Why Warner Bros. Is Key to Box Office Recovery Despite Streaming Films

Films like “Tom & Jerry” and the upcoming “Godzilla vs. Kong” will be key for theaters hoping to get audiences back indoors ahead of summer blockbuster season

Warner Bros./Legendary Pictures

Three months after shocking Hollywood with its decision to put all its 2021 films in theaters and on HBO Max at the same time, Warner Bros. has become a major player in the early stages of the U.S. box office recovery, with films like “Godzilla vs. Kong,” which comes out this Friday, playing a key role in theaters’ reopening strategies.

While Disney’s animated “Raya and the Last Dragon” has provided a noticeable boost to the box office over the past three weekends, Warner Bros. that has been the only studio to earn an opening weekend of over $10 million since the pandemic closed theaters last March. Along with the $20.2 million opening for “Tenet” last September ($58 million domestic total), Warner Bros. has also seen “Wonder Woman 1984” earn a $16.7 million opening toward a $45.5 million domestic total since Christmas Day and “Tom & Jerry” post a $14.1 million opening toward $33.7 million total since late February. And the latter two films earned those grosses despite being available on HBO Max.

Now comes “Godzilla vs. Kong,” a clash of arguably the two most famous movie monsters ever in a blockbuster designed to be seen on the big screen with a booming movie theater sound system. For cinemas, it’s exactly the kind of film they’re hoping can bring back audiences who haven’t been in a theater in a year, even if the option to see it at home is still there.

“Tom and Jerry ” (Warner Bros.)

“What’s happened with Warner Bros. over the past month reminds me of the dust-up between Universal and AMC when ‘Trolls World Tour’ went on demand at the start of the pandemic, but ultimately ‘Trolls’ was a success while Universal continued to put out films for theaters that have done well despite the pandemic, like ‘The Croods: A New Age,’” Comscore analyst Paul Dergarabedian said.

“Similarly, we saw a similar dust-up when Warner Bros. announced this move with HBO Max in order to adapt to the pandemic, but what we’ve seen so far is that providing that streaming option to audiences hasn’t really come at the expense of theatrical,” he continued. “The consumer base is wide enough to support both home and theatrical models for these new films and they don’t have to be adversarial to each other.”

And Warner Bros. has also made moves to assuage fears among theater owners that the HBO Max move won’t extend into 2022. Along with its announcement that it would reopen all its locations on April 2, Regal Cinemas announced that it had reached a deal with Warner guaranteeing 45 days of theatrical exclusivity for all of its films starting in 2022. The deal not only signals Warner’s commitment to theaters, but signals that exhibitors’ hard-fought 90-day window is likely gone forever.

Daniel Kaluuya in “Judas and the Black Messiah” (Warner Bros.)

Warner has also curried favor by giving theaters a bigger share of ticket revenue to make up for potential losses from consumers who choose to stream instead. The studio’s generosity is in marked contrast to Disney, which has refused to renegotiate box office terms — and saw Cinemark refused to screen “Raya and the Last Dragon”as a result. The loss of the chain’s 400-500 locations led to a disappointing $8.5 million opening weekend, though “Raya” has held well and had only an 11% drop in its third weekend.

Cinemark CEO Mark Zoradi pointed to upcoming Warner Bros. films like “Godzilla vs. Kong” and “Mortal Kombat,” which will be released April 16, as reasons why he is feeling optimistic about his chain’s recovery. “We’ve seen solid numbers at our locations within the capacity limits we’re required to operate under in states like California, and our customers are feeling very comfortable with the COVID-19 safety restrictions,” Zoradi said. “As we get more films like ‘Godzilla’ that are made to be seen on the big screen and more people get vaccinated, we should see improvement with each passing weekend.”

There’s also another detail to Warner Bros.’ HBO Max strategy that may allow the studio’s spring releases to leg out at the box office as more theaters reopen: New films released for streaming will be temporarily taken down 30 days after their initial release. “Judas and the Black Messiah” dropped off HBO Max the same week it earned five Oscar nominations, including Best Picture. That makes theaters the only place for Oscar fans to watch the awards contender.

And while grosses this weekend remained in the low six digits for Best Picture nominees — with $250,000 for “Judas” and $321,700 for “The Father” — that could change as older audiences, long the core demographic for Oscar fare, continue to get vaccinated and get more comfortable with coming back to theaters.

“Godzilla vs. Kong” could see similar legs on a larger scale, as it will leave HBO Max in late April. And its prospects notably improved as its biggest potential competitor, Marvel Studios’ “Black Widow,” has moved from May 7 to July 9. Provided that a surge in COVID-19 variant infections does not force theaters to close again, Warner Bros. could find itself filling the demand for big-screen blockbuster spectacle with battles between Japan’s most famous kaiju and the Eighth Wonder of the World.

Source: Read Full Article