Could the Warner HBO Max deal Destroy Cinemas forever?

Have Warner Bros made a short-sighted mistake that could see us not only losing our beloved Cinemas but also paying a lot more to watch films in the future?

As you’ve probably heard by now Warner have decided to release their entire slate of films starting with Wonder Woman this Christmas and continuing throughout all of 2021 (17 films in total) simultaneously in both cinemas and their streaming service HBO Max. This status quo destroying move has sent reverberations throughout the film industry with equal parts hailing the move as a necessary evolutionary step hastened by the Covid-19 pandemic whilst others condemn it as a step that could bring irreversible damage to the entire film industry.

[wpdiscuz-feedback id=”9f93kp0s3j” question=”Do you agree with Matt or Mysteree?” opened=”0″]Our own <em>Mysteree</em> is in the former camp as he outlines <em><a href=”https://wetalkfilm.com/hbo-max/&#8221; class=”rank-math-link”>here</a></em> arguing that, much like with the music industry, this is an inevitable step which is a positive move. Although seemingly most beneficial to us the consumer the following outlines why it may not be such a good thing for us after all.[/wpdiscuz-feedback]<br>

Given the choice of venturing outside to visit a cinema in the midst of a pandemic or watching from the comfort of your own home it’s likely that everyone but the most ardent of film fan would choose the latter. Why expose yourself to the risks of an enclosed cinema (and extortionate popcorn, food and drink prices) filled with people you don’t know when you can simply stream the latest films at home with your own (reasonably priced) snacks and watch them with your family?

The choice seems clear and for those who subscribe to that line of thinking Warner’s announcement would have been the panacea that they were all waiting for. Tired of constant film delays they can now watch these blockbuster films that they had been longing for but had been frustratingly pushed back time and time again.

[wpdiscuz-feedback id=”9f93kp0s3j” question=”Was this really a consumer friendly move?” opened=”0″]This was the ultimate consumer friendly move. Warner had stepped up and put film lovers first where other studios had hid behind empty platitudes of delaying films because they had ‘wanted as many people to experience it together in the cinema as possible’ (i.e. they wanted the full box office revenue above all and weren’t willing to release any of their finished films until people were ready to go back en masse to cinemas).<br> But is this move by Warner as consumer focused as we think? Warner will undoubtedly lose money in the short term from this move. Films that would have seen hundreds of millions in revenues pre-pandemic may now only make a fraction of that in new HBO Max subscriptions to account for the revenue shortfall.[/wpdiscuz-feedback]

But in the medium and long-term it is possible that Warner will profit from this with parent company AT&T benefitting by offering subsidised or free HBO Max subscriptions if consumers take out one of their other offerings like internet packages. AT&T’s share price rose in light of the announcement. Conversely cinema owners were hit hard by the news with their share prices plummeting.

This move will undoubtedly see less people go to the cinema and more people choose to watch films at home. Less people going to the cinema makes it less likely that cinemas will be able to survive the pandemic. It is a real existential threat to cinemas which may become unviable and end up as relics of the past.

The big screen experience that we know and love consigned to the history books. Is that a price worth paying?

[wpdiscuz-feedback id=”9f93kp0s3j” question=”Will the vaccine make you more likely to return to the cinema?” opened=”0″]With a vaccine on the horizon which should make some if not all more comfortable going out and mixing again is it hasty to announce films as far out as a year away will be released on streaming when good take up of the numerous vaccines in development could indeed see people going back to cinemas in increased numbers? Maybe not as much as before initially but still even at 50% capacity that is a lot of box office revenue being missed out on.[/wpdiscuz-feedback]

With decreased revenues film studios will need to make up the shortfall somewhere and it will be felt in either a reduction in spending on films, increased prices for consumers or both. Conspicuous in its absence from Warner’s announcement was whether or not subscribers would need to pay a premium to watch these films that are released at the same time as in cinemas, only citing that they would be ‘available the same day’.

Following the announcement that Wonder Woman 1984 will be released this Christmas at no extra cost many assumed that the rest of the films will follow in the same vein but this has not been explicitly stated. If Warner do decide to charge per film viewing in addition to the subscription would this announcement be as warmly received as it has been?

With reduced or no cinema revenue costs will undoubtedly be passed on to consumers. Whilst you may be fine with the current subscription price point if cinemas are forced to close and the streaming service is the only place to see a particular film that monopoly would mean that streaming services could charge a high monthly price (with minimum term commitment) meaning that we end up paying much more for the pleasure of doing so than we are now.

Also these big blockbuster films were produced with the belief that they would bring in substantial box office revenue. Knowing where we are now studios are much less likely to spend as much on production values as they did before. Some purists may see this as a good thing (“no longer can a film dazzle us with CGI at the expense of on actual story!”) but big blockbusters are part of the cinematic experience.

Can you imagine a scaled down Avengers film with half the spend on effects? Would it have felt the same? Less spend on films also means less people employed and benefitting in the film making process (from those staff on set and in production to those people working in cinemas) which can only be a bad thing for those who will lose their jobs and have reduced incomes as a result of this.

We are truly in unchartered territory…. if Disney replicate Warner’s HBO Max move with their Disney Plus streaming service in “any capacity” the cinematic industry is “finished”

One film executive told Variety that if Disney replicate Warner’s HBO Max move with their Disney Plus streaming service in “any capacity” that the cinematic industry is “finished”. The stakes truly are that high. All eyes are on Disney’s Investor meeting on 10^th December where they are expected to respond to Warner’s move. How they do will have a long lasting, maybe even permanent impact on how we consume films for the short, medium and long term.

Streaming and traditional cinema going can co-exist. Shortening the cinema exclusive window or renegotiating the revenue split as a result of the pandemic should be in scope but denying cinemas that period of exclusivity will ultimately be to our detriment.

Films being kept exclusively in cinemas at the beginning of their life cycle helped the fight against cinema piracy. It is very hard to pirate a film that is in cinemas with technology being introduced to catch those who attempted to and very few people wanted to watch a shaky pirated ‘cam’ copy of a film secretly filmed in a cinema anyway but with films being released on streaming services on day one the chances of a good quality, high-definition blockbuster film being able to be streamed or downloaded for free by many on the internet from day one of its release has increased exponentially reducing revenues even further which, as already has been discussed, will ultimately be to our detriment.

We consumers will ultimately be paying for this down the line even if we do gain in the short term. We must not lose sight of the bigger picture and the negative impact this will have on a number of people in the industry just because we get a film a few months early and this is why, as much as I would love to see Wonder Woman saving the world and Neo dodging bullets at home, this will ultimately prove to be a bad move for us all.