By Erich Schwartzel and Joe Flint 

LOS ANGELES -- AT&T Inc.'s Warner Bros. will release its entire 2021 slate of theatrical films simultaneously in theaters and on its HBO Max streaming service, the studio said Thursday, taking the most drastic step yet in eliminating the exclusivity theater chains have enjoyed for decades.

Warner Bros. movies will play on HBO Max during their first month of theatrical release before leaving the service while staying in theaters.

The hybrid model will apply to all of Warner Bros. films next year, from smaller-scale releases to big-budget movies that traditionally require gargantuan box-office sales to turn a profit. That includes the science-fiction adaptation "Dune," a movie version of the musical "In The Heights" and a new installment of the "Matrix" franchise.

Warner Bros. last month said it was going to release "Wonder Woman 1984" on HBO Max Christmas Day for a month at the same time the movie went into theaters. The announcement Thursday covers 17 films that are scheduled for release next year.

"It's threading a needle in the middle of a pandemic," said Carolyn Blackwood, the studio's chief operating officer. "We weren't comfortable sitting on our hands or punting these movies into oblivion."

The decision is sure to jolt a Hollywood in the midst of overhauling how it makes and distributes films. With a majority of theaters closed in the U.S., studios have shifted focus to their streaming operations, where subscriptions are the key metric of success. That has meant some of the year's biggest releases have premiered in the living room, a shift that could outlast the pandemic and spell economic ruin for theater owners desperate to reopen.

As the pandemic has persisted, it has become increasingly difficult for studios to manage delaying films or deciding to shift them directly online. Letting moves sit unreleased on the shelf can impact corporate tax liabilities, debt repayments and relationships with top filmmakers and actors whose compensation is tied to a box-office release.

For HBO Max, having a slate of expensive theatrical-quality releases could help drive subscriber growth to the new streaming platform, which has struggled to find breakthrough content in a crowded marketplace. HBO Max is paying a license fee for the movies, Ms. Blackwood said.

The strategy, which will also include major big-budget films such as a new "Space Jam" and a sequel to "Suicide Squad," signals that Hollywood doesn't expect business to return to normal for the foreseeable future -- and could prove a harbinger of new distribution strategies even after the pandemic ends. By taking such high-profile releases to its streaming service, AT&T and other studios are mounting a serious challenge to Netflix Inc. in the industrywide race for exclusive content that drives and keeps subscribers.

Ms. Blackwood stressed that this is a temporary strategy meant to deal with a damaged theatrical business model. "The goal is to augment that theatrical audience and Covid-imparied box office," she said.

WarnerMedia Chief Executive Jason Kilar said in a memo explaining the move, "we see an opportunity to do something firmly focused on the fans, which is to provide choice, whether that choice is to enjoy a great new movie out at the cinema, to open up HBO Max, or to do both."

Launched in May, HBO Max includes HBO content as well as a huge amount of movies and TV shows from Warner Bros. and elsewhere. Consumers have yet to embrace the platform, as it only has 8.6 million subscribers so far. WarnerMedia executives have attributed this to confusion in the marketplace about HBO Max vs HBO.

Other Hollywood studios, such as Comcast Corp.'s Universal Pictures, have crafted models that combine theatrical release with at-home streaming or premium rental options. Exhibitors have long chafed against any distribution plan that impedes their exclusivity, but the pandemic has driven several major chains to accept such terms.

While domestic exhibitors accepted Warner Bros.' decision to release "Wonder Woman 1984" in theaters on Christmas Day -- even though the film will simultaneously be made available online -- it is unclear how theater chains will react to the studio following a similar strategy for its entire 2021 slate. Typically, studios and theaters generate the bulk of a film's box-office revenues during the first few weeks of release.

Write to Erich Schwartzel at erich.schwartzel@wsj.com and Joe Flint at joe.flint@wsj.com

 

(END) Dow Jones Newswires

December 03, 2020 14:25 ET (19:25 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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