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Hollywood “We’re No longer in Kansas” Moment

Los Angeles — Jason Killer, CEO of WarnerMedia, explaining why WarnerMedia decided to release the long-awaited big budget Wonder Woman 1984 on theater and Christmas day streaming service HBO Max at the same time. Called a classic Hollywood movie “Wonder Woman Oz.”

“We are no longer in Kansas,” Killer said in a statement.

He said the success of a movie would no longer be judged solely by the box office revenue generated by the cinema. Instead, it is partially measured by the number of HBO Max subscribers it can attract. And just as Dorothy enters the world of Oz’s Technicolor, Hollywood feels like it’s stepping into a new era.

The holiday season at the end of the year usually means that the theater will delight a blockbuster audience, win awards, and be full of movie fans. Not this year. Many studios have postponed major movie releases to 2021 or new theaters are still in operation, as many theaters have been closed due to the coronavirus and struggling to attract spectators. I have created a hybrid model that can display publications. Also available through streaming or on-demand services.

“Wonder Woman 1984” is the most prominent example ever released using a hybrid model. However, when it appears on HBO Max on Christmas Day, it will appear in Pixar’s animation “Soul” and DreamWorks Animation’s “The Croods: A New Age” as a holiday-season movie that was expected to generate box office revenue. It is mainly found in people’s living rooms.

For companies that have their own streaming platforms like WarnerMedia or Disney, releasing movies this way is seen as an opportunity to drive subscriptions. The two companies say the move will only continue through a pandemic, but recently swapped management responsibilities to clarify that streaming is a new priority. (For example, Disney has a central department that determines how content is delivered, and there is a change in strategy that makes Disney + a top priority for studio priorities.) And viewers are told that the studio is an old release method. You may not want to go back to. A movie that gave the theater a 90-day exclusivity.

Jason Squire, editor of The Movie Business Book and professor of Cinematic Arts at the University of Southern California, said: “Over the years, there has been a lot of tension between theater exhibitions and studio distribution, but there haven’t been any major changes. The pandemic has begun to change in a hurry.”

It wasn’t long ago that Hollywood saw streaming as an unwelcome rebellion. A few years ago, when Netflix began to seriously compete for Oscars, traditionalists ridiculed the idea of ​​awarding a prestigious award to a movie that was nominally only released in theaters. (This year, bowing to the reality of a pandemic, the Film Academy announced that the film could skip theatrical release and be considered by Oscar.)

Still, the studio has long wanted to shorten the dedicated window given to the theater. The theater chain was actively lobbying for it, worried that people would hesitate to buy movie tickets that they could immediately watch at home.

Even after the blockade of the pandemic began, the sacredness of theatrical release was enthusiastically preserved. In April, Universal Pictures said it had successfully released a video-on-demand video of “Trolls World Tour”, making more movies so available without an exclusive theatrical release. Adam Aaron, CEO of AMC, the world’s largest theater operator, called the move “resolutely unacceptable” and said his company would no longer book Universal Movies.

But by July, the two companies have signed a multi-year agreement to play Universal Movies in the AMC Theater for at least 17 days before making it available at home through Premium Video on Demand (PVOD in industry jargon). .. Last week, Universal signed a deal with Cinemark, North America’s third-largest theater chain, similar to Canada’s top exhibitor, Cineplex, for theater monopoly periods for movies with ticket sales of $ 50 million. Added a provision to expand to 31. days.

Shorter windows mean that studios theoretically spend less on marketing than would normally be needed if the theater and home video debuts were three months apart. Also, studios typically maintain 80% of premium on-demand revenue, but ticket sales from theatrical releases are split between the studio and the theater company in about 50-50.

“We hope that bringing PVOD to market will improve the economy of the studio and, as a result, more movies will be released in theaters,” said Peter Levinsohn, Vice Chairman and Chief Distribution Officer of Universal. I am. .. “The overall goal here is to increase marketing efficiency, increase movie profitability, and prevent movies from being sold out,” he tells subscription services such as Netflix and Amazon.

Warner Bros. hopes Christopher Nolan’s “Tenet” will bring people back to theaters this summer after the first wave of the virus has passed and 68% of American theaters have reopened. We chose to defend a proven theater model. However, the film only screened $ 56 million nationwide, as theaters are still closed in the two largest markets, New York and Los Angeles. This is far from Nolan’s previous theatrical achievements, such as “Interstellar,” which earned $ 188 million domestically, and traditional methods of releasing movies will not work in 2020. It was a strict warning to other distributors.

Today, the theater climate is becoming more severe. Half of US theaters are closed and virus cases are on the rise nationwide. Regal Cinemas, the second largest chain in the United States, has closed all theaters due to a shortage of movies and spectators. If there is no immediate federal grant program available at the theater, John Fisian, CEO of the Theater’s National Trade Association, said 70% of the theater would be completely closed or bankrupt by early next year. He said he expected to apply.

From VCRs to streaming, even in the wave of home entertainment competition, high-budget spectacles have flooded the cinema. It has benefited both theater chains and studios, and there is little reason to expect a movie of “Wonder Woman 1984” size to go directly to post-pandemic streaming.

Moving away from the theater affects what kind of movie is made. In short, if the box office revenues collected are low due to a decrease in the number of cinemas or a permanent change in consumer behavior, studios will be forced to make smaller budget movies. For those who believe Hollywood is too dependent on slow-moving superhero movies, that may actually be welcome news. The thousands of people employed by each of those films will undoubtedly have different perspectives.

However, others are uncertain whether the change will be so dramatic and point out the power of the theatrical experience.

“Wonder Woman 1984” producer Charles Roven said in an interview that he was convinced that the release was not a sign of a new long-term strategy. “There is no doubt that they want HBO Max to succeed, but this particular thing will happen in the future and will make a leap forward,” he said of Warner Bros.

Disney has chosen to completely bypass US theaters and release $ 200 million in “Mulan” on Disney + in September, plus $ 30 per month to watch live-action animated films. Was charged to the subscriber. Disney CEO Bob Chapek told analysts earlier this month: “We got enough positive results before the controversy knew something was here. The best access strategy.” Disney decided to send some more high-budget movies to Disney +. planning.

For studios that don’t have their own streaming service, the calculus is a little different. Many chose to postpone theatrical release until 2021, but others sold the movie as a way to get their cash back. For example, Paramount offloaded “The Trial of the Chicago 7” to Netflix and “Coming to America 2” to Amazon. With a twist, Netflix is ​​currently one of the few studios sending products to struggling chains. From now until the end of the year, Netflix will be on the service after releasing eight films in a limited theater, including Oscar candidates such as “Ma Rainey’s Black Bottom” and David Fincher’s “Mank.”

Universal is another large studio supplying theaters, backed by new PVOD contracts with theaters capable of delivering both larger films, such as The Croods’ First Time. Small film From its independent subsidiary Focus Features.

This is good news for Bobby Bugbyford, Executive Vice President of Family-owned B & B Theater, the sixth largest theater chain in the United States based in Liberty, Missouri.

Before the pandemic, Bagbyford said Warner hadn’t accepted plans to release “Wonder Woman 1984” at the theater and HBO Max at the same time. However, there is no opportunity to show a movie that can do real business. It will be safe for companies that are stopping bankruptcy.

“Our movie fans in the Midwest are very excited to come back and they’ve been asking about’Wonder Woman’for months, months and months,” said Bagbyford. Told.

In a statement, WarnerMedia chief Kirar said it was the main reason Pandemic released “Wonder Woman 1984” through theater and streaming. But he also mentioned how this move controls how the movie is seen firmly in the hands of the audience.

“A little over 4 million fans in the United States enjoyed the first” Wonder Woman “movie on the first day of 2017,” Killer wrote. “Is it possible that Wonder Woman 1984 will be held again between the theater and HBO Max this Christmas? We’ll do our best to give our fans the power of choice and we’ll find it. I’m very excited. “

If that works, things are unlikely to be the same.

Hollywood “We’re No longer in Kansas” Moment

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