Can cinemas play day-and-date releases from Warner Bros after continually refusing to show Netflix films?
The big circuits have to be feeling really stupid now: If they had only made a deal with Netflix last year on Martin Scorsese’s The Irishman at a 45-day window instead of emphatically rejecting one, perhaps this looming apocalypse brought on by WarnerMedia would never have happened. Netflix was willing to play ball with exhibition, agreeing to a limited theatrical window before a movie’s premiere on its streaming service.
Exhibition, along with the National Association of Theatre Owners’ muscle, was clear it would never waver and play films that were day and date, but now cinema owners are in hasty retreat. We’ve gone from a global $42.5 billion record global box office record last year to an exhibition industry that has zero leverage.
Even though AMC has said it won’t make a deal with Warner Bros at the exhibitor’s expense, and Cinemark will deal with the studio on a title-by-title basis, several sources believe both chains, and other exhibitors, will easily cave in to Warners.
Exhibition is just so overly bludgeoned by the pandemic and in desperate need of product that the companies now going against everything they were trying to prevent. Some have observed that Cinemark never came out in swinging support of Wonder Woman 1984‘s theatrical-HBO Max debut like AMC publicly endorsed; the Plano, Texas-based chain had not officially agreed to play the Gal Gadot movie. Go on Cinemark’s site now, though, and you’ll see that advance tickets are available for WW1984.
With exhibition expected to go along with the Warners and HBO Max’s plan, they must now open the pool to everybody, meaning streamers like Netflix, Amazon and Apple TV+. It would be hypocritical for exhibition to hold Netflix and other streamers to one standard, and let HBO Max through.
It would also be outrageous to take WarnerMedia at its word, that this whole theatrical HBO Max experiment is for one year. If it works out well with subscribers (and remember, it’s the 166 million AT&T wireless subscribers HBO Max is after, not just the near 29M un-activated HBO accounts), who says it won’t stick to a similar theatrical-HBO Max plan in 2022? Not to mention, is it going to shortchange future HBO Max subs on such big movies as The Flash, Fantastic Beasts 3 and The Batman?
Word in distribution circles is that AMC and Cinemark are already opening the door for Netflix and Amazon. We hear that AMC and Netflix have been engaged in talks for a 14- to 17-day theatrical window since the HBO Max bombshell despite both sides denying it. Allegedly, AMC went to Netflix and said that it could offer better terms than those being given to Warner Bros if they abide by some form of a window. To be continued on how that shakes out.
Cinemark and Netflix’s partnership is already out there, and the two are negotiating on a picture-by-picture basis on varying terms. Netflix’s The Christmas Chronicles 2 played for a week before the movie’s November 25 release date on the streamer, and Ma Rainey’s Black Bottom opened at Cinemark on December 4 before its December 18 stream date. Ryan Murphy’s The Prom will go limited day and date on December 11 in Cinemark and on Netflix, while George Clooney’s The Midnight Sky will go in the No. 3 exhibitor on December 11 and stream on December 23. There’s buzz that there’s a window deal in the works with Cinemark and Amazon’s Regina King-directed movie One Night in Miami, and big exhibition will be wise to book the streamer’s big pics Coming 2 America and Without Remorse down the road.
Now, despite WarnerMedia’s ambitious business philosophy to have the consumer decide where they want to see the movie, versus the downstream revenue model that spans theatrical to home and generates profits for participants, the conglom’s chairman and CEO Ann Sarnoff conceded on CNBC’s Squawk Alley today that the studio with the “hybrid model, which hasn’t been tried before” is already bailing out talent deals on theatrical releases like Wonder Woman 1984 “so that the economics are balanced out for any theatrical cannibalization by being on HBO Max.”
Gulp! A full admission there that the HBO Max side of the ledger will win.
So, big exhibition, in all your fierce fighting for theatrical windows, why not full-out reject this domestic Warner Bros-HBO Max plan, and all streamers who are threatening to close out the window? That would be the solution to protect the theatrical side of the business, no?
It’s not that easy, according to sources. If AMC closes, like Regal, many say the chain would be closed for good. And if exhibition refuses to play big movies like The Suicide Squad, The Matrix 4, Dune and Conjuring: The Devil Made Me Do It, well then WarnerMedia truly wins. Warners doesn’t care if U.S. movie theaters play their titles or not: They still reap all the glory of an HBO Max run. (This said, I hear from exhibition that the terms Warners is offering for WW1984 are far more comfortable at 55% for 12 weeks than the 63% they charged on Tenet).
Other problems for exhibition: the whole dynamic pricing issue. In definition, should they charge more for those theatrical releases respecting some form of a window and less for those going day and date on streaming?
While in spirit cinemas should charge $1-$5 for any theatrical-streaming title, exhibition still depends on the share of box office in addition to concession revenue. For those distributors abiding by a deeper window than any streamer’s day-and-date theatrical release, they don’t want to be in a situation where a movie theater charges a regular top-tier price for their movie, and lesser ticket price for a streaming service title. This only creates a scenario whereby moviegoers will buy the cheaper ticket to sneak in to the more expensive movie.
Currently, Cinemark on weekend evening showtimes at its Texas theaters is largely charging the same ticket price for Netflix titles as major studio ones, i.e., Netflix’s The Midnight Sky and Universal’s The Croods: A New Age‘s Friday night admission price at the West Plano multiplex are both $15.75. Sources tell me that in the new streaming theatrical release world, it will be hard for studios to enforce per-capita limits in their contracts–and exhibition should refuse it–whereby the former dictates that they’re taking a certain amount of what the cinema charges per ticket.
The first quarter of 2021 for both exhibition and WarnerMedia’s owner AT&T will be one of great feast and famine –0 amine certainly for exhibition as it competes with what is essentially free movies (for argument’s sake, the price of a movie ticket in a metro area largely equals the overall monthly price for HBO Max). But as I said on Sunday, WarnerMedia’s gamble here with its 2021 HBO Max-theatrical slate is one of financial genius or insanity. If AT&T’s stock –which was up 4% today to $30.81– climbs to Netflix or Disney heights of $512.66 and $153.72, respectively (closing prices as of today), they may be on the right side of movie-grossing history. But at what cost as they shell out for all the talent back-end deals on pics, and lost downstream revenues? Adversely, AMC’s stock has dropped 4% since last Tuesday to $3.98 today with the bad news of HBO Max still factored in, while Cinemark is down 7.6% over the same period to $15.02.
There could be a light at the end of the tunnel. Some have rose-colored glasses and believe there’s a future, whereby a bulk of theatrical-windowed fare can propel exhibition to lock arms and block simultaneous theatrical streaming titles. But will exhibition have any courage left by next year or 2022? And will that force WarnerMedia to rethink or rescind its disruptive plan?
Exhibition is on its heels and as it tries to reopen and run its business, and studios are walking all over them.
Cries one distribution vet, “If HBO Max had taken off this past spring, WarnerMedia would never have done this.”
Read More About:
Source: Read Full Article