After announcing plans last week to release 17 films from studio’s 2021 slate simultaneously in theaters and on its streaming service HBO Max, includingDune,The Matrix 4andThe Suicide Squad, Warner Bros. sent exhibitors into paroxysms of terror with a reminder that their industries are in business with one another but definitely not friends. Although the public’s appetite for entertainment only intensified in 2020 while locked in and sheltering at home from a raging pandemic currently entering its third wave, severely restricted or fully shuttered theaters had few options to provide ticket buyers not just with venues to attend, but new options from which to choose. Simultaneously, studios mostly tried to hold back their potential blockbusters until restrictions lifted, or at least until urging people to gather in large enclosed spaces would not be seen as sacrificing public health at the altar of capitalism. When the year became untenable for theatrical distribution, Warner made the decision to pre-emptively save its own ass and attempt to lessen the impending financial burden by giving consumers broader options to choose from to watch their movies — at the cost of supporting their local theaters.
The decision to expand distribution via streaming platforms isn’t surprising; it’s merely the latest signpost of the direction in which the entertainment industry is headed and has been for many years. And of course Warner is trying (and should try) to save its own ass; it’s a massive corporation with obligations to its stockholders. But there are many reasons why we’ve arrived at this particular moment where those corporate interests and the misconception that these complementary businesses would (or should) altruistically help one another collides with an ugly truth as creators continue to be caught in the middle of an historically lopsided power struggle.
First of all: corporations have owned movie studios for decades, and movies are distributed to the masses to make a profit. Even the smallest movie needs to be profitable in order for its makers to be able to tell more stories. And it’s naïve to suggest that companies should altruistically subsidize films (or most entertainment) and to some extent make their programming choices accordingly. But afterJawsand especiallyStar Warsalerted them to the unimaginable fortunes to be made not just by telling those stories but expanding them to ancillary endeavors — first sequels, then spinoffs and imitators, and crucially merchandising opportunities — studio executives began to make decisions with more of mercenary attitudes, not just to develop these multimedia empires, but control them at every step.George Lucasfamously acquired his first great fortune by retaining the Star Wars toy rights, and no studio wanted to leave that pot un-pilfered again. And so they began expanding their holdings, pioneering licensing deals and eventually merging with companies that could directly produce and distribute the memorabilia that ticket buyers built into their lives and lifestyles.
Simultaneously, the stakes grew for success with those original films, because they were meant to launch an empire, not just keep audiences engaged for two hours. Studios wanted them talking about those films, collecting the ephemera of their worlds, aspiring to live inside them. Money poured into production to realize them as fully (and sometimes irresponsibly) as possible, forcing budgets to balloon to record-breaking levels, coinciding both with a new era of star power in the 1980s and 90s and also a growing interest from the public about the ins and outs of the industry, and especially the costs involved. The cable news grist mill required fresh meat on a 24-hour basis, so why not share information previously only of interest to industry insiders onEntertainment Tonight— and whenArnold SchwarzeneggerorJim CarreyorDemi Mooregot paid tens of millions to star in a movie that made hundreds of millions, that became news as well.
Soon, the studios were dealing not only with their films’ success or failure, but the perceptions by the public of that success or failure, and reacting accordingly. This is the part that was less precedented in Hollywood, as opposed to the corporate world where ups and downs and not just seen but determined by the stock market. So whenWaterworldarrives in theaters on a wave of publicity for its $200 million budget, it’s already perceived as a failure, or at least an expenditure unworthy of risking a corporation’s bottom line. (Never mind that the film eventually became profitable thanks to ancillary home video and post-cinema sales.)
By the early 2000s, the companies that began acquiring movie studios were no longer mainly these large creative partnerships with pedigrees in entertainment and an understanding how to measure success in terms of Hollywood. Back in the 1950s, television was a threat to the movies until executives began to understand the differences in these two media, and saw the opportunity to create programming on TV that functioned as a delivery system for advertising — if not during breaks, then baked into the shows themselves. Coca-Cola, and later Sony’s acquisition of Columbia Pictures were watershed moments, followed by Warner merging with Time and Tribune Media, and of course Disney’s consolidation of Pixar, Marvel Studios, Lucasfilm and eventually 20thCentury Studios. The idea of billion-dollar movies is relatively new, but even as far back as the 1980s, these companies were focused more on market share than “just” making good movies, and already too big to allow them to fail consistently — that thinking did not make sense in a corporate environment. But more pivotally, people put in charge were not coming from a creative background, and that changed the way movies were made, possibly irreversibly.
Kevin Tsujiharaat Warner Bros. epitomized this kind of bottom-line leadership. His background was in finance, and came from the company’s interests in Six Flags Theme Parks. So over his six-year tenure at the top of the company’s corporate ladder, he attempted to engineer multiple franchises at the expense of telling good stories; the DC Extended Universe and its scattered progress was just one of the results of his willingness to put a potential franchise ahead of single-serving (much less single-character serving) films. He was a leader with a theme park mentality making theme park rides sold in theaters, not films for people to invest in or care about, and there’s a reason that they produced fewer successful franchises during his tenure than before — despite more attempts.
What this further has to do with exhibitors is that as budgets rose from the 1980s to now, catalyzed as much as anything as by a profligate 1970s where auteurs likeMichael Ciminobankrupted studios fulfilling their vision on projects with artistic value but little commercial appeal, focus has intensified on films that had to make more money, and to be hits, to appease demanding stockholders. So as they increasingly shifted to a model that exploited intellectual property, gaming success by focusing on known characters and stories, the best way to ensure that was to exert pressure on theaters to prioritize these more and more expensive films as their opening weekends became not just financially crucial but symbolic for their success and importance. A good example of how this took effect was when theStar Warsprequels were released; aVariety article from April 1999details how 20thCentury Fox required theaters to commit to puttingThe Phantom Menacein its biggest houses for a fixed amount of time, demanded record percentages of the opening weekend grosses, and otherwise squeezed their only platform for exhibition to ensure their own profits. It’s true that theaters make a significant portion of their profits from concession sales, but they were hamstrung from the outset to leave films in auditoriums that they may or may not fill, while other films from which they could have received a greater share of the ticket revenue packed smaller houses.
Meanwhile, not all theaters are the same.The Simpsons’ “googolplex” became a self-fulfilling prophecy, but there are cities that don’t have theaters with dozens of screens, and more importantly, theaters whereStar Warsmay not be the biggest draw for their clientele. But as studios continue to exert greater control about where and for how long their films are shown, they have not so quietly eliminated the films that might flourish in those communities, the mid-budget dramas or just smaller films that don’t rely on spectacle and star wattage to attract hordes of people on opening weekend but perform steadily over successive weeks. Theaters are getting fewer films with varying potential for commercial performance, and then being instructed not to promote those films, or enable their maximum profitability, to effectively make sure that studios satisfy shareholders who have essentially become fans thrilling at a record box office haul. That said, at least itdoesbenefit them…
And then at the same time, more and more money gets poured into television — not just as streaming services and broadcasters proliferate, but as that medium’s “premium” content earns the same budgets as its theatrical counterparts. A show likeGame of Thronesgets brought to life with hundreds of millions of dollars, albeit split across eight or ten or twelve episodes, because it is actively competing with movies likeAvengers: Endgame. Television showrunners are giving people a reason not to go to theaters. And that’s on top of the other reasons that are evolving naturally as byproducts of a culture full of increasing distractions — expanding entertainment options both in quantity and variety, much less social media, as costs rise to participate in these options while income such as minimum wage stagnates. It simply costs too much money for people to go to theaters regularly to watch films when their experience continues to get worse and worse, thanks to both other moviegoers and an exhibition industry that is aggressively resistant to change.
If you don’t believe that, go to CinemaCon when and if that celebration of theater exhibition happens again. Its entireraison d’etreis to pay tribute to the success of movie theaters, and insist upon it no matter what the market forces are telling its leaders. The studios bring their biggest stars on stage to thank theater managers and tell them how lucrative the industry is, even as ticket attendance and profits continue to decline. They refuse to acknowledge the encroaching domination of streaming as a threat, and similarly, do not contemplate its possibilities as an opportunity for them to diversify their offerings. Ironically, the pandemic as actually forced this realization upon them in a limited capacity as drive-in theaters without new films to show have been able to license older films for special screenings, returning if only slightly to the repertory model that was massively popular decades ago. But by and large, their expectation, or hope, was for the studios to bail them out by withholding their films until they can operate at full capacity — and in a capitalistic system that will not pause to recover, or adjust to accommodate businesses affected most strongly by events out of their control, that’s a sadly unrealistic sentiment.
Withrebukes coming from longtime partners like Christopher Nolan, Warner Bros. has new challenges to face in the immediate wake of its decision to release its slate in theaters and on VOD on opening day, most specifically in terms of contracts that were signed long ago guaranteeing that these films would receive an exclusive theatrical window — an expectation that can more feasibly result in litigation from opponents of the studio’s plan. But Warner backed Nolan’s insistence on a theatrical release forTenetat the height of the pandemic and the film’s box office success suffered as a result and painted him and the studios as focusing on profits over people’s lives. Of course, in principle exhibitors are right that studios should support them — as much in solidarity as anything, because all businesses should be “bailed out” or backed up at a moment when their profitability is interrupted through no fault of their own. But a narcissistic, depressingly American mindset has set in that believes the greater good is what helps ourselves (in this case, stockholders) first and the rest will work itself out. And corporations exceed, perhaps by design, at making that mindset a cornerstone of their decision making.
Of course, theaters are owned by corporations too, but in this equation, they don’t have the leverage to do more than issue angry, empty statements while sitting idly by watching their properties languish and accumulate debt. It’s important to realize that as personally important as theaters are to moviegoers as a part of the movie watching experience, it has also steadily changed over the past few decades, both in terms of options, and in terms of the way we interact in and with an environment that fewer and fewer people consider sacred. The advent of better technology at home, and worse conditions in dirty, crowded, poorly-maintained facilities, has only hastened this decline in attendance and disinterest in risking one’s viewing of a movie we’re desperately eager to see.
Certainly, that does not mean that the theatrical experience should die or change so fundamentally to acquiesce to the rise of streaming services with better connection speeds and more cinematic experiences on the small screen that it becomes something completely different. But what it comes down to is that one industry has changed slowly and steadily over time, consolidating the corporate, bottom-line identity it’s curated while its partner has not, fighting against obsolescence by ignoring reality, and worse, capitulating to a bully while insisting they’re a friend. And ultimately, whether or not the divide between the two is too great, this year has forced them both to finally acknowledge it, while simultaneously proving to be the worst possible time to try and bridge the gap.
