HBO’s Hollywood Max(imum) effort for Theatrical Streaming Distribution

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Photo courtesy of the Associated Press
Photo courtesy of the Associated Press

During a year that will indeed be reflected upon, there are many lessons to be gleaned.  However, some business truths remain.  First, change is certain, and second, businesses must meet the consumer where they want to be met.  The Bill Gates-inspired and Jonathan Perelman quote that “content is king, but distribution is [still] queen” applies to AT&T-owned WarnerMedia’s decision to place all of its 2021 Warner Bros., DC Entertainment, and related films on their newly minted streaming platform HBO Max to coincide with a traditional theatrical release window.  The question becomes will the change be a permanent one?

The recent agreements between movie theaters and studios, Netflix purchasing the Egyptian Theater, the growth of Amazon and its studio, and streamer platforms at nearly every Hollywood content distributor shows the path is clear: an open streaming space is now complimenting theatrical windows.  WarnerMedia made the decision to go the way of distribution by internet knowing there is (1) an imminent vaccine that was just approved for distribution in the United Kingdom, and (2) that nearly all of its 2021 slate of blockbuster, tentpole, and films in general will release after the flu season and into the spring and summer months when theaters will almost certainly be open.  The timing is essential here.  WarnerMedia is betting that consumers will want films now and will prefer the now-delivery option for the future.  That is a good bet. 

Another business truth is that once something changes for efficiency, it rarely changes back.  Meaning, rhetorically speaking, does anyone expect that HBO Max, the theaters, and other streamers and studios will stop showcasing their films on their streaming platforms when theaters open completely and fully.  Many theaters have closed and the mergers between the distributor giants shows that there is a struggle to survive.  The result: adapt, and find ways to profit from streaming distribution through a cut in those subscription and video on-demand (VOD) revenues

There will always be film lovers that enjoy seeing newly released films on the silver screen, including this author.  However, it is also be nice to have the choice to watch a new film at home, with a home-cooked meal (or via delivery), among family and friends, with the ability to stop and control the start and pause timing of streaming and crowd effects.  For too long the theatrical window has been rigid and unchanging.  People’s consumption habits have changed, which is based on another old truth: consumers are willing to pay more for convenience. 

An additional aspect to the bet that WarnerMedia and other studios are making with theatrical streaming distribution is that the subscription model to content distribution is far more predictive for revenue generation than one based on theater going.  Streamers know how many subscribers it has and collects that revenue regardless of whether you watch a particular film or television series.  Of course some agreements with talent, producers, and partner studios are based on streaming numbers, but the amount of consumers streaming has increased across the board, not gone down since its inception.  Furthermore, streamers are mostly owned by studios, which leads to another business and investment truth: diversity of assets, investments, and revenue streams.  Theatrical streaming distribution is another revenue stream for studios and talent, producers, partner studios, and theater chains.  Lastly, consumers like it and welcome it.  It is unlikely to see consumers complain that they get to watch films from home and possibly save some expense money too. 

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