursory discussions with the major filmmakers behind the movies and with the agencies that represent the key talent prior to the announcement. That rankled many A-list filmmakers, including Denis Villeneuve, the director of “Dune,” and alienated key financial partners, like Legendary, which financed “Dune” and “Godzilla Vs. Kong” and is weighing legal action. Christopher Nolan, who directed “Tenet,” a sci-fi thriller released by Warner Bros. in theaters last summer, didn’t mince words. In a napalm-laced statement guaranteed to get the attention of WarnerMedia and AT&T higher ups, he said, “some of our 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.”
Of course, money can be a balm for bruised egos. When Warner Bros. opted to release “Wonder Woman 1984” on HBO Max and in theaters it paid out the bonuses of director Patty Jenkins and star Gal Gadot, calculating their profit participation as if the film had earned $1 billion globally. Insiders say that Warner Bros. is still coming up with a formula to pay leading actors and directors impacted by last week’s announcement a portion of the back-end deals that are tied to a film’s box office performance.
But, there are cultural impacts that extend beyond hammering out deal points. It used to be that the success of a film could be measured in box office performance. The Monday after a movie opened, the director of a blockbuster or the star of a new franchise could bask in the collective envy and admiration of “the town” while having lunch at the Grill on the Alley or dinner at Dan Tana’s. And the creative team behind a turkey knew it was wise to steer clear of the studio commissary for a few weeks, at least until another film opened and bombed, taking the heat off. Now, streamers are loath to provide data about how movies or television shows perform on their service, making it harder, if not impossible, to readily determine the success or failure of a film. That further scrambles the favorite Hollywood parlor game of who’s up and who’s down.
“It impacts how we now define success inside the business,” says Pichirallo. “It used to be that box office success impacted one’s standing in the industry and that impacted your fees and the projects you could make. If we’re now putting the emphasis not on box office grosses but on how movies drive subscribers to HBO Max, that’s going to require a different way of evaluating success.”
But the whole notion of “the town” is changing. Five years ago, there were the six major studios — Disney, Sony, Paramount, Universal, 20th Century Fox, and Warner Bros. Now, one of those six, Fox, has been absorbed into Disney, and Paramount and Sony are shells of their former selves or have been left punching up in a new world order.
Plus, a fresh group of power brokers, many with Silicon Valley roots, have decamped for the entertainment capital. The new elite is composed of traditional players such as Disney and Universal, but also tech giants like Amazon, Apple, Netflix and — by dint of owning WarnerMedia — AT&T.
That’s resulted in relative newcomers to the world of motion pictures — like WarnerMedia CEO Jason Kilar, formerly of Hulu, and Warner Bros. chairman Ann Sarnoff, a longtime TV exec — rewriting the history of movies.
“With Jason and Ann running the show, it’s a bottom-line business,” says producer Peter Newman, the head of Tisch School of the Arts’ MBA/MFA program. “All of these companies have stockholders. They want to wring as much profit as possible.”
There’s no denying that decisions are being made with a sharper eye toward Wall Street, and without much regard to movie theaters and filmmakers. Hollywood has always been a business, but perhaps more than others, it’s one built on personal relationships. In the world of entertainment, schmoozing is almost as revered an art form as moviemaking itself. Warner Bros. has long been considered one of the most filmmaker-friendly studios, attracting big-name repeat directors like Nolan and Clint Eastwood. Yet the company’s new world order could affect the capacity in which talent chooses to collaborate with the studio.
“This is the great showdown between six monoliths in the streaming business, involving hundreds of billions of dollars,” Newman says. “They’re not worrying about one individual film or director and their feelings right now. The relationship part of the business has been diminished.”
A very different movie business will emerge from the pandemic. When lamenting the changes roiling the industry, more than one executive offered the idiom “The toothpaste is out of the tube.” That most aptly describes the situation around theatrical windows. For the better part of the past decade, studios and theater operators contested the amount of time a movie should exclusively play in cinemas. Studios had long lost that battle, resulting in the three-month time frame that’s become industry commonplace. That is, until Universal Pictures announced months ago that it would make new releases available on demand within weeks of their debuts and give select theater circuits a cut of digital profits in return. Warners then dropped a small bomb in November in saying “Wonder Woman 1984” would open day-and-date on HBO Max on Christmas Day, only to scorch earth weeks later in revealing Gal Gadot’s superhero sequel wouldn’t be a one-off. Sarnoff called Warner Bros.’ hybrid model a “unique one-year plan,” but few believe that will be the case. That leaves little incentive for rival studios to adhere to the standard 90-day window.
“The floodgates are going to open. Theater owners are not in any financial position to make demands about how distributors are going to release their movies,” Newman says. “They’ve lost their leverage.”
The devastation is going to be heaped on the exhibition community. Yet that doesn’t mean the end times are nigh for those in the business of showing films on the big screen. Some theaters may get unfairly caught in the crossfires, but the movie theater industry as a whole isn’t going away overnight. Insiders suggest the future of going to the movies will be more reliant on creating event-like atmospheres that feel less like casual nights out and more like cultural happening.
“It’s hard to imagine this doesn’t have permanent implications to consumer behavior,” says Rich Greenfield, a media and entertainment analyst at LightShed Partners. “They can say things will go back in 2022, but people will have spent a whole year watching movies at home.”