SIGNALS

Backstabbing for Beginners

Ken C. Pohlmann  |  Dec 7, 2020

Good morning students and welcome to Backstabbing for Beginners. In this class, you will learn how to betray like a pro. As we will see, there are many ways to screw over another party. But all backstabbing can be boiled down to two easy steps: Step 1: Plunge the knife. Step 2: Twist the knife.

Using these two easy steps, you too can really mess someone up. Over time you will develop clever ways to embellish and personalize your backstabbing, but these betrayal fundamentals will always stand you in good stead.

All of which brings us to Hollywood. Alert readers will remember that in my last blog, The Lasso of Truth, we examined the blockbuster news that Warner Bros. will release Wonder Woman 1984 both theatrically and to HBO Max. Whether this was a smart business decision or not remains to be seen. There is also the chance that the movie is a stinker. One indisputable fact is that it screws over movie theaters. They have watched the rise of streaming platforms with concern, and now their nightmares are materializing.

Now, after the plunging in the knife, Warner Bros. has announced that it will twist it. Its entire slate of movies for 2021, some 17 movies in all, 17 movies originally intended for theatrical release, will be simultaneously released to both HBO Max and movie theaters. If you own a movie theater, or a chain of movie theaters, this news is not welcome.

Of course, it's all because of the pandemic. In an upcoming blog I will go into the matter in some detail, so I won't dwell on details here. Suffice it to say that (1) movie studios need income, (2) movie theaters can't deliver it, (3) streaming platforms need content more than ever, (4) streaming platforms are intensely competing with one another, and (5) streaming platforms see this as an opportunity to establish supremacy over theaters. Whew! That's a lot of sufficing.

Warner's latest announcement hit Hollywood like a a bomb in a B movie. HBO Max will show the movies for only one month, while theatrical showing continues. Big-budget films such as Dune, and a new Matrix installment will debut simultaneously on TV. Move theaters are in shock. Why did Warner do this?

Warner is owned by AT&T, which also owns HBO Max. Clearly, AT&T decided that even with the imminent arrival of vaccines, a loss in theatrical revenue was inevitable. Thus it was prudent to hedge the loss into at least an advantageous boost for HBO Max. Still, it is surprising that the entire slate for 2021 would be wholly given to HBO Max, rather than a more incremental approach.

The rise of Netflix has shaken the industry to its core, and led the studios to reevaluate their business model. Perhaps movie studios have concluded that the future of the movie business lies in streaming, and not in theaters. Perhaps after deciding they wanted to make this move, they still didn't want to take the risk, or suffer through several years of poor revenue while the industry transitioned. Now, the pandemic gives them the perfect excuse to make a clean break. If Disney follows suit with Disney Plus, it truly is the end for movie theaters. As one Hollywood executive wryly noted, “I guess the movie theaters will just be Halloween stores now.”

Class, thank you for your kind attention. Next time, we will discuss another, more treacherous form of backstabbing. Although more complex, the technique can be boiled down to three easy steps: Step 1: Plunge the knife. Step 2: Twist the knife. Step 3: Repeat steps 1 and 2.

COMMENTS
David Vaughn's picture
Submitted by David Vaughn on December 7, 2020 - 10:50am

This was bound to happen eventually over the next 10 years or so, but Covid-19 sped the process up out of necessity for the studios. I'm thinking the days of the large multiplex are gone but there will still need to be some "large" venues for tentpole movies that are meant to be seen on the big screen (Marvel titles, for example), but the landscape for dramas and small independent films has changed drastically. I wonder if this means that production budgets will get cut? Also, how do the actors/directors/producers get paid on the back end from box office sales? Should be interesting to see how this shakes out.

Al Griffin's picture
Submitted by Al Griffin on December 7, 2020 - 11:56am
This development won't entirely kill theaters, but it will hasten the demise of the mega-multiplex with several screens simultaneously showing the latest hit movie(s). Also, interesting to consider the financial impact for cast & crew when titles exist in a walled-off media ecosystem with no licensing.
trynberg's picture
Submitted by trynberg on December 7, 2020 - 3:14pm

This is an inevitable and terrible moment.

If you look at the music industry, streaming services have made it easy for people to listen to any song they want -- and made it impossible for musicians to make money by creating music. Almost the entire revenue of modern acts is from touring (how's that working out?).

It's hard to imagine the movie industry being handled much better. The people at the top will continue to make out like bandits while the actual people who create the content will get the shaft.

David Vaughn's picture
Submitted by David Vaughn on December 7, 2020 - 5:08pm

I read today that Legendary Pictures is threatening to sue Warner over this decision. They are in a partnership on a couple of movies ("Dune" and "Kong vs. Godzilla") and I'm sure this is negatively impacting their own balance sheet since they don't share any of the revenue from HBO MAX. Should be an interesting case study.

supamark's picture
Submitted by supamark on December 7, 2020 - 7:18pm

is to clear their backlog. All those movies from this year that got postponed to next year pushing back next year's movies, etc. There isn't enough theater space to show 2 years worth of movies in a year. Most studio's release calendars are a mess right now, so some of that backlog is certainly going to get dumped somehow. I'm curious what other studios will do, especially those without a streaming service.

trynberg's picture
Submitted by trynberg on December 7, 2020 - 9:45pm

Your last sentence is a perfect example of why this type of verticals should never have allowed by our government. When content providers are also content creators, there will always be shenanigans like this.

supamark's picture
Submitted by supamark on December 8, 2020 - 7:47pm

it's good to know:

https://en.wikipedia.org/wiki/United_States_v._Paramount_Pictures,_Inc.

btw, this will remain in effect for about 2 more years unless Congress acts (passes a law).

trynberg's picture
Submitted by trynberg on December 8, 2020 - 8:37pm

Thanks for pointing that out! Amazing how (some of) the studios have managed to bypass this with modern distribution means.

MatthewWeflen's picture
Submitted by MatthewWeflen on December 7, 2020 - 11:49pm

I care about the people who work at theater chains. I don't want them to lose their jobs.

With that said, the theater business model has been terrible for decades.

1. You pay too much money upfront for a family of four, with ever-shrinking discounts based on time of day and age.
2. We suffer a steadily dwindling slate of choices, because movies all have to be 4-quadrant comic book tentpoles that can clear 500m in 3 weeks.
3. Concessions are outrageously priced.
4. To top it all off, they make you watch 40 minutes of commercials.
5. People no longer know how to behave themselves in public.

Movie theaters are like cable television companies - using the tools of exclusivity and monopoly to browbeat consumers into paying more than they want for less and less. They were ripe for "disruption."

Hopefully, movie theaters will make a comeback after this is all done, and offer consumers more pleasant experiences. The best movie-going experiences I've had were not at mega chains watching blockbusters, but at the Music Box in Chicago, watching classic movies in a grand theater environment with serious fellow moviegoers and no previews.

If a movie theater can make going to a movie feel special and magical again, they'll succeed.

jeffhenning's picture
Submitted by jeffhenning on December 8, 2020 - 11:40am

I'll echo the sentiment that movie theaters have been waning way before COVID. People having large TV's & home theaters is making it easier than ever to forgo going to the movies.

Of course, most theaters are not helping their own efforts when the sound is mediocre and the image is dull because they've turned down the power on the projector to save money.

It's one thing to go to a great, old movie palace and even better if it has a bar. As to theaters that aren't that, sorry, but no, thanks. My home theater is a lot better than any movie theater I've ever been to. That is why I don't go to the cinema anymore.

As to HBO Max, if I didn't get it for free because I have HBO through Comcast, I wouldn't ever consider it. There's nothing all that compelling about it or its original content. Warner is doing anything it can to increase Max subscriptions. I seriously doubt that HBO Max is going to put any theater chains out of business when it costs $180/yr. Even John Oliver joked about how it's not worth the money on his HBO show.

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