The Great Theatre Debate

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

When AT&T’s WarnerMedia decided to go direct-to-consumer for a limited window of time through streamer HBO Max on all of its 2021 slate of theatrical films, the action set Hollywood ablaze in commentary.  Directors, studios, and actors signaled the end of the Hollywood, specifically moviegoing.  A deeper dive into the decision-making and future of the industry might lead to a different conclusion.

There is a business principle that states where a company or industry holds a monopoly over a process, product, or event, the profits are high to begin, but over time the profits fall because the lack of competition creates apathy, staleness, and disenchantment.  Hollywood’s domination in the moviegoing space has been consistent.  Theaters and theatrical windows have been the way of watching films for over 116 years

Hollywood turns out terrific films, but no one can deny that the advancement of technology, specifically in streaming, direct-to-consumer options, and the implementation of the content anytime-anywhere strategy has benefited the industry and consumers.  It is easier today for consumers to watch films and television and to be exposed to more diverse types of content.  It is also much easier to distribute films more consistently when there are options and specifically a digital pathway.

The explosion of content on plus (+) platforms like Apple+, Paramount+, and Disney+ is evident.  Libraries and minds are being opened to new characters, plots, and revenue streams.  Disney’s meteoric rise in streaming is based on the dredging and trudging of Netflix for a decade.  Clearly businesses, talent, and industry can learn from each other.  In that vein, it is good to remember that change is a good thing and can be modeled after others.    

AT&T’s recent sale of a stake in its DirecTV business to TPG, is as much about paying down debt from the Time Warner, Inc. purchase to obtain Warner Bros., HBO, and Turner to create WarnerMedia, as it was and is about adapting for the future.  The consumption of content has been changing and is changing more rapidly each day.  It is not enough anymore to just make films, you must also own the tech and distribution to get content to consumers.  Remember, AT&T is a cellphone company, a top five product that humans use most. 

As highlighted by Vanity Fair, the real issue with direct-to-consumer film distribution is about money.  That makes sense as writers, actors, directors, producers, and even studios will await gate receipts to pay/receive percentage deals.  However, the key word in that last sentence is studios because those companies are initially losing money on streaming endeavors while waiting for the subscriber base to build.  Wise agents, talent, and studios will work on deals to allow partnerships between talent and tech. 

Are options a bad thing for consumers and talent?  No, competition is good for consumers, other companies, innovation, and the economy.  Talent and studios can now seek another revenue stream on top of theatre tickets.  The adjustment period to change is always more difficult.  Finding balance and common ground will prevent work stoppages with the unions and their members in the future.  However, the idea and practice of direct-to-consumer films as an option and benefit to movie lovers, talent, and studios should be embraced.  Necessity is the mother of invention, after all.  Trying times and changing consumer habits combined with the tech to deliver content is going to continue to grow.  Each side in the theatre debate will need to be proactive in their approach and creative in their delivery.  It benefits all to do so.      

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