How Warner Bros.’ HBO Max Experiment Led to Mixed Box Office Results

·7-min read

At the start of 2021, Warner Bros. was the talk of Hollywood for its decision to start a year-long experiment that would come to define its box office performance: The legacy studio would release 17 films simultaneously in theaters and on its nascent screaming service, HBO Max — though none finished in the top 10 top-grossing films of the domestic box office.

The experiment proved to be a double-edged sword. While Disney, Sony, Universal and even MGM found big blockbuster success in spite of the pandemic, HBO Max likely put a ceiling on Warner’s ticket sales. Only two of the studio’s films grossed over $100 million in North America — “Godzilla vs. Kong” and “Dune” — and overall domestic grosses reached $646 million, fourth among all studios, according to data from The Numbers. This story will be updated with revised data from Comscore when the analytics firm publishes its final end-of-year count.

But the dual-release strategy offered other advantages — particularly for struggling theaters. Warner Bros. locked in the release dates for its films at a time when it was unclear how fast the initial COVID vaccination process would take and how long it would take for theaters to fully reopen. That gave cinema owners solid hope for the March 31 release of “Godzilla vs. Kong” as the first big-budget tentpole film of the year to lure back film lovers.

Whatever frustration theater owners had with the day-and-date strategy was at least publicly withdrawn as multiple regional and national chains, including Cineworld/Regal Cinemas, planned their reopening strategies around “Godzilla vs. Kong.” The film grossed $100 million domestically and $467.5 million worldwide despite the capacity restrictions placed on theaters around the world in the spring, giving other studios the confidence to move forward with their Q2 releases and getting the ball rolling on box office recovery.

And on the streaming side, the experiment did exactly what WarnerMedia CEO Jason Kilar hoped: attract new subscribers. While subscriber counts for HBO and HBO Max were hurt somewhat by Warner pulling the services off Amazon Prime Video channels in September, the company reported in October that it was on track to meet its year-end target of 73 million subscribers.

For some films, it was clearer to see how HBO Max was peeling off interested moviegoers who choose to watch at home instead of in theaters. One example is “Space Jam: A New Legacy,” one of many animated films that went day-and-date in 2021 and which grossed $70.5 million domestic. While millennial nostalgia for the original “Space Jam” helped theatrical turnout, it’s likely that many families chose to stream the film at home.

godzilla vs kong What Time Does Godzilla vs Kong release on HBO Max?
“Godzilla vs. Kong” (Warner Bros./Legendary Pictures)

Other films had problems unrelated to HBO Max. Despite critical acclaim, the Jon M. Chu adaptation of Lin-Manuel Miranda’s “In the Heights” and James Gunn’s gory DC spectacular “The Suicide Squad” tanked at the box office, with the latter’s worldwide total failing to make back its massive $185 million production budget. While “Heights” suffered from what turned out to be a widespread disinterest in Broadway musicals among moviegoers, “The Suicide Squad” failed to get anyone outside of hardcore comic book fans excited to see Margot Robbie’s Harley Quinn team up with the likes of Peacemaker, King Shark and Polka Dot Man.

Ironically, Warner’s biggest success was the film that was seen as its biggest risk: Denis Villeneuve’s “Dune.” After the auteur’s “Blade Runner 2049” disappointed at the box office in 2017, it was unclear whether audiences would be interested in seeing a pricey tentpole based on novelist Frank Herbert’s dense and cerebral sci-fi classic.

But Warner turned “Dune” into the highest grossing film of Villeneuve’s career, using the Venice Film Festival as a launch pad for top Oscar contention while using a marketing strategy that emphasized the film’s epic scale as something best enjoyed on the big screen along with stars like Timothée Chalamet, Zendaya and Jason Momoa.

Though the Delta variant hampered international sales, “Dune” finished with $106 million domestic and nearly $400 million worldwide. Combined with strong viewership on HBO Max, Warner Bros. has given Villeneuve the green light to make a sequel based on the second half of Herbert’s book and suddenly a $500 million global run could be a feasible goal for “Dune: Part Two” when it comes out in October 2023.

Just prior to Dune’s release, Jason Kilar told TheWrap that despite the mostly muted box office numbers and the long talks with production partners and theater chains to smooth the waters, the company still felt like the HBO Max move was the right one, giving the studio stability to figure out its release strategies for its films regardless of whatever COVID surges came and giving HBO Max a foothold in an increasingly competitive streaming market.

“We were the first one over the wall with this. So we took a position of leadership,” Kilar told TheWrap during a lengthy interview in Los Angeles on Wednesday ahead of parent company AT&T’s Q3 earnings report. “We’re the only company, for the last year-plus, that has delivered 18 movies. Nobody else has done that, nobody else has come even close. If you take a look at what the exhibitors have been saying, we were their lifeline in their period of greatest need.”

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“Dune” (Warner Bros.)

Forecast for 2022

Warner Bros. is making good on its promise that the HBO Max dual release strategy would be a one-year-only experiment. In 2022, all of the studio’s theatrical releases will have a 45-day exclusive theatrical window before landing on the streamer.

But Warner is shifting its strategy on what films will get theatrical exclusivity — and its slate will be roughly half 2021’s. Only nine Warner films will get a wide release this year, and five of them are DC superhero blockbusters while a sixth is a third film in J.K. Rowling’s “Fantastic Beasts” franchise. Meanwhile, smaller budget films that might have gotten a theatrical release will instead debut on HBO Max, with the studio’s upcoming streaming exclusives including Steven Soderbergh’s pandemic thriller “KIMI” and the Bruce Campbell-produced “Evil Dead Rise.”

Warner’s domestic distribution chief Jeff Goldstein said that this shift to a more tentpole-heavy theatrical strategy had been in the works even before the pandemic, pointing to how the studio released several adult dramas in 2019 like “Motherless Brooklyn” and “The Goldfinch” that flopped at the box office. That trend continued in 2021 as films like “The Many Saints of Newark,” “King Richard” and “Cry Macho” all struggled to find an audience.

Warner Bros.

“Going forward, those films will likely be made in a different way for streamers because you don’t have that big commitment for marketing,” Goldstein said. “If a drama has a marketing spend of $40 million if released theatrically, it can be done for a fraction of that if it’s released for a streaming service,”

The two notable exceptions to this trend are Olivia Wilde’s New Line thriller “Don’t Worry Darling,” which stars Florence Pugh and Harry Styles and is set for release in theaters in September, and Baz Luhrmann’s “Elvis” starring Tom Hanks as Elvis Presley’s manager, Tom Parker. But for the most part, Warner is focusing primarily on franchise event releases with some low-budget horror on the side.

One of the big concerns of theater owners is that older audiences will have grown so comfortable with seeing films on streaming during lockdown that they won’t show up to theatrical releases that might interest them, leading to a cycle in which studios invest less in mature theatrical fare and the 55-plus demo continuing to dwindle as a result. While Warner Bros. is sure to give theaters plenty of revenue from DC diehards this year, those fears may come true as the demise of the wide-release adult drama looms.

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