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Hollywood wasn’t built for a year without theaters

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2020’s biggest blockbusters were stuck in stasis

Image: Warner Bros.

Hollywood scheduling has always run like a finely tuned watch: a delicate dance of release dates as studios try to optimize movies for the most money, avoiding other massive blockbusters, while juggling the shifting demands of film editing, reshoots, and special effects work.

But the shuttering of theaters by the pandemic has thrown all of that into disarray, forcing studios to shift release dates in a chaotic cascade. Each change has ripple effects due to that strict schedule: when one massive superhero film moves dates, it trickles down the line, forcing both movies from within the studio and from competitors to shuffle their dates to avoid risking splitting their audiences (and box office takes).

Small delays turned into large ones; films that were scheduled for 2020 jumped to 2021. And yet, in all the uncertainty, it seemed that studios were extremely reluctant to turn to what might have seemed like an obvious solution: just releasing their biggest films on any of the newly minted streaming services or digital video storefronts in lieu of a theatrical release. The current model of Hollywood just wasn’t built to survive without theaters.

Photo: Film Frame / Marvel Studios

There’s a simple explanation for Hollywood’s hesitation to embrace streaming: theaters are where the money is, and streaming — at least in today’s world — can’t match that revenue.

Traditional theater chains like AMC and Regal Cinemas still wield immense power over the current movie landscape. The amount of money they bring in to studios is great enough that companies like Disney and Warner Bros. are willing to forgo close to half of their revenue (theaters typically keep roughly 45 percent of the box office).

When Universal began to even mutter about the idea of releasing some of its films on streaming alongside theaters, AMC CEO Adam Aron went to near total war, threatening to no longer play any of its films. The two companies have since reached a new deal to allow for Universal’s films to debut on streaming services just 17 days after they debut in theaters — an unprecedented time frame for major films — in exchange for giving AMC a cut of the digital take.

There’s also the prestige of being a “theatrical” movie, one that remains a requirement for eligibility for major awards like the Oscars. Years on, companies like Netflix and Amazon are still trying to work their way out of the reputation that streaming is somehow a lesser form of entertainment. Smaller movies have done well in the chaos — some, like Trolls: World Tour, have even defied expectations. But barring a few notable exceptions, major studios haven’t been willing to risk their billion-dollar films on the unproven marketplace of direct-to-consumer sales or streaming.

Because it’s true: today’s biggest blockbusters rake in more — like last year’s Avengers: Endgame, which smashed through the all-time box office record and made an astronomical $2.79 billion. But these massive films also bring with them eye-watering costs: Endgame is estimated to have cost roughly $400 million when factoring in the production budget, multimillion-dollar salaries for stars like Robert Downey Jr., and the massive marketing campaign.

But the shuttering of theaters has effectively frozen the entire business in stasis as studios struggle to figure out what exactly to do with their multimillion-dollar investments that have no clear release strategy anymore.

Photo by Melinda Sue Gordon

Take Warner Bros.’ Tenet, for example. The blockbuster Christopher Nolan film was supposed to be one of the studio’s biggest movies of the year, an event that — in a normal world — would have brought huge crowds to theaters and was projected to rake in $1 billion at the box office.

Instead, Tenet was delayed, delayed, and delayed again before it finally attempted to release while coping with the severe limitations of COVID. But even then, theater capacities (and therefore, ticket prices) were cut down a fraction of their usual numbers for safety purposes, some of the biggest theater marketplaces in the world, like New York City or Los Angeles, never saw it on the big screen at all.

The results are staggering: while Tenet grossed a more than respectable $300 million in international markets, it’s made just $57 million in the US — a considerable decrease, given the estimated $205 million production budget that Warner Bros. invested in the film (a figure that doesn’t even include the film’s marketing spend).

With results like that, it’s no wonder that most of 2020’s biggest films have elected to punt on their releases and rescheduled for 2021 and beyond. When gambling hundreds of millions of dollars on a single release, studios can’t afford to risk another theatrical flop in the United States from 2020’s anemic audiences.

But simply stockpiling movies isn’t the answer, either. Each of these films is an investment of tens, if not hundreds of millions of dollars that studios need to at least recoup at some point and which theaters need to stay open. It’s a delicate balance: the movie industry needs money in the short term to survive, but it is also designed to run on hundreds of millions in revenue, which theatrical releases in 2020 just haven’t been able to provide.

The model is already changing, and studios and theaters alike are starting to experiment with new ways of doing things.

Disney shifted the release of major films like Hamilton and Soul to Disney Plus, and it’s experimenting with a new Premiere Access for releasing big films for higher digital price tags instead of traditional theatrical releases. Though, it’s not clear how well (or poorly) the live-action Mulan actually did in terms of revenue for the company.

Warner Bros. appears to have learned from its lackluster Tenet strategy and is trying a different approach for both the highly anticipated Wonder Woman 1984 and every single one of its 2021 films. Starting this December, and going through the end of 2021, Warner Bros. will release its movies both in theaters (where possible) and on the company’s streaming service HBO Max. It’s a move that theoretically will give the studio the best of both worlds, capitalizing on the high ticket revenue of traditional theaters while still letting it reach audiences that can’t, or simply won’t, go to a theater during a pandemic.

All of these approaches are still largely untested, mainly because of the huge risk involved: no one wanted to gamble their possible billion-dollar movie, at least not until absolutely necessary. And it’s not clear whether any of them will be able to offer results on par with traditional theaters. In 2019, the global box office hit an astonishing $42.5 billion worldwide — big shoes that these new methods will have to fill.

2020 has shown that Hollywood wasn’t designed for a world without theaters. But 2021 might show us the first glimpse at a world of movies that extends far beyond the walls of a traditional movie theater. But one thing’s for sure: however we watch the movies of the future, it’ll look very different from the last century of film.