HBO Max decision harms theaters for profit

HBO Max decision harms theaters for profit

By Sam Gray, Contributing Writer

Warner Brothers announced that their upcoming movies will be streamed on HBO Max in December. Since these films will be released simultaneously in theaters, this decision has robbed promising blockbusters of an exclusive theatrical release. After New York City reopened movie theaters on March 5, audiences will get the chance to see long-awaited films such as “Matrix 4, “Dune” and “Space Jam: A New Legacy.” Only this time, many will have had the chance to watch them at home. 

As the pandemic shuttered cinemas across the country, theater chains endured massive third-quarter losses, with AMC revenue dropping 91%and Cinemark dropping 96%. New York City theaters are finally open again, but the city has restricted capacity to 25%, meaning that public interest in moviegoing is still not enough to resuscitate an industry on its last leg. The HBO Max decision has only exacerbated the losses incurred during COVID-19. 

The AT&T executives who own Warner Brothers still believe the move is a step forward, with company chief John Stankey describing the movie decision as a “bold and aggressive swing.” For younger people who grew up with the convenience of modern technology, and for older people who appreciate being able to watch a movie from the comfort of their couch, theaters are non-essential. Most people watch enough content on their phones and laptops that the distinction begins to fade from their brains. The HBO Max decision is simply a company providing the most convenient entertainment experience for their customers. 

AT&T did not make this decision because they had any evidence to suggest that these movies would do poorly in theaters. If that was their concern, they would follow the lead of other studios and delay their releases until the end of the pandemic. In May, AT&T made a big bet on HBO Max and the streaming market. December proved that this bet would lead to a major loss of revenue as exhibition stocks from AMC, the largest movie chain, fell nearly 22%. AT&T harbors a massive debt clocking in around $149 billion, leading to an accelerated release of blockbusters as a way to pad their losses and funnel more viewers to HBO Max. 

AT&T’s attempt to soften the financial blow means movie theaters may end up taking the brunt of their mistake. Theaters earn 90% of their theatrical revenue during the first month a film is shown in theaters. If consumers decide to opt for the creature comforts of streaming new films on HBO Max, then cinemas around the country will continue to close. The jobs of upper-level media management will be protected, but at what cost? 

If the United States manages to successfully curb the coronavirus pandemic soon, Americans will find that many of the cherished independent cinemas that used to animate our communities have disappeared while we were gone. We will need places where people can enjoy art together, open the lines of cultural discourse and immerse themselves in a nostalgic American tradition. Cinemas should not need to turn consistently high profits to prove their artistic importance, particularly when a recession has already squeezed almost every sector of the American economy. Market forces are not laws of nature, and there is no reason we should allow a vicious cycle of cuts and rollbacks to destroy a vital piece of American culture. There is nothing inevitable about this.

If Congress can afford to bail out hedge funds, they can afford to bail out movie theaters. If we allow theaters to disappear, it will be a completely preventable tragedy. The HBO Max decision is not the second, or even third punch in the gut that American cinemas have suffered this year. It looks more like the beginning of a knockout.

Opinions expressed on the editorial pages are not necessarily those of WSN, and our publication of opinions is not an endorsement of them. 

A version of this article appeared in the Monday, March. 15, 2020 e-print edition. Email Sam Gray at [email protected]