Warner Brothers made waves recently when it announced that all of the movies it will release in 2021 will be available on Warner\u2019s HBO Max subscription streaming service\u2014on the same day they premiere in U.S. theaters.<\/p>\n
<\/p>\n
Text b<\/strong>y<\/strong>\u00a0<\/span>Gordon Burtch,<\/span><\/a> Daegon Cho,<\/span><\/a> Yangfan Liang,<\/span><\/a> and\u00a0<\/span>Michael D. Smith<\/span><\/a><\/p>\n Last month Warner Brothers announced that all of the movies it will release in 2021 will be available on Warner\u2019s HBO Max subscription streaming service\u2014on the same day they premiere in U.S. theaters. That includes such expected hits as\u00a0Matrix 4,\u00a0Dune,\u00a0Godzilla vs. Kong, and\u00a0The Suicide Squad.<\/span><\/p>\n This announcement has had a seismic impact on the movie industry, for several reasons.<\/span><\/p>\n First, prior to this announcement almost all major Hollywood movies were given a three-month exclusive theatrical release before they were available on in-home channels. Indeed, theater owners had threatened to boycott any studio that violated the exclusive theatrical release window\u2014a threat that AMC Theaters acted on in April of 2020, when, to punish NBCUniversal for releasing\u00a0Trolls World Tour\u00a0simultaneously in theaters and on digital channels, it announced a\u00a0<\/span>boycott of all of the studio\u2019s movies<\/span><\/a>.<\/span><\/p>\n Second, while several studios had released movies on digital channels while theaters were closed during COVID-19, Warner\u2019s announcement covered its entire 2021 slate, including movies slated for release late in 2021 when most industry observers believe theaters will no longer be subject to COVID-19 restrictions. This made it appear to some that Warner wanted to make these temporary COVID accommodations permanent.<\/span><\/p>\n Theaters owners and other industry observers were quick to criticize Warner\u2019s move. Chris Johnson, the CEO of Classic Cinemas, called Warner\u2019s decision \u201cridiculous and short-sighted,\u201d and Adam Aron, the CEO of AMC Theaters, argued that Warner would \u201csacrifice a considerable portion of the profitability\u201d of movies that bypassed the traditional theatrical release. David Sims piled on in\u00a0The Atlantic, saying of Warner\u2019s decision, \u201cAudiences will have little incentive to pay more to see these films in theaters.\u201d His conclusion? \u201c<\/span>Theater chains are right to fear for their survival<\/span><\/a>.\u201d<\/span><\/p>\n These concerns reflect the conventional wisdom in the industry: that given the choice, many consumers will avoid the \u201cbig screen\u201d theatrical experience in favor of the convenience of watching the same movie at home. If that\u2019s true, it would obviously be ruinous for theaters.<\/span><\/p>\n But\u00a0is\u00a0it true?<\/strong> Will early digital releases significantly harm theatrical revenue? We analyzed that question in a\u00a0<\/span>recent research study<\/span><\/a>, and what we found might surprise those who are concerned about digital platforms encroaching on the theater business.<\/span><\/p>\n In the study, we analyzed what happened to theatrical revenue in Korea from 2015 through 2018\u2014 a period during which Hollywood studios significantly shortened the exclusive theatrical windows for their releases, from three months to only one month. We found that, after controlling for differences between movies with early digital releases versus traditional release windows, early releases had a statistically and economically insignificant impact on theater sales, equivalent to around a 0.8% drop in total theatrical revenue during the first eight weeks of the movie\u2019s theatrical run in Korea. Most theatergoers, it turned out, remained loyal to the theatrical experience even when they had the option of watching the movie at home while the movie was still showing in theaters.<\/span><\/p>\n We should interpret this result with some caution, of course. U.S. consumers may behave differently than Korean consumers when it comes to early digital releases, and our study results only apply to movies that received an exclusive theatrical release for at least four weekends\u2014a release window more similar to the\u00a0<\/span>17-day exclusive theatrical window that AMC and NBCUniversal ultimately negotiated<\/span><\/a>\u00a0than to the \u201cday-and-date\u201d HBO Max availability proposed by Warner.<\/span><\/p>\n Nonetheless, our broad finding is consistent with what we\u2019ve seen in other settings where many feared that new digital products would cannibalize existing markets. For example, our past research found that\u00a0<\/span>making books available on Amazon\u2019s Kindle platform<\/span><\/a>\u00a0didn\u2019t significantly cannibalize hardcover sales,\u00a0<\/span>unbundling digital singles from albums didn\u2019t damage overall music revenue<\/span><\/a>, and\u00a0<\/span>releasing movies on iTunes didn\u2019t harm those movie\u2019s DVD sales<\/span><\/a>. In each case, the data showed that opening new digital channels wasn\u2019t a zero-sum game. Rather, the new digital products appealed to new and previously untapped customers, and making them available to the market ultimately benefitted both consumers and sellers.<\/span><\/p>\n What we learned in our Korean study suggests that a similar effect may exist for movies, which in turn suggests that John Fithian, the president of the National Association of Theater Owners, was right when he argued that \u201c<\/span>theaters provide a beloved immersive, shared experience that cannot be replicated<\/span><\/a>\u201d \u2014 but that Jason Kilar, the CEO of WarnerMedia, was also right when said that early digital releases provided an opportunity to give customers a choice \u201c<\/span>whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both<\/span><\/a>.\u201d<\/span><\/p>\n That\u2019s an encouraging sign. Maybe, when it comes to how movies get released, studio executives and theater owners have more to agree on than they realize.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Warner Brothers made waves recently when it announced that all […]<\/p>\n","protected":false},"author":8,"featured_media":28779,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45,53],"tags":[99,1385,4397,1722,3379,307,3941],"class_list":["post-28778","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industry","category-opinion","tag-ceo","tag-ceo-northam","tag-movie-theaters","tag-movies","tag-pandemic","tag-revenue","tag-warner-brothers"],"_links":{"self":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/28778","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/comments?post=28778"}],"version-history":[{"count":1,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/28778\/revisions"}],"predecessor-version":[{"id":28780,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/28778\/revisions\/28780"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media\/28779"}],"wp:attachment":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media?parent=28778"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/categories?post=28778"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/tags?post=28778"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}