| March 6, 2022
I realize that most of my thinking on what may be a very significant moment ended up in tweets. so I gathered them for a more complete picture.
Jason Kilar will be out of his job by 2022.
Waiting on NATO response. But here we go… WB passes Universal as most experimental. Netflix, which is cutting back on spending, set the trap for the studios and Kilar is the only sucker to bite so far. HBO Max isn’t ready for this.
The only real question for NATO in response to WB’s suicide move is whether to refuse to play any WB movies, starting with Wonder Woman.
If there is no unique compensation for playing WB’s films under these rules, NATO members are likely better off shutting the door.
Keeping the doors open at 15% of normal grosses is not keeping them alive. And this stands to reduce the post-pandemic box office by at least 10%.
They need to get PPP and close down for 4-6 months is what they need.
For the record… AT&T stock is up .17% on this seismic news. Wall St is saying, “Fuck off until you prove something.”
Meanwhile, AMC is off 18%, Cinemark is down 19%, IMAX is down 8%.
Here’s what happens next on the Warner Bros move…
Every AMC 15 becomes an AMC 4 with only 4 premium screens with higher prices. The extra space can’t be rented.
HBO Max adds 5m subs HBO subs (65m dom). No stock movement. HBO Max expands internationally before the end of 2021.
“streaming is no longer an ancillary profit stream for big entertainment companies. It’s the business, period.“
Yeah… except for the revenues.
This is bigger than Roku.
But it is another sign that WarnerMedia is way out over its skis on this. No Roku. No international. And don’t count on any of these movies playing in movie theaters domestically. And they will certainly have a France problem
AT&T stock has gone from being up a tiny amount to being down for the day.
I feel like I am watching Paramount trying (and failing) to tweak their stock price a decade ago.
By the way… this unilateral move by WB is profoundly stupid by design.
You push to streaming (& theatrical?) for a month and THEN try to get a theatrical going? Is this the lesson they learned from Tenet?
Whoever analyzed their way into rationalizing this will be the 1st fired.
Killer Kilar: “Having this release model… we believe economically first and most importantly, it’s the right thing to do for fans, it’s the right thing to do for exhibition, and the right thing to do for talent, considering the circumstances.”
But he didn’t bother asking them.
Killer: “The revenues that are generated by the box office of course, & the other is the value of the consumption on HBO Max from existing subscribers & what we anticipate to be more subscribers coming into HBO Max who choose to do so because of the presence of these films.”
Killer: “we believe that the marketing investment works better if eyes were out there talking about these great films title-by-title-by title, that that marketing can benefit not just the theatrical experience”
OMG… he thinks he is Netflix & doesn’t understand theatrical at all
I bet the other studios are almost as appreciative of Killer Kilar’s big move as the theater owners.
As a quarter of the market, he can come close to sinking everyone’s business.
NATO can call his hubris. And there may be real pressure to dump this before summer. Tick Tock.
Remember… HBO has 160 million subscribers worldwide already.
They are not playing from far behind Netflix. They don’t need to change everything instantly. They haven’t rolled out Max overseas… and if they don’t by March, they should all be fired for seeking failure.
This was a unilateral move by a sub-model guy who doesn’t understand theatrical. It is not good news for any other studio. It is not good news for exhibition.
He needs to get his own house in order.
Kilar’s fantasy thinking is that international will be theatrical and GREAT!
This is proven wrong, for now, with Tenet. As you say, even Canada isn’t open yet. Closures across the globe.
They don’t have any needle-movers until summer. So they have time to fuck it up worse.
And as a friend points out… how will this notion of launching on streaming affect VOD and PVOD?
It’s not the largest revenue source… but it means a lot to a lot of bottom lines.
Everyone can refuse to play WB films. We will see if that is the tactic. Exhibitors could try to do a deal to get paid a high percentage for everything. Or just shut them out.
By the way… Killer Kilar’s tears for theatrical may be because he is legally required to distribute to theaters before any streaming.
New contracts may not include that. 2 year old contracts probably do.
“Kilar also noted that international movies — which generates the bulk of box office revenue — will be first released in theaters with normal windowing rules. HBO Max will debut globally next year.”
If it takes him a year, he will be unemployed when it happens.
New streamers have a growth window of 3 or 4 years before they will mature. Lots can be hidden in that.
Kilar is making a lot of statements of facts that he doesn’t actually control. A lot. And I think it will kill him before 3 years. Maybe in 2021.
By the way… as stupid as the WarnerMedia plan is, they are still creating windows in the US and sticking to traditional windows in the rest of the world.
So if you are saying windows are dead, you are factually incorrect.
“Under a traditional model, big-budget movies like “Dune” would need to gross hundreds of millions of dollars at the domestic box office to turn a profit.”
False. Domestic, international, VOD, DVD, streaming, 1st pay-TV/Streaming, int tV & dom streaming would need combined $450m
I’ve said for many years… we are heading towards a single window for everything forever under a subscription. Once a film goes to post-theatrical, it’s value will be booked “forever” in all but a small % of titles. So how to differentiate? Theatrical will be the only separator
People, inc professionals, are all excited… “Movies will premiere on my TV!! Yay!” But they get distracted from the next reality.
The plan is maximum subs, smallest spend possible.
We aren’t there yet. But it should take less than 5 years to get there. Then it won’t be cute
If (super-analytics about audience interests) really worked so well, studios – inc Netflix – would do better than 50% success.
Having the entire history of film and TV at your fingertips is great. People still want to leave the house. There have been just 40m frequent moviegoers in America for decades
There is a uphuge cost to operating brick and mortar. Studios take exhibition for granted. They have taken 5 or 6 significant revenue streams and are whimsically taking it down to one that cannot be measured economically.
Good luck with that.
The studios killed VHS rental by making DVD sell-thru priced. The studios killed DVD by oversaturating the market & price cutting. Studios took the “free money” from Netflix and let them launch streaming without competition for 5+ years.
So today… the studios are always right.
HBO Max is domestic only, even though HBO has a 90m sub footprint outside of US. And likely very few non-HBO sign-ups domestically.
They need to get their house in order first before trying to set the world on fire.
Piracy is real. But the industry, overall, has moved on. They work on it constantly. Hard. But it’s a given.
The Tenet launch happened because “theaters are open overseas.” But they didn’t deliver, even at reduced expectations.
This is all about fear & incompetence.
The deafening silence from NATO (exhibition) is likely Fithian trying not to do what Kilar did yesterday… acting unilaterally.
My guess is that they are negotiating a deal for theaters of over 80% from WB and whomever else wants to run this new “system,” creating a new window.
HBOMax is not taking out Netflix. Netflix is not able to block Disney or Warners or Amazon (or Peacock, though on a slower track) from matching their worldwide reach in the next 5 years.
We need to be able to discuss the future without everything always invoking absolutes.
Streaming is the future… of television. It has been for years. It isn’t a debate.
Movie theaters have major value now & moving forward, though yes, studios can kill theatrical. It is a symbiotic relationship. Studios won’t buy theaters in numbers. Theaters won’t become studios
The longer that National Association of Theater Owners remains silent on this – almost 24 hours now – the more likely that Warners’ pronouncement yesterday will not proceed as they said.
Not saying WM won’t push the button. But by announcing w/o negotiating, WM gave NATO power.
I’ve said it a million times. Streaming has a natural cap. I don’t think it has more than 250m – 300m worldwide.
Netflix is just under 200 million.
HBO is just under 150 million
Amazon Prime has 170m members.
So in 5 years, when the streaming wars calm… where is more money?
One has to wonder if NATO is being cock-blocked from slamming Warners and pulling out of WW1984 agreements by Regal, even though Regal isn’t open to play the title.
Lots of negotiation. This event is not over.
AT&T stock price still up minimally. Theaters stock dropping less.
The other thing that could be slowing the NATO response to WarnerMedia is the money that seems to be coming out of the chute from Washington in the next two weeks.
No one wants to upset that apple cart, which is suggested to be $15 billion. Blocking Warners could become a thing.
The funny thing about the “seismic” Warners unilateral announcement?
CNBC isn’t covering it. A little yesterday. Talking more about Disney’s rally.
I understand that people love Christmas and we are all bored & really, really want to open presents & find something new and exciting.
Yes, this could kill theatrical. Yes, this could end up strengthening theatrical. Both are possible.
Puppy-like love of change is for suckers.
Mark this… if the Warners trajectory is changed – and none of this is FOREVER until theaters start closing – all the people who jumped up and down like children will find a way to say it is still happening, it’s just been slight delayed.
People don’t like changing their minds.
And yeah, I can be resistant to changing my mind as well.
But I have explained the math a lot of times. It’s not a whim. It’s billions of dollars & many unknown effects caused by breaking windows.
I disagree with Moffett Nathanson on a lot, but we agree on the math here.
Theatrical, as an emotional issue, has changed for me over the last few years.
Media has been bashing theatrical forever, but it keeps growing. $40b in 2019. But media loves “reporting” change more than understanding #s.
You are right. The content fights will outlive change.
The story is cable/satellite.
AT&T has all but dumped DirecTV. Comcast will either find a solution or take a massive loss as cable actually dies (still over 80% in US). Disney will lose on the transition.
All that said, real people only want more & better TV for less $.
This isn’t about subs, ultimately.
It’s about stock price. And it has already been rejected by Wall Street.
Kilar moved without negotiating, completely disregarding the many partners involved with every film, including exhibitors.
HBO Max is US only… so this is stupid.
The only part that may not be suicidal is that the line-up is relatively cheap. They will save some risk on marketing.
But we don’t know what the theatrical situation will be, here or abroad.
Like the Tenet miss or the Mulan miss, this is an experiment & one never knows. But…
The problem for a guy like Kilar, who is a baby in the movie business, is that he is boldly taking wild swings that have ways of showing losses, but few ways of showing success, if there is any.
If he has to change course, no one will trust him because he acted unilaterally.
That’s why the media response amuses and irritates me. They called Warner names for the launch. They have watched a bunch of veterans fired. And now… this is EVERYTHING.
It’s like the people who kept telling us about “the new Trump” and how he was going to learn his lesson.
I believe that the public is less intensely focused on the details than we in the media are.
Honest, watching CNBC and waiting for them to be worked up over this has created perspective for me. Until they have to act, no one much cares outside of the bubble.
The one thing I object to, even in a well & deeply reported piece like that specific CNBC piece, is the idea that it’s all about battling Netflix.
Netflix is not the definer of any other streamer’s success. Consumers will end up with the 4 or 5 new “networks.” Just do your thing
My last thoughts on Killer Kilar for the weekend. I expect WW84 agreements to be honored. I expect Kilar will spend Dec digging out of the cesspool he created with non-exhib partners. And I expect there will be a pricey accommodation or a exhib blockade of WB after New Years
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