WarnerMedia’s Hybrid Release Model Shaping Up To Become A $1 Billion Loss – Called A “Major Misstep”

In December, WarnerMedia announced plans to release all of their 2021 slate in theaters and on their streaming service HBO Max (free for one month with subscription) on the same day, the hybrid release model was controversial and led to reports of their partner Legendary Entertainment gearing-up for a lawsuit. Legendary attempted to sell-off Godzilla Vs. Kong to Netflix for a massive $200 million but Warner Bros. blocked the deal only to announce they would be giving the film away to HBO Max subscribers for free. Directors Christopher Nolan and Denis Villeneuve also were vocally upset that directors weren’t properly informed about the move and mentioned how harmful the hybrid release would be to the industry.

The plan seemed to be sacrifice the Warner Bros. Pictures slate to coax a boost in domestic subscriber numbers for the floundering HBO Max that launched last year, however, the numbers haven’t been stellar in comparison to other streaming competitors.

It’s now May, and it was recently announced there would be a WarnerMedia-Discovery merger with rumblings from business news outlets that WarnerMedia CEO Jason Kilar was kept in the dark about the deal and is getting ready to exit. There is also chatter that the merger could signal an easier sale of WarnerMedia in the future, however, no potential buyers have been mentioned.

New information suggests that the hybrid release model at Kilar’s direction wasn’t as lucrative as hyped-up to be, mentioned in an Variety report they state industry sources believe the hybrid model may end up a billion-dollar loss due to high license feeds paid and sluggish subscriber sign-up.

Moreover, industry sources say the strategic move that made such a splash last December — when WarnerMedia at Kilar’s direction opted for simultaneous releases in theaters and on HBO Max for Warner Bros.’ 2021 movie slate — is seen as a major misstep because it is shaping up to cost the studio over $1 billion in lost box office revenue, talent profit participation payments and in high license fees paid for the movies from HBO Max. Unless the pace of HBO Max subscriber additions pick up significantly in the coming months, the high cost of the movie content for the streamer will be hard to justify.

While WarnerMedia insists that other films such as Dune are still sticking to the hybrid release in October, there have been conflicting trade reports that we could see exclusive theatrical windows return before 2022.

SOURCE: VARIETY

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