A lot of things happened in 2021 that upended the movie industry. The ongoing COVID-19 pandemic forced movie studios and theaters to finally come to terms with the fact that they needed to talk about the streaming question. They were woefully unprepared for that, which is why it took so long for someone to figure out a solution. Some studios, like Universal and Sony, decided to just delay everything a year and hope that 2021 was better. Like Disney and Warner Bros, others turned to streaming and their own streaming services to try and make up the difference. Warner Bros. decided to release Wonder Woman 1984 on HBO Max and in theaters at the same time and move their entire 2021 slate to hybrid releases. To say that this has caused an uproar would be a gross understatement. Warner Bros. has spent the last several weeks trying to placate talent angry about this change and even possibly having legal action taken against them by Legendary.
One of the reasons this is such a big deal is the way that movies pay people. There is the upfront payment that talent gets and residuals that come from the box office. There is no denying that the HBO Max rollout will impact the box office, thus lowering people residuals. They dealt with Wonder Woman 1984 by giving talent $10 million upfront, but that sort of deal was not worked out with the other 2021 movies. It sounds like that upfront fee could be part of the norm going forward. According to Bloomberg, the new plan at Warner Bros. and HBO Max are to give all talent whose movies are opening on HBO Max and theaters an upfront fee.
Here’s how it will work, according to the people familiar with the situation: When movies come out this year, anyone entitled to a bonus will receive one at half the box-office revenue that would normally be needed to trigger a payout. And if more theaters close down, the threshold will fall further — a stipulation called the “Covid-19 multiplier.” Those who would normally participate in profits from box-office receipts will continue to do so, as well as benefit from on-demand and online sales.
HBO Max will pay Warner Bros. a fee for its 31-day window, and the money from that will be shared with not just profit participants, but cast and crew. Both businesses are part of AT&T Inc.’s WarnerMedia, run by streaming veteran Jason Kilar.
So Warner Bros. will spend a month giving talent essentially bonuses for their movies being on HBO Max with the thought perhaps being that the box office will get a boost once that 31-day window is over. However, there is a decent chance that that won’t happen. People who are loyal to movie theaters will go see movies like Dune or The Suicide Squad in theaters, but it’s repeat viewings that will hurt the most. Some people will want to see the movie a second time at theaters, but plenty of people got their theatrical experience, and now they just want to rewatch their new favorite movie without needing to worry about brushing their hair or wearing pants. Will someone go back to the theaters after 31 days? Sure, but the market is so saturated and going to be even more saturated in 2021 that you have to wonder if anyone is going to be rewatching movies at all.
The first of the 2021 Warner Bros. and HBO Max hybrid release is The Little Things, and it comes out later this month. We’ll have to see how things develop as the year goes on. The report seems to say that Warner Bros. is still saying that this will be a one-year thing that they are only doing because of COVID-19 but who knows. If they manage to find a way to make back their money and placate talent, this could be the new normal no matter what Christopher Nolan has to say.
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