Daily Management Review

Same-Day Streaming By Warner Bros Set To Disrupt Theater Business


In an unprecedented move that hammered shares of struggling cinema operators, of its 2021 films will be debuted in theatres and on the HBO Max streaming service on the same day by AT&T Inc’s Warner Bros studio, the company said on Thursday.
The studio said in a statement that it will make available films on HBO Max for one month starting on the same day they hit theaters and will include films like “Godzilla vs. Kong” and “The Suicide Squad”. Also scheduled to follow the new release pattern are the films “Mortal Kombat,” a new version of “Dune” and a sequel of “Matrix”.
The announcement resulted in a drop of almost 16 per cent in the shares of AMC Entertainment, the largest theater operator of the world, and a 22 per cent fall in the share price of rival Cinemark.  
This latest strategy is the brain child of the WarnerMedia CEO Jason Kilar and is one that is being viewed as the most aggressive for the company ever, aimed at bringing movies into homes sooner. It has also sent shockwaves across Hollywood. Efforts of studios to reduce the exclusive time given at theatres to new movies have been resisted by theaters for long.
AT&T’s media division was taken over in May by Kilar, who is a former Amazon.com Inc executive and the founding CEO of Hulu, and since then has changed the businesses focus on to HBO Max, which has been placed as the new competitor to Netflix Inc by the company.
The novel coronavirus pandemic has limited the opportunity of people going to movie theatres while also most cinemas were closed, which prompted this strategy of the company, said Warner Bros executives. Many of the cinemas in many countries are slated to remain closed for longer periods, including in the United States.
“We know new content is the lifeblood of theatrical exhibition, but we have to balance this with the reality that most theaters in the U.S. will likely operate at reduced capacity throughout 2021,” said Ann Sarnoff, chair and CEO of WarnerMedia Studios and Networks Group.
Watching movies at home could also cost less than going to the theater for consumers. According to the National Association of Theatre Owners, the average price of two movie tickets in the United States was at $18.32 in 2019, while $15 a month is charged by HBO Max.
The plan was however not welcomed by cinema operators. Profits at its movie studio were being sacrificed by Warner Bros to boost HBO Max, said AMC CEO Adam Aron. “We will do all in our power to ensure that Warner does not do so at our expense,” Aron added.
“We will aggressively pursue economic terms that preserve our business,” Aron said in a statement.
Details of its plan had not been shared by Warner Bros, said a Cinemark representative.