The shockwaves from WarnerMedia’s decision to simultaneously release its theatrical film slate on HBO Max continue to reverberate across the industry.
Variety reports Legendary Entertainment — producers of Dune and Godzilla vs Kong — may sue to prevent the AT&T owned media powerhouse from releasing the films as part of its “hybrid” plan in 2021. As announced last week, each film on the Warner Bros. Pictures calendar will arrive in theaters and on the streaming platform the same day. Titles will be available on Max for one month, and continue in theaters thereafter through the usual release window pattern. The plan certainly seems sensible in terms of the continuing COVID-19 pandemic, but Warner reportedly offered little advanced notice for stakeholders like Legendary before revealing the hybrid release strategy to the world.
Of course, the threat may be part of a normal renegotiation of their profit participation in the wake of Warner’s unprecedented new strategy. Considering so many deals are built on the usual box office receipts, “what about my cut?” seems like a fair question for production partners and talent to ask of WarnerMedia.
It may even be a fair question for movie theaters to ask. AMC Theaters, caught unawares by the Warner decision, also plans to see what recourse it has in getting some sort cut; much like it did when Universal decided to release a handful of films via platforms like Amazon earlier in the year.
These negotiations — particularly if they are successful — reflect just what a sizable change the hybrid strategy represents. From the release of Wonder Woman 1984 in a few weeks, opening box office grosses may no longer be the key metric from which to define success and hand out profit participation checks. Clearly, by making the announcement and putting out fires afterward, WarnerMedia (and AT&T) believe it is are in position to dictate terms.
A less generous take: AT&T’s willingness to let go of long-entrenched Warner executives and their treatment of DC Comics suggests they simply don’t care about how the entertainment business works and will charge ahead not caring who gets trampled in their wake. Indeed, some reports suggests filmmakers like Christopher Nolan will walk away from WarnerMedia if the hybrid plan remains a major part of the strategy past 2021.
Which makes this story the most important one to follow for the time being. AT&T is betting it can fundamentally change the business and we wonder if it can actually pull such a thing off.