Nearly 20 months since the onset of the COVID-19 (coronavirus) pandemic, film producers, distributors and theaters are still grappling with its effects and attempting to find ways for the show to go on. Early on, the pandemic spurred studios to revamp their release strategies for many marquee movies, with companies experimenting to find the most-successful release model.
Most significantly, AT&T Inc.’s (AT&T) entertainment subsidiary, WarnerMedia, committed to releasing its entire 2021 theatrical slate day-and-date on its HBOMax streaming service. Meanwhile, the Walt Disney Company (Disney) has consistently reevaluated its methods in recent months, adjusting strategies in real-time and always with an eye on a return to theatrical release normalcy. The resulting trends have created an uncertain operating environment, with the future of theatrical releases still in flux.
Splitting streams
Disney has adopted a unique model, with the company releasing its theatrical content on its steaming platform, Disney+, and in theaters simultaneously; some titles are free to subscribers, while others require an additional fee. Disney asserts the model’s success, using the strategy on tentpoles such as Mulan and Black Widow. Despite these release strategies' reported success, overall box office health remains dismal compared with prepandemic levels. In fact, the strategies are exacerbating box office struggles, siphoning potential customers from theaters.
For some players, box office receipts matter less than big-picture strategy.
Consider Black Widow. The film made $379.6 million worldwide, generating $60.0 million during its first streaming weekend alone. Prior to the pandemic, streaming revenue would be tallied into its gross and split between theater. Indeed, most studios stand to make more from putting big-budget movies in theaters.
For example, after Disney broke box office records with the release of Shang-Chi and the Legend of the Ten Rings, the highest grossing movie of 2021 at the time of writing, the company announced that it would stop its premiere access strategy for theatrical-exclusive releases again. Still, it remains to be seen if this strategy will be viable for films without the built-in brand recognition of Disney and Marvel.
Nonfinancial benefits
For some players, box office receipts matter less than big-picture strategy. Significantly, some criticize AT&T, HBO’s parent company and traditionally a telecommunications company, for the management of its entertainment division, particularly by filmmakers. Following its hybrid release decision, the company reportedly paid about $200.0 million upfront to stars and filmmakers involved with relevant media, functionally increasing its budget at a likely loss.
However, since launching HBOMax during the pandemic, the chief goal of AT&T has been to render its streaming service competitive with existing players or attractive for acquisition, rather than necessarily recoup its film investments. Ultimately, AT&T may have found success in the planned WarnerMedia merger with Discovery Inc.
Trying a new angle
From a certain perspective, HBOMax’s underperformers helped create value for the brand. The Suicide Squad, which underperformed at the box office, serves as a predecessor the forthcoming HBOMax series, Peacemaker, creating potential longevity for the film and an audience for the series. Additionally, The Many Saints of Newark grossed an estimated $11.5 million at the box office, despite costing $50.0 million to make. Yet, WarnerMedia executives are unfazed, measuring the film’s success by viewers driven to the original Sopranos TV series on HBOMax and any potential opportunities therein. In conjunction with the successes of some of their features under this model, including Dune and Space Jam: A New Legacy, it is possible that the future of film releasing might take a more holistic and individualized tack.
