After months of pandemic-forced delays, WarnerMedia will simultaneously debut its blockbuster feature Wonder Woman 1984 on Christmas Day in theaters and on its HBO Max SVOD service, a move that could presage a reshaped release strategy for Hollywood’s most high-profile projects.
"We see an opportunity to do something firmly focused on the fans: give them the power to choose between going to their local cinema or opening on HBO Max,” wrote WarnerMedia CEO Jason Kilar in announcing the move."Super-fans will likely choose both.”
Hollywood studios have long sought to shrink the time between their films’ theatrical debuts and arrival on other distribution platforms such as electronic sell-through and VOD, but have been staunchly blocked by nearly all U.S. theater chains. With pandemic-forced closures leaving most chains on the precipice of bankruptcy, however, theater owners have little leverage as studios start to experiment with other distribution options for a backlogged pipeline of major films.
WarnerMedia’s day-and-date simultaneous release of the much-awaited sequel represents the most radical move yet, going well beyond revenue-sharing deals by NBCUniversal with several chains, and even the Disney Plus direct releases of the movie version of Hamilton (free to subscribers) and a live-action remake of Mulan (available to subscribers who paid $30 more).
Unlike those recent experiments, Kilar and WarnerMedia are using one of the company’s most important franchises to see if they can reshape the streaming paradigm and drive more signups and retention to HBO Max after its stumbling launch last spring, just as Kilar arrived at the company. It’s a major financial gamble that most certainly required some significant negotiations with the film’s creators over profit participation and other contractual obligations. But it could be a game changer.
"The glass is continuing to shatter across the historically rigid sequential release windows of the feature film industry," wrote industry analyst Rich Greenfield of Lightshed Partners in a post this week. That the Wonder Woman franchise is being used to shatter the glass is perhaps appropriate, given that it already has broken more than a few glass ceilings.
The 2017 Wonder Woman feature starred Gal Gadot and Chris Pine, and was directed by Patty Jenkins in what became the most successful female-directed film in Hollywood history. It rebooted a crucial DC comics franchise, and grossed $821 million worldwide. (And unusually for superhero blockbusters, slightly more than half of the gross came from the United States alone.)
Warner quickly doubled down, ordering a sequel with Jenkins, Gadot and Pine, and lavishing an estimated $200 million in production costs, and plans for a globe-girdling marketing campaign.
But the pandemic shut down the film’s summer debut, as it did with many other Hollywood blockbusters. Most of those were pushed into 2021 or beyond, but Warner held onto hope that it could still release WW84 and Christopher Nolan’s equally expensive Tenet in theaters, even as key markets in California and New York remained closed for months, and the pandemic surged disastrously heading into the fall.
Those hopes evaporated after Tenet flopped in a September theatrical-only debut that garnered only $56 million in domestic gross. Though Tenet also pulled in another $297 million internationally, it woefully underperformed expectations for a Nolan film, and for the studio’s finances.
In a post announcing the decision, Kilar framed the day-and-date move to Christmas Day as a fan-friendly experiment rather than a definitive shift of the company’s strategy. That may be what needed to be said for public consumption, but it is likely this won’t be the last big film to get this treatment, particularly if Hollywood moves beyond a hide-bound focus on theatrical grosses as the main metric of success for feature-length projects.
Lightshed’s Greenfield, for instance, has urged all the studios to consider shifting more of their films to streaming debuts, and building the expense into their services’ monthly subscription fee. The payoff: reduced marketing costs and churn, enhanced subscriber signups and retention, deep subscriber data to inform future projects, and the opportunity for month after month of recurring subscription revenue. =
Greenfield said the WW84 move should boost HBO Max, which has suffered from brand confusion and a botched launch. Even six months after the SVOD service debuted, only 30 percent of HBO subscribers have bothered to convert to HBO Max, even though it offers all of HBO’s shows on demand along with a wide range of classic films and TV shows, some original programming and other content.
Kilar, former head of both Hulu and the failed video startup Vessel, has since dramatically restructured WarnerMedia to focus on streaming first, eliminating hundreds of jobs, corporate silos, and even entire units.
Greenfield suggested WarnerMedia’s day-and-date plan could become a new Hollywood norm, particularly as the pandemic drags on even as vaccinations slowly roll out next year. Public health experts expect the challenges of manufacturing, distributing and giving vaccines to 330 million Americans will take at least another half a year before the country begins to return to something closer to its old normal. That presumes the nation will return to a previous pattern of media consumption, rather than a new one learned amid a year and a half of lockdowns.
"Experiment or not, this is a very big deal for the global film industry," Greenfield wrote. "It reminds us of the crack that starts in the movie Ice Age, when Scrat pulls the acorn out of the ice and ultimately starts an avalanche."
HBO Max is among the most expensive of streaming services, at $15 a month. Getting more subscribers there could be a lucrative long-term opportunity for WarnerMedia. After all, the average U.S. theater ticket costs around $10, according to the National Association of Theater Owners. Typical box office splits mean the studio gets about half that ticket revenue, or $5. How much more lucrative might it be to get that monthly subscription, at three times the net ticket revenue, with all the other potential benefits that accrue around it?
Of course, Greenfield this week also urged Comcast and AT&T, the owners respectively of NBCU and WarnerMedia, to sell off and merge their respective studios. There’s no compelling reason for content companies to be tied to just one distributor, he wrote, nor is there any reason for a distributor to be tied to one content supplier, as each of those pairs are.
That’s especially important given that the Hollywood studios will need more scale and resources to compete with the Big Three tech giants in the business: Netflix, Amazon and an increasingly assertive Apple. As well, Greenfield argues the real emerging powerhouses are the hardware platforms, including Roku, Amazon’s Fire, Apple TV, and Google’s Android TV/Google TV pair, along with connected TV manufacturer/platform operators such as Vizio, Samsung and LG.
It’s a radical thought, and possibly dead right, though given the excruciating transformation Hollywood has gone through just to get to a day-and-date release by one studio of one big film, don’t expect this latter Greenfield suggestion to happen any time soon.
NEXT TV NEWSLETTER
The smarter way to stay on top of the streaming and OTT industry. Sign up below.
David Bloom of Words & Deeds Media is a Santa Monica, Calif.-based writer, podcaster, and consultant focused on the transformative collision of technology, media and entertainment. Bloom is a senior contributor to numerous publications, and producer/host of the Bloom in Tech podcast. He has taught digital media at USC School of Cinematic Arts, and guest lectures regularly at numerous other universities. Bloom formerly worked for Variety, Deadline, Red Herring, and the Los Angeles Daily News, among other publications; was VP of corporate communications at MGM; and was associate dean and chief communications officer at the USC Marshall School of Business. Bloom graduated with honors from the University of Missouri School of Journalism.