As it moves to bolster HBO Max, WarnerMedia is almost assuredly giving up hundreds of millions in box office revenue, which means that some of its big-budget movies ($200 million or more in production costs, plus tens of millions of dollars in marketing spending) will lose money, regardless of their reception by audiences. But AT&T is mostly interested in the financial windfall that it stands to make in the longer term by turning HBO Max into a success.
The Walt Disney Company, for instance, has taken a beating from the pandemic, with its theme parks struggling in particular. But Disney shares are nonetheless trading at all-time highs because of the success of Disney+ over the last year. Next week, Disney will hold an investor day and outline its own plans for supercharging its streaming services, which include Hulu. Disney is also expected to shift release plans for coming films, making titles like “Cruella” instantly available online.
As soon as Warner’s plans became public on Thursday, WarnerMedia began marketing HBO Max subscriptions as a holiday gift. “I got you something nice this year,” the company said on Twitter, linking to a slick video of film clips and a message about how “the biggest premieres” next year will be coming to theaters and HBO Max on the “Exact. Same. Day.”
Mr. Emmerich downplayed the threat to theaters. “We really believe that in markets where HBO Max exists and theaters are also open that many consumers will chose the theatrical experience,” he said. “We hope that this will prove to be a win-win — for movie fans in the United States, for filmmakers because their movies won’t sit on a shelf and get stale, for theater owners who can rely on a stable supply of movies, for HBO Max subscribers.”
Wall Street disagreed with that assessment. Shares of AMC Entertainment, the world’s largest theater chain, fell 17 percent on Thursday afternoon, while Cinemark dropped more than 21 percent. Imax and the Marcus Corporation also lost significant value.
Last month, Warner Bros. tested the water on this strategy with the announcement that “Wonder Woman 1984,” which had already been delayed from its summer 2020 perch, would debut on Christmas Day in theaters and on HBO Max.
It was a framed as a singular event, and theater owners, desperate to fill screens with appealing content, happily agreed to it. “Given that atypical circumstances call for atypical economic relationships between studios and theaters, and atypical windows and releasing strategies, AMC is fully onboard for Warner Brothers’ announcement today,” Adam Aron, chief executive of AMC Entertainment, said at the time.