Moving “Tenet” to HBO Max could be the “battering ram” WarnerMedia needs against Amazon and Roku, analysts say
Warner Bros. delayed “Tenet” again this week, this time indefinitely, opening an even bigger question mark about the possibility that theaters will reopen soon. And Warner parent company AT&T chief executive John Stankey said Thursday that the company has no intention of giving up a theatrical release for the film and debuting it on PVOD or its new streaming service, HBO Max.
But analysts see a major advantage for such a bold move, and even Stankey noted that other upcoming Warner Bros. titles could skip theaters to debut in streaming. “Shift ‘Tenet’, a Warner Bros. over $ 200 million budget movie, directed by Christopher Nolan directly to HBO Max, may just be the power move WarnerMedia needs right now,” Lightshed Rich analysts wrote. Greenfield, Brandon Ross and Mark Kelley. week in a blog post for customers. “If WarnerMedia has the guts and the financial means to push ‘Tenet’ to HBO Max, we will quickly learn who the ‘king’ is, the content or the distribution.”
Since the pandemic closed theaters worldwide, “Tenet” has positioned itself as the first big-budget studio release to revive theaters and bring moviegoers back to theaters, and the studio is unlikely to want jeopardize his relationship with Nolan, a trusted blockbuster producer who has insisted on opening his movie in theaters. But COVID-related delays forced the studio to delay the initial launch from July 17, first to July 31 and then to August 12 before being indefinitely postponed this week.
The delays have prompted exhibitors to slow down their own reopening plans, with AMC Theaters, the nation’s largest theater chain, on Thursday pushing its planned reopening again in mid-to-late August.
Also read: ‘Tenet’ delayed again to date 2020 without name
The pandemic has simply shed light on what is clearly a vulnerable business model that many have considered obsolete for years. “Movie theaters have essentially prevented movie studios from developing their business model in the past decade, even when consumer behavior has changed dramatically,” Lightshed analysts wrote. “Studios have stalled with the inherited sequential release pattern of movies with 75 days between theatrical and digital sales and six to eight months between theater and paid-for premiere. The COVID-19 pandemic has allowed studios to start experimenting. “
Throughout the summer, major traditionally exalted releases to the big screen have been broadcast, while mega-power movies that were supposed to rule the summer, such as “Wonder Woman 1984” and “Tenet,” have been kept on ice.
Studies have recognized the importance of transmission, primarily as a supplemental means of distribution and income. But in the last five months, it has proven to be a possible way forward. “Studios have only two ‘good’ options for big-budget movies: delaying movies in 2021 in hopes of a shot or switching to (subscription video on demand),” analysts wrote, noting that the studios have two others. “less convincing” options. One is to sell movies to streamers: Paramount sold its romantic comedy “The Lovebirds” to Netflix, Sony got $ 70 million from Apple for the Tom Hanks WWII movie “Greyhound,” and STX Entertainment put “My Spy” on Amazon. Prime.
Alternatively, they could stick to a theatrical release despite the risks of the pandemic, especially in the first few weeks and months of reopening. “Theatrical release of movies in this environment will undoubtedly lead to massive financial losses,” the analysts wrote, “between a lack of movie theaters / open screens and widespread consumer fear of being in movie theaters.”
Also read: What if Warner Bros. has to delay the beginning because health officials aren’t ready to reopen theaters?
HBO Max, which launched in late May as WarnerMedia’s foray into a subscription streaming service to rival Netflix, could also use a boost. HBO Max gained 4.1 million subscribers after its first full month since its launch, but the service is at a standstill with the two most-used streaming platforms in the country, Roku and Amazon Fire TV. The showdown illustrates the evolution of the fight between content creators and distributors, a new-age transportation dispute, essentially how TV providers like Dish and Comcast routinely engage with network conglomerates like Disney and CBS.
In their post, Lightshed analysts wrote that moving “Tenet” to HBO Max could be the “battering ram” WarnerMedia needs against Amazon and Roku.
But there are financial disadvantages given the considerable cost of producing the Nolan film. Based on pre-pandemic estimates, “Tenet” was expected to make roughly $ 700 million to $ 1 billion at the worldwide box office, revenue that cannot be generated if the film opens on HBO Max. Even if the film opened in PVOD at $ 20 per household, as Universal’s “Trolls World Tour” did, it’s unlikely the studio will be able to generate that kind of revenue.
Universal said it raised approximately $ 100 million in rentals with “Trolls World Tour,” a movie with an estimated budget of between $ 90 million and $ 110 million. That’s not bad for the animated movie, and it even led the studio to say it would consider releasing more movies that way, but the numbers may not match for higher-budget movies like “Tenet,” “Wonder Woman 1984,” or “Mulan. “
Also read: A month after the launch of HBO Max, why isn’t it on Roku or Amazon yet?
In fact, executives at some Hollywood studios have serious doubts that premium on-demand video can be a viable long-term model, especially for tents.
“Tenet” could be released abroad, where restrictions on closings and social distancing have begun to ease, and even some states and markets in the United States. In fact, Warner Bros. Pictures President Toby Emmerich said the studio is not treating the release of “Tenet” as a traditional day-and-date release that opens in all markets on the same day. But even then, the movie’s earning power at the box office will likely decrease.
“Movie releases and reopening of the market, at least by the end of the year, are likely to stagger more and more,” wrote B. Riley FBR analyst Eric Wold in a recent note. “There may never be a ‘perfect date’ for studios to release movies in the traditional day-and-date model. A phased or phased release plan would allow the studio to start monetizing the film theatrically in a way other than cannibalistic about potential box office earnings. ”
Then there is Christopher Nolan who, even through the pandemic, has remained a staunch defender of the theater model and experience. At the start of the pandemic, Nolan wrote an opinion piece for The Washington Post, in which he said, “Movie theaters are a vital part of American social life. They will need our help.
Also read: HBO Max in July: Here’s everything that comes and goes
All that said, it doesn’t change the state of things: the pandemic is ongoing, continuing in some states, making the probability of movie theaters opening substantially in 2020 quite low. And without movie theaters, under traditional modes of operation, studios have little or no way to earn revenue from the content they’ve invested hundreds of millions of dollars in.
“Yes, changing these facts for big screen movies to direct to SVOD, without any PVOD window at all, would lead to dramatically lower earnings than if they had been released in theaters and would likely require painful write-downs,” wrote analysts at Lightshed. However, if the goal is to force the HBO Max app on Roku and Fire TV devices, the highest-profile content WarnerMedia has are new, high-budget movies from Warner Bros.
“If HBO Max really is the future of WarnerMedia, with all the signs pointing in that direction, now is the time to make bold and aggressive decisions.”
Sean Burch and Tim Baysinger contributed to this report.
