Evolving Businesses: Hollywood has its ‘We’re not in Kansas anymore’ moment

In explaining why WarnerMedia had decided to release the much-anticipated big-budget Wonder Woman 1984 simultaneously in theatres and on the streaming service HBO Max on Christmas Day, the company’s chief executive, Jason Kilar, invoked the classic Hollywood film “The Wizard of Oz.” “We’re not in Kansas anymore,” Kilar said in a statement.

No longer, he said, would a film’s success be judged solely by the box office revenue it generates in theatres. Instead, it would be measured partly by the number of HBO Max subscribers it is able to attract. And just like Dorothy entering the Technicolor world of Oz, Hollywood feels as if it is stepping into a new era — one with streaming at the center. The end-of-the-year holiday season usually means that theatres are packed with blockbuster crowd pleasers, award hopefuls — and moviegoers. Not this year. With many theatres shut because of the coronavirus and the ones that are open struggling to attract audiences, many studios have either pushed the release dates of major films into 2021 or created a hybrid model in which the theatres still in operation can show new releases while they are also made available through streaming or on-demand services.

Wonder Woman 1984 is the most prominent example so far to be released using the hybrid model. But when it appears on HBO Max on Christmas Day, it will join Pixar’s animated Soul, and DreamWorks Animation’s The Croods: A New Age as marquee, holiday-season films that were expected to be box office favourites but are now likely to be primarily seen in people’s living rooms. For companies that have their own streaming platforms, like WarnerMedia and Disney, releasing movies this way is now seen as an opportunity to drive subscriptions. Both companies have said that the moves will only last through the pandemic, but they also both recently shuffled their executive responsibilities to make it clear that streaming is the new priority. (Disney, for example, now has a central division that decides how its content is distributed, a change in strategy that puts Disney+ at the top of the studio’s priorities.) And audiences may not want studios to go back to the old way of releasing films that gave theatres 90 days of exclusive rights.

“There will be a new normal,” said Jason Squire, editor of “The Movie Business Book” and a professor at the University of Southern California’s School of Cinematic Arts. “Over the years, there has been a lot of tension between theatrical exhibition and studio distribution but not a lot of change. The pandemic has jump-started the change.” It wasn’t long ago that Hollywood viewed streaming as an unwelcome insurgency. Several years ago, when Netflix began to seriously compete for Oscars, traditionalists scoffed at the thought of bestowing prestigious awards on films that were only nominally released theatrically. (This year, bowing to pandemic reality, the motion picture academy announced that films could skip a theatrical release and be eligible for Oscar consideration.)

Today, the theatrical climate is more grim. Half of the theatres in the US are closed and virus cases are rising around the country. Big-budget spectacles have kept audiences flocking to movie theatres even through waves of home entertainment competition, from VCRs to streaming. That’s benefited both theater chains and studios, and it’s why few expect movies of the size of Wonder Woman 1984 to be going directly to streaming post-pandemic.