The move follows Warner Bros.' decision to put Wonder Woman 1984 on HBO Max in December, along with a concurrent theatrical run. If that pivot sent shockwaves through the industry, Thursday's announcement rattled Hollywood to the core.
Given the unprecedented time that we're in, we needed a creative solution to address our fans, our filmmakers and our exhibitors, said Ann Sarnoff, chief executive of WarnerMedia Studios, in an interview. Big and bold is a necessity right now. Sarnoff called it a temporary solution and a one-year plan. The studio said other options releasing big-budget films solely in reduced capacity theaters or delaying films another year weren't appealing. Warner Bros.' move amounts to an acknowledgement that any full rebound for theaters is still a year or more away.
We've got to get people back in theaters at full capacity at some point. If you read the medical experts that's going to take a while to work its way through the system," said Sarnoff. If we saw an end in sight to the pandemic, we might have a different strategy. But we don't see that at this moment.
HBO Max is only available in the United States. Internationally, the studio's 17 films planned for 2021 release will roll out exclusively in theaters.
Warner Bros.' decision resonates especially because the 117-year-old studio of The Wizard of Oz and Casablanca has long been a market-leader in Hollywood and one known as especially supportive of theaters. The studio has generally ranked among the top two studios in market share over the past decade most recently dwarfed only by Walt Disney. Warner's films typically account for $1.5-2 billion annual in ticket sales in North America a lot of money to compensate for in HBO Max subscribers. Warner Bros. confirmed the films will be available to subscribers with no further charge.
I can't comment on the economics of how it will all work I'd need a crystal ball for that, said Sarnoff. But I'm very optimistic that this is a win-win-win for our fans, our filmmakers and our exhibitors. We're getting the movies out. We're allowing them be seen on the big screen which is what they were made for, but giving an alternative.
The hybrid approach also allows us to market them in a fuller way than we would have had we just looked at the less-than-full capacities in theatrical right now. Warner Bros.' 2021 slate includes many of the expected top movies of the year, including Dune, The Suicide Squad, Tom & Jerry, The Conjuring: The Devil Make Me Do It, King Richard and Judas and the Black Messiah. The move by Warner Bros. only makes the pain being felt by exhibitors all the more acute.
Having been shuttered for much of the year, cinemas reopened nationwide in late summer except in some key locations, including Los Angeles and New York. But with most major releases postponed and virus cases surging, about 60% of theaters have since closed again. Regal Cinemas, the country's second largest chain, has shut all its doors. Following Warner Bros.' announcement, shares of AMC Entertainment fell 16%; Cinemark was down 22%. The National Association of Theater Owners, the trade group of exhibitors, didn't immediately comment Thursday.
Under chief executive Jason Kilar, the former Hulu chief, WarnerMedia recently reorganized to further prioritize its streaming service. He has moved aggressively to boost HBO Max, even if it comes at the expense of the theatrical marketplace. After a rocky rollout, HBO Max has attracted about 29 million subscribers, including those who get it as HBO subscribers.
For comparison, Disney+ has about 74 million subscribers, though it's available worldwide.
Our content is extremely valuable, unless it's sitting on a shelf not being seen by anyone, said Kilar in a statement. We believe this approach serves our fans, supports exhibitors and filmmakers, and enhances the HBO Max experience, creating value for all. It's the latest in a series of sea changes sweeping through an industry convulsed by the pandemic. The demise of the traditional 90-day theatrical window something long sought by some in Hollywood has accelerated, and many think it's gone for good. Universal Pictures last month made deals with both AMC Theatres and Cinemark to give them the option of shifting movies into home release after just 17 days in theaters. Disney has postponed most of its releases, but redirected Hamilton," Mulan and the upcoming Pixar release Soul to Disney+.
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