by Arnie Carvalho
"The movie theaters are dead! Let us weep for the theatrical film experience!"
Those are the types of cries I've heard in articles, online, and in-person since Warner Bros. announced its bold move of releasing all their 2021 films, including would-be blockbusters The Suicide Squad and The Matrix 4, on HBO Max the same day they go to theaters. Certainly Wall Street thinks so as theater stocks fell hard after the news broke.
I think WB's move is transformative and game-changing for Hollywood. I think theater attendance will be forever diminished by this choice.
And I think that's a good thing. Please read why before you start to argue.
The Movie Theater Experience Costs More and Gives Less and Theaters Don’t Care
To start, I love the theatrical experience. It’s what I grew up with. The excitement of seeing a movie on the big screen has engulfed me time and again. I even slept out all night to be one of the first to see The Phantom Menace...in theaters.
The cheers of the crowd made me feel part of the experience in The Avengers. The outcries of a fellow audience member made my screening of Captain America: The Winter Soldier one I will never forget. From early dates with my now-wife to large gatherings of friends, some of my best memories, childhood and adult, came from the movie theater.
And the picture and sound of a big screen, especially an IMAX screen, simply can’t be replicated in most people’s homes.
But the theatrical experience also has its drawbacks.
I love seeing movies with others, but I don’t enjoy theater seating that packs people in like sardines. Only flying coach on an airline puts me in closer proximity with strangers. I want to hear others laugh, but I don’t want to fight them for my armrest or, creepily, have our legs rub together during the movie.
Yes, theaters have adapted to that in some places by adding larger or reclining seats. Yet when I go to those theaters I am always appalled by people coming to the theater in pajamas and slippers, with a blanket under which they canoodle during the film. This is a movie, not a sleepover, and with bedbugs a real problem in theaters (seriously. Read that article.), I don’t want your nasty blanket near my seat.
People talking during movies seems to have increased over time. I don’t remember it happening often as a child, or maybe I was more able to ignore it, but now it happens in most movies I see.
Then the ubiquitous phone screens moviegoers refuse to put away distract me from the big screen I paid to watch. I refuse to attend PG-13 horror movies in theaters anymore after a terrible theatrical experience watching 2006’s Stay Alive. That teen audience was more interested in phones and gossip than in the movie.
Furthermore, movie ticket prices continue to go up, far and beyond the rate of inflation. If you want a drink of water for the movie you better be prepared to pay another $6. That a theater charges $20 for popcorn and two drinks I can understand--theaters need to make money. What I don’t understand is anyone paying $20 for that.
These complaints are ubiquitous and well-known, yet theater chains and owners do nothing to improve the experience as they have a monopoly on blockbuster entertainment. Only niche theaters like The Alamo provides enforcement of moviegoing rules...then breaks them in many cases by having waiters walk around the theater serving food and refilling drinks.
But outside of the known pros and cons of theater-going, the problems with theaters go much deeper.
Movie Profits Will Be Measured Differently Without Theaters, and that’s a Good Thing.
Firstly, the formula of theater/studio revenue split is complex but can be generally reduced to a 50/50 to 60/40 studio-to-theater split. Studios also bear the brunt of most advertising costs, which can cost $200 million or more for blockbuster releases like Avengers: Endgame.
Movie profitability becomes nearly impossible with that math. Christopher Nolan’s Tenet reportedly had a $200 million budget. With theater split, advertising, and other ancillary costs Tenet would need to gross $800 million theatrically, to break even. Out of the tens of thousands of movies ever released, only 85 grossed $800 million or more. Those are odds I wouldn’t take in Vegas let alone with my business.
Direct-to-streaming simplifies, and increases, the studio’s revenue stream. It takes far fewer subscribers to justify a $200 million budget than butts-in-theater-seats. Studios keep 100% of the revenue and can measure success by actual viewings instead of tickets.
“But why do I care about studio profits?” you may ask.
Streaming Services Allow for More Diverse Filmmaking
Let’s face it...studio movies have gotten stale. From the ubiquitous “laser from the sky will destroy the planet” to the Save the Cat formulaic movie structure, and the pressure on studios to have a new blockbuster every week, today's films feel less distinct than in decades past. The latest blockbusters rarely become a cultural touchstone and are quickly forgotten the next week when a new blockbuster opens. (Case in point: 2009’s movie 2012 grossed over $750mil. How many people still have a love for, or even remember, that John Cusack disaster film?)
We’ve already seen cases where direct-to-streaming allows studios to take risks that wouldn’t be viable at the box office. One example is Martin Scorsese--one of the biggest defenders of the theatrical experience. He tried for years to get studio financing for The Irishman, to no avail. Warner Bros. chairman Toby Emmerich said, “No studio could expect to make that movie and come out alive.” Enter Netflix with $225 million and that movie was a hit for the streaming service.
Additionally, studios and filmmakers often argue over a movie’s length. The shorter the movie, the more times a movie can be shown in a day and, theoretically, the more tickets will be sold and money made.
Personally, I enjoy epic films. I loved watching Lawrence of Arabia (3 hours, 42 minutes) in theaters. Can you imagine The Godfather Part II (3 hours, 20 minutes) forced to meet a studio-mandated 120-minute runtime? It would be ruinous to that complex dramatic film.
Already we’re seeing a return to more epic, long-form storytelling. The Irishman was a beefy 3 hours, 39 minutes. More, sites like this one (Letterboxd) consider limited series like The Queen’s Gambit, Defending Jacob, I Know This Much Is True, and Chernobyl to be, you guessed it...movies! Five hour, eight hour, 12-hour movies. This allows more complexity and character depth than could ever be imagined by a theatrical release.
Streaming services will allow filmmakers more freedom and flexibility to create and success may finally be determined by quality and long-term viewership instead of first-weekend box office grosses.
I personally hope for a return of the R-rated comedy as seen in When Harry Met Sally, The 40-Year-Old Virgin, and Coming to America. Today R-Rated comedies are seen as “unsafe investments”. Even action movies like the last two Die Hard movies have been neutered to accommodate a PG-13 audience in the hopes of getting younger viewers. (I’m sorry, but if John McClane can’t say his signature “Yippie-Kai-Yay mother-f**ker” line is it really a Die Hard movie?)
Theaters Enforce Censorship that Streaming Services Won’t
Beyond R-Ratings, let’s look at NC-17 films. That rating was established in 1990 to allow filmmakers to make edgy movies, perhaps with content, perhaps with violence, or perhaps with eroticism, and not be lumped into the “pornographic” X-rating. But many theater chains, in pursuit of profit, won’t even consider showing any NC-17 content. As such, studios won’t produce NC-17 films, and thus theater censorship stifles movie creativity.
That leads me to the biggest censor of all--the MPAA. This anonymous group of stodgy puritans has absolute control over what you watch. It’s called a “voluntary” process for films but, like NC-17 movies, theaters will regularly refuse to exhibit unrated movies.
The MPAA and the theaters’ coalition force studios to make “safe” content that fits into a certain box. With streaming, there will still be ratings provided to aid parents in making smart choices for their children’s’ viewing, but studios will be able to have more freedom to push boundaries.
Tell the censorship board where they can stick it would be a victory for movie lovers everywhere.
You Can Make a Blockbuster
The advent of streaming accelerates a trend we’ve seen for 30 years--the ability for an indie filmmaker to make a splash.
In the ‘90s Robert Rodriguez, Kevin Smith, and others created hit films on shoestring budgets. That trend exploded with the advent of ubiquitous digital cameras and affordable editing software. Now anyone can be a moviemaker.
But how does one get their movie seen?
Theaters have long time agreements with film distributors and those monolithic agencies are a barrier for a non-studio filmmaker to have their movie seen. In the pre-streaming days these movies would be delegated to gather dust on video store shelves.
Netflix already has a solid stable of indie films that circumvented the studio system. In an all-streaming world these small-budget, digital affairs have as great a chance at success as any other movie, regardless of budget.
Even Studios Will Benefit
It’s not just indie filmmakers that will have a greater chance of success...so will the studios.
Right now studios play a complicated chess match regarding movie release dates. The question of “when will my expensive movie have enough time to be the ‘it’ film” plagues studio heads. For nearly a decade most studios have not released a movie on Memorial Day weekend because Disney’s Avengers series has squatted on those dates. Outside of counter-programming, such as Midsommar opening the same week as Spider-Man: Far From Home, studios normally have one to two weeks to have a cultural impact.
The real reason for this is limited moviegoer time.
Think about how outdated this model feels: you, the consumer, are told when and where you must go to enjoy your movie. You must sit through perhaps 30 minutes of ads (45 or more if you include Maria Menounos’ prattling). With work, school, sports, and other life, most people cannot go to movies every week.
A 2019 study shows only 14% of Americans go to theaters one or more times per month, while 46% go once a year or less.
Critical mass for a movie is achieved in the week prior to its’ opening when the majority of advertising dollars are spent. Three months later, when movies are released on iTunes and Blu Ray, many films are already forgotten.
With the convenience of home viewing, more people will be able to watch more new-release movies, helping studios capitalize on their advertising dollars.
Movie Buzz Will be Larger; Movies Will Again be a Cultural Touchstone
WB made an incredibly smart move with this new plan, and one that seems largely ignored by most pundits: their new release films will only be on HBO Max for 31 days after their premiere. This gives the movie a “launch window” very similar to a theatrical release.
Streaming movies like The Cloverfield Paradox, Bright, and The Irishman were released with no set end date. This provides no urgency to those movies; no need to see them today. Warner’s 31-day window means you can’t wait forever to see the newest movies.
This will help create a communal movie experience, even if it’s just talking about the film at school, at work, or online. More people will see the same movies at the same time, and we humans will connect in that shared experience.
This Will Not Cost You More
Another complaint I hear (and I share) is the exhaustion of “I don’t want to subscribe to another streaming service.” The dream of streaming was to give viewers more control over the content they receive and pay less than the old-fashioned monthly cable subscription.
With streaming services ranging from $5 to $20 per month, the cumulative cost can quickly match or surpass the monthly cable subscription.
But compare the price of HBO Max ($14.99 per month, or $69.99 for 6 months) to a trip to the movies. The average cost for a family of four to go to theaters, including tickets and the overpriced concessions that children (and adults) demand, is $152.
That means a family of four can get a year of HBO max for less than the cost of one trip to the theaters.
A childless couple breaks even after just two movies. For hard-core movie-lovers who see most of the latest releases, the cost savings is enormous.
Theaters Will Never Die, but They Will Be Forced to Compete
Another plus is to you, the moviegoer, in that when you go to theaters (and you still will) your experience should improve.
Right now movie theaters hold the power. If I want to see Bad Boys for Life in theaters I must succumb to the aforementioned lackluster theater experience.
When theaters are competing with your sofa they will need to offer a premium experience for the premium price they already charge. Perhaps more theaters will install more comfortable seating and have employees in theaters to enforce no-cell-phone, no-talking mandates. It’s long overdue.
I do expect many theaters will close, and I would not advise a savvy investor to buy shares of AMC stock this week. However, people will still want that larger and louder movie experience for big films like The Avengers Part 5. Much like classical stage theater, movie theaters will stick around but they will become special nights out, not a weekly occurrence.
(But I don’t expect the price of popcorn to drop to a reasonable price. Ever.)
You Still Don’t Have to Watch Movies Alone
Finally, to return to my first point, the joy of communal movie watching does not need to go away. Now you can still watch movies with others, but they will be the people you care about and not a group of strangers.
One friend of mine has taken to hosting weekly movie nights in his home theater, watching the latest home-video releases. Many people watch movies at home with their families and friends.
The release of films direct-to-streaming does not mean we are all suddenly forced to watch movies in a small booth like an adult bookstore. Those we love, those we loved taking to theaters, will still be there. Your communal movie experience will still be special.
The trend for consumers is choice. When they watch, where they watch, how they watch. The studio move to streaming was inevitable. Theater owners fought tooth and nail for a decade to remain relevant, to keep a large window between when a movie was in theaters and when it was in homes. But that model was not sustainable and that window continued to shrink.
Theaters were dinosaurs and streaming was the asteroid. The impact was going to happen. Coronavirus and Warner Bros. just made it happen a bit faster than anyone expected.
But I feel this change is great for movie makers and movie fans worldwide. In time I hope even the most stalwart holdouts will come to agree.
Now, all we need to hope for is that this week Disney follows suit premiering its film slate on Disney+, Sony to leverage its ownership of Crackle (who knew?), and MGM to find someplace to drop Bond, and the world of movies will be a better place.