a group of people walking in front of a store: movie theater closed pandemic


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movie theater closed pandemic

Warner Bros. shocking decision to release all of its 2021 films on HBO Max and in theaters simultaneously may have been prompted by unprecedented circumstances — the coronavirus pandemic that has shut down theaters worldwide, with full reopening postponed to some distant future. But what Warner Bros. CEO Ann Sarnoff called a “unique one-year plan” threatens permanent changes to movie theaters that have been under strain even before this year.

“It’s a nail in the coffin for theaters who have been vulnerable for a long time — you are witnessing the single biggest blow to cinema since COVID-19,” the Patriarch Organization CEO Eric Schiffer told TheWrap, noting that WarnerMedia parent AT&T “has made a business decision that the traditional movie experience is less important” than growing the company’s six-month-old streaming platform.

Warner’s announcement includes likely blockbusters such as DC Films’ “The Suicide Squad,” the sci-fi remake “Dune” and “The Matrix 4” — and comes weeks after the studio announced a day-and-date Christmas Day release for “Wonder Woman 1984” that had already alarmed theaters.

“What’s most surprising about this move is that it was made even before we could see how the ‘Wonder Woman’ experiment goes,” Boxoffice analyst Shawn Robbins said. “But I also think that this is a way of hedging their bets. Even though we have a rough timeline, what if the vaccines aren’t readily available by next summer, or what if they are and people continue to wait this out and it takes more than six months to get back to some degree of normalcy?”

Indeed, Schiffer said that AT&T’s move is a clear sign “that they don’t think people will be going back to theaters soon.”

Studio insiders told TheWrap that the studio specifically had concerns over COVID-19 vaccine distribution and whether the rollout would allow the U.S. to achieve herd immunity by mid-year. On Thursday, the Centers for Disease Control approved distribution plans for the first wave of Pfizer vaccines, and states like California have announced the priority list for first responders and healthcare workers who will receive those vaccines later this month with the goal of making it available to the general public sometime in Q2 2021.

Warner’s 2021 slate has four-quadrant films like the live-action/CG “Tom & Jerry” reboot hitting theaters as early as March, and the studio sees HBO Max as an opportunity to maintain current release dates without worrying about how many states have allowed theaters to reopen or how much capacity they allow. At the same time, the theaters that do reopen, particularly in smaller markets, will have films to screen without any worry of further COVID-related postponements.

The studio is unlikely to generate as much profit from a primarily digital release of a tentpole like “Wonder Woman 1984” — with a $200 million cost and an expected marketing spend at least as big — but the company is clearly counting on the benefit of accelerating subscriptions for HBO Max to compete more directly with bigger rivals like Netflix and Disney+.

Still, it’s a major blow to theaters that have been decimated by the pandemic. While studio insiders say they approached major exhibitors like AMC Theatres prior to announcement, HBO Max will become a major tension point in the coming months. Already the announcement has battered theaters’ already shell-shocked stock prices, with AMC dropping 16% from $4.01 to $3.63 per share on Thursday while Cinemark fell 22% from $17.30 to $13.30.

Even if theaters still have Warner films to screen, no exhibitor anticipated having to compete with a simultaneous at-home release. AMC, the nation’s largest chain and a vocal opponent of day-and-date releasing, announced “urgent” talks with Warner Bros. to renegotiate terms for the studio’s 2021 films. “We will aggressively pursue economic terms that preserve our business,” AMC CEO Adam Aron said in a statement on Thursday.

The chain has agreed to the “Wonder Woman 1984” arrangement under the assumption that it was a one-time deal necessary in “these coronavirus-impacted times … when the pandemic appears that it be at its height,” Aron said. “However, Warner now hopes to do this for all their 2021 theatrical movies, despite the likelihood that with vaccines right around the corner the theatre business is expected to recover.”

AMC and other chains recently forged a deal with Universal allowing the studio to stream films on demand as early as 17 days after they hit theaters, a deal that also guarantees 31 days of exclusivity if the film opens to over $50 million. NBCUniversal’s nascent streaming service, Peacock, has yet to focus on original content the way Netflix, Disney+ and now HBO Max have, as the company is still experimenting with PVOD for home release after the success of “Trolls World Tour” last spring.

One thing that’s certain is that the traditional 90-day window between a film opening in theaters and debuting for a digital at-home release is dead and gone. Exhibitors had resisted any relaxing of that exclusivity period for a decade — but the pandemic reinforced their lack of leverage.

Still, theater chains would prefer an arrangement like the one with Universal that allows for some exclusivity. Robbins said he expects AMC to try to sway Warner into adjusting its HBO Max plans to fit into some version of that deal. “I think that this will play out similar to what happened with Universal and AMC earlier in the year and that cooler heads will prevail,” he said. “There will have to be some kind of compromise because in the middle of the pandemic, studio and exhibitors both have to be willing to play ball.”

Whatever happens, AMC and other theaters will need to move quickly. As music streaming services like Spotify have proven, digital platforms can change customers’ habits the more they get used to them.

That’s especially true depending on how other studios respond to Warner’s move. Disney did not respond to requests for comment about its release plans, but Robbins believes the studio could move additional films from theatrical release to premiere on its Disney+ streaming service, with an announcement coming as early as next Thursday during the company’s investor day.

“Now that Warner Bros. has taken a step even farther beyond Universal, Disney could figure that they have ground to push it even further,” he said, suggesting one candidate might be Disney Animation’s “Raya and the Last Dragon,” currently set for a March release.

“It’s tense time for theaters because we’re talking about the biggest films, the ones that struggling theaters are banking on to bring audiences back,” he said. “The only thing that everyone in the industry needs to remember is that in this pandemic everything is changing and we have no idea what everything is going to look like six months from now, and we are just going to have to look at these moves in a lot shorter term than we are used to doing.”

Beatrice Verhoeven contributed to this story.

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