This was the weekend Christopher Nolan’s Tenet was supposed to open on the big screen, offering a desperately needed lifeline to struggling theaters and reviving the summer movie season from its Covid-induced coma. But Warner Bros. was forced to push back its release to August 12 as theaters in most states remain closed.
Even that new date now seems doubtful. As the pandemic rages out of control and the Trump Administration fiddles, states that had begun to relax some restrictions on businesses are now reversing those steps and re-imposing shutdown orders.
It now seems very unlikely that theaters will be able to re-open before the Fall and even that could be a stretch. Even if they are able to open, moreover, it’s very unclear whether consumers will be willing to risk sitting in them, which could force the studios to make some very difficult strategic decisions. Should they postpone the rest of their 2020 theatrical slate until sometime next year, or should they go the Hamilton route and release them via streaming?
Delaying release until next year would mean writing off whatever they have already spent on marketing in 2020 and budgeting for additional P&A spending in 2021, while undermining and perhaps even losing whatever merchandising tie-ins they may have arranged. It would also mean postponing any chance of seeing a return on the hundreds of millions of dollars invested in production while shouldering any financing costs that might be associated with financing that production.
Perhaps worse, it could prove a fatal blow to struggling theater chains who might not be around next year to book those films.
Going the streaming route also carries risk. If you release a film via premium VOD, as Universal did earlier this year with Trolls World Tour, you have to market the release to consumers still not accustomed to paying premium prices to watch a film at home. If you license the film to one or more subscription VOD service you limit the potential audience to subscribers of that service or services.
Streaming and VOD rights may have been sold separately from theatrical rights in difference territories, making it difficult to organize a global release. A streaming-first release also likely means forgoing whatever Blu-ray and DVD sales that might have been budgeted for.
For studios that have launched they’re own direct-to-consumer streaming services, of course, there is also the option of doing what Disney did with Hamilton and releasing sought-after films exclusively through your own platform in order to drive subscriptions.
That strategy appears to have been highly successful for Disney. The July 4th release of Hamilton drove a spike in Disney+ app downloads and signups.
But it’s a high risk, high reward strategy as it means writing off other platforms and limiting the potential audience for the film.
It is also a strategy that could eventually increase calls for antitrust scrutiny of the direct-to-consumer video streaming business.
As I’ve written here before, the studios’ launching of their own, proprietary streaming services changes the incentives for how they manage the monetization of their content assets and will eventually change how they assess the value of a movie. In Hamilton, we see how Covid is accelerating that reassessment.
I wouldn’t be shocked if Warner Bros. makes a similar accelerated reassessment and that Tenet ultimately makes its debut on HBO Max rather than in theaters, unless there is major shift in the trajectory of the pandemic before the end of the year.
Ironically, this is happening as the U.S. Justice Department is asking a federal court to end the so-called Paramount consent decrees. Those agreements, which resulted from a series of antitrust suits the government brought against the studios in the 1940s, have for the past 70-odd years prevented the vertical integration of movie production and distribution by barring the studios from owning theater chains, as had been the norm for decades before.
The decrees also prohibited certain abusive distribution practices, such as “block booking,” in which theater operators must agree to book a studio’s entire slate of films in order to get the most popular titles, and “circuit dealing,” in which a studio would make a single deal covering all the theaters in a single circuit.
But in the view of the Justice Department, the decrees have outlived their usefulness.
“We cannot pretend that the business of film distribution and exhibition remains the same as it was 80 years ago,” DOJ’s head of antitrust enforcement Markan Delrahim said in December.
Well, yes and no. Delrahim is correct that “much of our movie watching is not in theaters at all.” But many aspects of the business of in-home viewing increasingly resemble those of 80 years ago.
As I have also written here before, the video streaming business increasingly is being built around exclusive content and the vertical integration of its production and distribution. Netflix makes movies and TV shows for Netflix. When it acquires content from third parties it insists on acquiring all rights on a worldwide basis, limiting its distribution to its own platform. Amazon does much the same.
Disney, Warner Bros., and Universal are all now producing programming exclusively for their own direct-to-home streaming platforms.
The fragmentation of the market into proprietary channels imposes costs on consumers, forcing them to subscribe to multiple services in order to receive of the programming they might want to watch. As University of Illinois economist Derek Long , put it recently, “What is streaming if not the ultimate form of block-booking — making consumers take the good with the bad?”
As Covid drives more of what has been the theatrical movies business into proprietary streaming channels, it’s starting to look more like the 1920s than the 2020s.
Update: Warner Bros. how now officially bowed to the inevitable and removed Tenet from its theatrical release calendar for 2020. No new release date has been announced, although the studio said it would release further information on its plans for the film shortly.
“We will share a new 2020 release date imminently for Tenet, Christopher Nolan’s wholly original and mind-blowing feature,” Warner Bros. chairman Toby Emmerich said in a statement Monday. “We are not treating Tenet like a traditional global day-and-date release, and our upcoming marketing and distribution plans will reflect that.”
Notably, the statement does not commit the studio to a 2020 theatrical release for the film. Indeed, the stipulation that it is “not treating Tenet like a traditional global day-and-date release,” suggests it’s considering other options, perhaps including a streaming release. Stay tuned.