Phantoms of the Megaplexes: How Studios and Their Streaming Services Are Harming the Movie Industry
In the hope of combatting lost revenues from production and premier delays due to COVID-19’s shutting down of movie theaters, studios shifted in a major way. Rather than waiting until some point in the distant future when the distinct aroma of buttered popcorn and “oohs” and “ahhs” would fill up the red-seated theaters, production houses decided to bring their blockbusters directly to viewers at home. Will we no longer have to wait months until that popular movie hits on-demand? Are the days of date nights out at the movies or waiting in line on the premiere night to see the summer’s biggest blockbuster over? Is “Netflix and chill,” or some other iteration, the new norm?
Warner Bros. was one of the first major studios to bring theater-worthy content directly to viewers’ screens when it released its film Wonder Woman 1984 on its streaming site HBO Max.[1] Other studios have followed suit: Disney released Mulan, Pixar’s Soul, and Artemis Fowl on its streaming service Disney+.[2] This move is known as a day-and-date open, whereby the movie is released on a streaming service the same day that it arrives in theaters.[3] Other studios, like Paramount, have chosen to sell their big-name films to other streaming services, selling The Trial of the Chicago 7 to the Netflix powerhouse.[4] Universal is taking another approach by partnering with movie theater chains, specifically AMC and Cinemark.[5] Their plan is to shorten the window of time films are shown in theaters and quickly bring them direct on-demand.[6] Universal was motivated to create this deal in case theaters refuse to show films that are available on-demand earlier than they “typically” would be.[7] While some may applaud the industry’s adaptability during the pandemic, this change comes with a cost.
Famed director Christopher Nolan recently called HBO Max the “worst streaming service.”[8] This was in response to WarnerMedia’s announcement that all of its 2021 films would be released directly to HBO Max the same day they would open in theaters.[9] Although consumers might welcome this change, many involved in the film’s production are staunchly opposed. Studios are wary of the legal ramifications of this new way to bring film to viewers at home. Some in the industry claim that Warner Bros. is engaging in self-dealing and are acting in bad faith.[10] These claims partially arise out of the fact that Warner is selling movies to be streamed to itself without allowing other profit partners to “shop” around and see what other streaming services, like AppleTV or Netflix, would offer for the rights to the film.[11]
Similarly, several contracts promised theatrical releases and renegotiated backend deals with financial partners and talent.[12] Those opposed argue that WarnerMedia is acting to benefit its reputation on Wall Street and that WarnerMedia and its parent company, AT&T, do not understand the movie business.[13] Like Christopher Nolan, whose Tenant, distributed by Warner Bros., grossed over $359 million worldwide, many in the industry are claiming that they are losing out on contractually promised earnings.[14] Additionally, WarnerMedia faces an issue with talent, who strongly believe their work is meant to be released in a theater.[15] Therefore, the studios also face the logistical challenge of needing everyone involved to sign off on the day-and-date openings.[16] Even with all of the potential legal issues with these nuanced openings, the flip side might seem almost more daunting: continuing to push back release dates of films with no end in sight. This shift also begs the question of how movie theaters will survive in the future if this continues. With the future of theaters hanging in the balance, studio owners have to put aside the financial concerns and consider whether this direct-to-consumer release is what people actually want.
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