MCN Commentary & Analysis

What Will Become Of The Movies?

There are only five studios left. Disney, Paramount, Sony, Universal, Warner Bros.

Paramount is as shaky as Don Knotts. Sony is stable, but lacks a clear vision for the future. And now the tie-breaker between the high (Disney and Universal) and the low, Warner Bros is taking itself out of the movie business.

Netflix has a bigger market cap than AT&T… not WarnerMedia… ALL of AT&T. You see, AT&T generates $160 billion a year in revenue… Netflix generates $24 billion. But Netflix is worth more than AT&T…. according to Wall Street.

In 2013, Ted Sarandos said, “”The goal is to become HBO faster than HBO can become us.” Now, the TV-born leaders of Warner Media want to be Netflix.

Never mind than HBO alone has been more profitable than Netflix historically. Never mind that Netflix has been valued as a tech stock from the start and AT&T will never be. Never mind that HBO Max is still stumbling out of the gates and hasn’t shown an ability to convert even their own HBO-subbing customers to the new streaming service for free.

Throwing the entire 2021 schedule (and Wonder Woman 1984 at Christmas) at the HBO Max spend, they have roughly doubled their HBO Max spending for the year overnight, somewhere between $4 billion and $5 billion. Still not at Netflix pace, but a lot more than they intended when this journey started. And much more than they have ever spent on a year of theatrical movies.

HBO had, going into HBO Max, 55 million domestic subscribers and 88 million international subscribers. That’s still about 40 million short of Netflix now. But in range. Disney+, which is operational in only a few countries outside of the U.S. is in the low 60s of millions of subs. Amazon Prime has more than 142 million U.S. members… only a fraction of whom use the movie/TV service. And Peacock will catch up (after a lot of changes) in time.

So the battle has begun in earnest… Whether anyone but Jason Kilar thinks it is a good idea or not.

This is what happens when you put TV people in charge of everything… they think everything can be fixed by TV. They don’t understand the other pieces of the puzzle as well as their value.

One of my favorite writers, Joe Adalian wrote today, “Streaming is the heart and soul of these entertainment giants now, so they really don’t have much choice but to try to make these new services work.

They are heart and soul… like Tony Stark’s chest plate. It was a jerry-rigged solution made in the middle of desperation by people a lot less brilliant than Iron Man and Tony is stuck with this thing, in the suit or not, until he dies.

Streaming is not going away. It is the future. Part of the future. Television. It is not everything. It may become the “heart and soul,” but Disney, it would become such at a massive loss of annual revenues and the taken-for-granted exhibition world won’t be there to add what will be much-desired and much-needed revenues if they are forced to shut down by the “daring experimentation.”

I believe in theatrical as much, or more, than anyone. But as I have written for decades, there are incremental losses that will collapse windows and once those lucrative windows are collapsed and replaced by flat-rate subscriptions, the majority of theaters will close and the ability of content producers/negotiators to increase profits by doing anything other than lowering spending and raising prices will be gone.

Let’s be clear… Disney doing $4 billion a year domestically is not enough to save theaters. Put aside COVID. Realistically, a strategy like the one WB is rolling out will cut domestic box office in half… at best. A majority of theaters would close and probably two-thirds of all screens. And then, Disney can’t do $4 billion or $3 billion or, most likely, $2 billion. So then they have no choice but to reconfigure their distribution plans because those massive number of seats that are empty all week in theaters is key to the mega-numbers that have become possible for blockbusters.

It’s MAD… Mutual Assured Destruction.

Many have said to me over the years that they would look forward to a film industry with its knees broken, forced into lower budgets and more opportunity. And they could get their wish. Of course, their rose-colored glasses about the wonders that will come with restraint are painted with ignorance of how money really works. They imagine a world of Easy Riders but reality tends to be a rack full of Dolph Lungren movies.

And so it begins. I am really trying to figure out how this plan works for anyone, starting with Warner Bros. It’s a soft content year for the studio, so they aren’t throwing the HUGE money away. But playing games with a unilateral move like this is taking every studio for a ride.

And exhibition.

No big deal. right?


25 Responses to “What Will Become Of The Movies?”

  1. Pete B. says:

    By throwing everything on HBO Max, WB has cheapened their movies. How are blockbusters anything special if you can watch them along with everything else? I remember standing in line for over an hour to get tickets to opening night of Tim Burton’s Batman. It was an EVENT. And the sold-out crowd reacted that way. Now I could just watch it from my couch. Ho-hum. No bid deal. It’s sad, really.

  2. Ray Pride says:

    Maybe it’s a stock move by AT&T? They think they can boost their market value by a billion dollars even as they throw a billion or two out the back of a train?

  3. Bob Burns says:


    I am much more likely to add HBO+ than Disney or Peacock. They have a better inventory, and their brand is more adult, which I believe they will see as their niche. That will give me Netflix, Prime, Hulu and HBO plus. My direct experince with HBO was that they were very cool, competent and intelligent.

    Secondly, the theatrical experience in the real world, in regular places, is nothing like the expeiences of people in the industry, or those who write about it professionally. The theatrical experience here is pretty bleak. I have no sympathy for the big exhibitors. Just don’t, Sorry. Actually, I have antipathy for them. I can understand why the studios want to back away from them. And yes, David, I have paid attention to your analysis of the business aspects. Just talking about my personal feelings about the theatrical experience regularly available to me.

  4. Stella's Boy says:

    It’s not 1989. And Bob is right. The theatrical experience wasn’t great prior to the pandemic. Extremely expensive. Phones and loud people. Poor projection. The list goes on and on. For ten years I saw 3-4 movies a week in theaters. I loved nothing more than a movie theater. But things have changed. I can’t wait to watch these movies at home.

  5. Amblinman says:

    Streaming is not “TV”. There is a generation coming of age that has consumed movies on all versions of screens. They do not agree they’re watching “TV”. They don’t even share Dave’s understanding of what “TV” is defined as. “Movies” vs “TV” is an old person’s understanding of the industry.

    As long as some of you keep operating under old terms and understanding, this stuff will be scarier than it should be.

  6. cadavra says:

    Streaming is not TV? They’re both on your home screen; the only difference is the start times (one fixed; one not). If I want to watch THE MALTESE FALCON, only the choice of when to watch it is the difference between HBO Max and TCM. (Or my DVD.) But none of them equal seeing it at the cinema, which will no longer be an option when the last rep house goes tits up.

  7. Pete B. says:

    Amen! I agree wholeheartedly Cadavra.

  8. Amblinman says:

    More old person worrying. Movie theaters aren’t going anywhere. There will always be movie theaters.

    They just not might be the main venue for films anymore. It’s okay. We used to read the news on gigantic printed piece or paper too.

  9. Pete B. says:

    Some folks still do.

  10. Stella's Boy says:

    The pandemic just accelerated what was going to happen anyway. This was inevitable. And movie theaters are at least partly to blame for this. They didn’t adapt quickly enough as more and more people chose to watch at home as their options increased. They didn’t work to make the experience better as ticket and concession prices went up and up. I know I just don’t love going to the movie theater as much as I used to. I’ll go back eventually and movie theaters aren’t dead but people’s habits have changed dramatically and this was a matter of when not if.

  11. amblinman says:

    @Pete: yeah, those are called “old people.” Modern sensibilities don’t care about their feelings, just ask ‘em.

    @Stella: yup. Theaters will always be there, but I am so good with being able to screen Unhinged at home on an opening Friday. Giant blockbusters will return, because that’s what theaters will be used for along with other events (theater landlords need to understand: you now have an event space, think it through.) Or not. They’ll die like bookstores. I’m okay with that. I miss bookstores but my life goes on and I still read books. Imagine that.

    Those waxing poetic about the theater experience, yeah yeah. I get it. Grew up with it too. I remember during the summers standing in line for a couple of hours just to watch Temple of Doom or Jedi. NOW, however, I get to reserve tickets and don’t have to show up but 5 minutes before the movie starts with no problem. Ask me how much I miss “the good old days” of standing in line for blockbusters vs just showing up and seeing ‘em? Tech makes things better. 😉

    PS: The argument that everything will just be “content” with no quality, it’s cute that anyone thinks this scenario is any different than what we’ve watched forever. It wasn’t oscar stuff that lined the shelves in the 80’s, it was Robert Ginty movies and horror dreck. Remember in the 90’s when Blockbuster expanded their shelves with the idea being MORE new releases so you didn’t have to rent all the old dreck? “Direct to video” was created for a reason. It’s not new.

  12. Bob Burns says:

    The vast majority of films are made without any expectation of being seen in multiplexes. I help support a young documentary film maker in Portugal who would be thrilled with a few theatrical viewings at festivals, and an afterlife in one of the streamer libraries. My favorite film viewings are at a pre-civil war live theater which shows an art film once or twice a week…. it has a great audience. Theatrical will not die. Multiplex gargantuanism may get scaled back, or evolve, but the art of theatrical cinema will continue.

  13. Bob Burns says:

    and now, when Warner mounts a $50M+ publicity campaign for Dune, or Suicide Squad, it will be sending customers to its own business, not someone elses. If the big exhibitors want people to come to their dumps, let them do their own advertising..

  14. Ray Pride says:

    Richard Rushfield this morning: “It’s not the death of the movies. It’s the death of Warners as a movie company.” he takes it all back to AT&T and its billions and billions of dollars in play.

    AT&T’s market cap is $208.3 billion.

  15. Stella's Boy says:

    But it isn’t just Warner Bros. right? Granted they have taken the most drastic action, but this year Universal has stepped up its PVOD game and made early VOD deals with theaters (I’ll be watching Freaky this weekend). Disney got into the PVOD game. The trends are pretty clear.

  16. Dr Wally Rises says:

    The assertion that only a minority of Prime subscribers actually use the video service deserves interrogation. Just why is this? Does Jeff just not care enough? Is the interface not slick or accessible enough? Borat and Coming 2 America may give them a boost, but of more interest to me is why it needs the boost in the first place. The actual, you know, CONTENT, seems to me to rival anyones right now. ‘Get Duked!’ is the most pure fun I’ve had with any movie the year.

  17. David Poland says:

    Geez, Ray… you have stopped reading my tweets. Sigh….

  18. David Poland says:

    You’ve got a big semantic stick up your ass, Amblinman.

    TV is everything on every device that is not going to the movies. No one is fighting this notion. No one is failing to acknowledge this is the future.

    “Scary” is a projection.

    And movie theaters are not the primary way people see movies NOW. Not for decades. This not new. This is not generational. The internet changed the dynamic and not only allowed screens to be anywhere, they created the functional possibility of real on-demand service as a norm. We all get this.

    How old are you, Amblinman? Were you born in ’74? That would make you 46… not a kid.

  19. David Poland says:

    The stock play has already failed.

  20. David Poland says:

    No. This degree is just WB.

  21. David Poland says:

    The same is true of Warner Media. People seem to be leaving out the fact that HBO has 140 million worldwide subs right now. HBO Max is US only. But they get most of the way to Netflix numbers on HBO alone. On the other hand, they already have that money booked monthly. This is one of the inherent conflicts of launching HBO Max and investing more in it.

    The lure of the stock price is a fools errand because Netflix is valued as a modern tech company. Neither AT&T or a spin-off of Warner Media will be so valued. Ever. This move was a car wreck.

  22. David Poland says:

    The notion that VOD is the future of anything is a joke. Studios have known this for decades. Without windows, there is no VOD, btw. But VOD is an incremental business, dwarfed by theatrical.

    There is going to be a new formula in all this at some point that works effectively. But the Warner’s fiasco is not it. It will 90%-likely include a windowed exclusivity. Not because of feelings or love of cinema or anything else but money… which is all this about… which is almost all it’s ever about… the rest is ego.

  23. Stella's Boy says:

    Yes, as stated, Warner Bros. has gone beyond the others, but Universal laid the ground work didn’t they? First with PVOD in March and then with the 17-day window deal? Paramount and Disney have both dabbled in PVOD as well. Is Sony the lone holdout? And if you don’t see this as a huge sea change here to stay, is that because you think by next year enough people have taken a vaccine (coupled with actual grownups running the country) that people flock to movie theaters again? That’s more likely than the claim that the pandemic just accelerated what was already happening? I guess only time will tell.

  24. Andy says:

    The 90 day window is dead, but I can easily see a 7-14 day window surviving. Those who want a theatrical experience will have it and get to see a little earlier, and those who don’t won’t. If theatrical can’t survive that business model then it won’t survive.

    And it’s still pissing me off that HBO Max is US-only…..

  25. David Poland says:

    Long space between 90 and 14.

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