2020 has been a tumultous year for all of us; the movie industry has been no exception. In the same way that Amazon has been making money hand over fist during this pandemic while most in-person retailers have been shuttering and even going bankrupt, streaming services like Netflix and Hulu have been boosted at the expense of movie theatres. Last month, Warner Bros. made headlines by announcing that Wonder Woman 1984, which had already been pushed back multiple times, will be available to stream on HBO Max on the same day it is released in theatres on Christmas Day.
This was groundbreaking. Traditionally, movie theatres have exclusivity on new releases for about three months before they are first made available for viewing on VOD/DVD. This was then shortened to 3 weeks earlier this year, but just last week Warner Bros. sent shockwaves throughout the industry by announcing that it would completely do away with the theatrical window for its entire 2021 slate of releases. For no additional cost to HBO Max subscribers, all its 2021 releases would be available on HBO Max at the same time as they are released in theatres. This includes such tentpole movies as Dune, Matrix 4, the new Space Jam, Tom and Jerry, Godzilla vs Kong, among others. This decision by such a major studio seems to be the latest indicator that movie theatres are on its last legs. Many smaller and independent theatres will never reopen after the pandemic ends, but moviegoing was already dying out well before 2020.
This is certainly not for a lack of effort or creativity by exhibitors, who have been fighting for survival in recent months, experimenting with makeshift drive-in theatres, renting out screens for private parties, and implementing a variety of COVID protocols. Most of the studios had postponed its major films anyway, and the few major releases this year – like Trolls World Tour and Mulan – that were immediately available for streaming, came at a fee in the $20-$30 range . But drinking saltwater doesn’t help the parched. Warner Bros. clearly had no confidence in a meaningful theatrical revival in the next year, and theatres have zero negotiating leverage right now as they are trying to stay afloat.
While no other studio has thus far followed suit, Disney just released a statement that it will increase the subscription price of Disney+, on which it would be putting an almost indigestible amount of new Marvel, Star Wars, Disney live-action, Disney animation, and Pixar content in the next few years. Disney was conspicuously silent on its plan for forthcoming major blockbuster films like Black Widow, Eternals, and Shang Chi. But it seems to signal a shift in the entertainment industry from investing in talent to content.
The talent, of course, is understandably irate. Scores of filmmakers have criticized the decision and lamented its effect on the future of cinema. Warner Bros. was known for being a great home for talent, but that reputation is in tatters. One of the most controversial aspects of this is, of course, related to money. Many top actors and directors are compensated not only with an upfront salary but with participation rights in a share of the box office profits. Warner Bros. bought out the back end rights for Wonder Woman 1984 based on a billion dollar box office calculation, but apparently didn’t do that for any of the 2021 releases.
It’s arguable that Warner Bros. or other studios have no obligation to pretend that COVID-19 never existed. It’s not only economically improbable to continue to pay out on a fictional box office return of a billion dollars against a real return of nothing, that also isn’t completely equitable. The fundamental question with a force majeure event like the novel coronavirus is, when an entire industry is affected top to bottom, how do the losses get allocated and who bears this risk? Some actors are getting paid less, but the studios aren’t seeing that revenue stream either. The original set of assumptions that both sides made when they originally negotiated those contracts just no longer applies. Someone has to eat the loss – it probably isn’t fair if either side has to bear the entire burden. Everything is up in the air.
Moving forward, this will have a huge impact on compensation and financing. Studios will likely take fewer risks and be more unwilling to give huge payouts to actors. Some speculate that the output and investment will be content-driven rather than talent-driven. Existing franchises and IP that remain popular with viewers will commoditize talent. If Disney’s announcement is any indication, this shift is already occurring. Stepping back, this could be out of economic necessity – Christopher Nolan had pushed to have Tenet released theatrically this year, and the resulting huge flop was reportedly a big factor in WarnerMedia’s decision to give up on theatrical releases.
Another question mark is how the industry will evaluate the success of future films. Netflix is famously opaque with its numbers, and “views” on streaming platforms, for various reasons, are a lot less reliably quantifiable than tickets sold and asses in seats. Since the beginning, technological innovations – from the introduction of sound and color, to digitial filmmaking and CGI effects, and the rise of streaming – have always forced movies to adapt in order to stay alive. Nevertheless, many have long predicted the downfall of theatres and popular moviegoing as inevitable as we get more comfortable with watching on smaller screens in the comfort of our own homes. It’s too early to say for sure, but even though there are comorbidities, movie theatres may well turn out to be another COVID-related casualty.
