In a wide ranging interview with Deadline staff before earnings were released, WarnerMedia toppers Jason Kilar and Ann Sarnoff were quite pleased with the long term results of the disruptive decision to put its entire 2021 theatrical slate on its fledgling streaming service HBO Max as the films were released in movie theaters. They spent the money and time to repair relationships with talent and their reps, and said they will not blindside them or movie theaters again. More importantly, the numerous films on the slate with sequel potential will not be penalized by the stunted box office receipts that came from people choosing to watch from home. That bodes well for future installments of Dune, Matrix and The Sopranos prequel The Many Saints of Newark. They along with Kong Vs. Godzilla (a sequel certainty) and The Suicide Squad are the kinds of films made specifically to feed franchises., It sounds like more Sopranos installments might be made for HBO Max.
“Will we have a sequel to Dune? If you watch the movie you see how it ends. I think you pretty much know the answer to that,” WarnerMedia Studios and Networks Chair and CEO Ann Sarnoff told Deadline yesterday in a sit-down chat regarding the conglom’s full support of Dune 2. That will be welcome news to Legendary (which put up most of the budget) and filmmaker Denis Villeuneve, who has set the table for a second film that focuses on Zendaya’s Chani character as much as Timothee Chalamet’s Paul Atreidis character was the central focus in the first film. There has been some question, but not if you’ve seen Dune on a big screen. The last franchise launch with that much creative ambition and sequel potential was The Fellowship of the Rings.
In regards to proceeding with sequels to this year’s theatrical HBO Max slate, WarnerMedia CEO Jason Kilar says the studio’s “decisions are well informed and based on audience response, not just based on box office.” In regards to how the streaming obsessed studio actually monetizes their investments on these big budget films in its pivot from a traditional downstream ancillary business formula, Kilar pointed to the overall macro success of WarnerMedia, i.e. how Q2 revenues spiked 31% to $8.8 billion. An exceptional feat in his opinion as that’s “hard for a 98 year old company”.
Sopranos creator David Chase told Deadline that he’s interested in another prequel movie much like Many Saints of Newark. While WarnerMedia never released any viewership results for the film, which tanked at the box office with a $4.6M opening (some of that attributed to older adults being slow to return to cinemas during the pandemic), Samba TV reported that the pic’s first weekend on HBO Max clocked 1 million U.S. Smart TV terrestrial households, one of the platform’s most-watched weekends for an older-adult skewing movies after the Denzel Washington thriller The Little Things which drew 1.4M in its first weekend.
“We’re thrilled with the results of Many Saints,” Sarnoff told Deadline.
“Yes, the box office was not quite as big, but back again to the demographics of whose going to theaters. On the other hand, you see Sopranos pop into the top 10 of the most viewed series on the service. It’s given it an entirely new life. We’re talking to David about a new series Sopranos related on HBO Max. It’s (the movie) literally lifted the Sopranos franchise in a new way, so you can’t measure it in and of itself in the box office.”
The fourth Matrix, entitled The Matrix Resurrections was originally conceived to reboot the series on the big screen. What happens if HBO Max gets in the way of that? Know that the movie is the last title in WarnerMedia’s theatrical-day-and-date HBO Max 2021 program.
Said Sarnoff, “Anytime Lana (Wachowski) wants to make a movie, we’re all in.”
Just as important, the WarnerMedia chiefs felt like they have regained the trust of the town after talent and their reps discovered the HBO Max move when the studio announced it. Not everyone was so forgiving; Christopher Nolan, who made billions for the studio with blockbusters like The Dark Knight films and had been fairly monogamous to Warner Bros, for the first time shopped his new film to other studios. Nolan, protective of the theatrical release experience, made a deal with Universal Pictures for his upcoming film about J. Robert Oppenheimer and the development of the A bomb during WWII. Cillian Murphy is set to play Oppenheimer and Emily Blunt was just set to star. Warner Bros wasn’t ignored, but it was not a serious player in the auction, and it looks like the HBO Max blindside cost the studio its relationship with one of the premier directors in Hollywood and a Warner Bros cornerstone filmmaker who is in his prime. Kilar noted that the studio spent generously to make things right in box office buyouts for the big stars of the films whose breakeven gross paydays were impacted by the day/date switch. Who knows if those bonus thresholds would have been hit in a pandemic stunted theatrical marketplace that has just begun showing robust returns at moviegoers return. Still, WarnerMedia’s blindside move cost them plenty to put its studio executives on solid footing with talent going forward, Kilar and Sarnoff felt. And the benefits of subscriber growth of HBO Max is undeniable.
It’s quite clear that the availability of Warner Bros. theatrical slate on HBO Max day-and-date this year has impacted the studio’s U.S. box office results. This has either led to a film seeing a big drop in weekend 2 at the B.O. after a solid first weekend or in the case of New Line’s Sopranos prequel feature, The Many Saints of Newark, nothing to brag about at the box office with $8.1M earned in its first ten days. James Gunn’s The Suicide Squad, a reboot for the DC franchise, opened to a very lackluster $26.2M without any tentpole competition over its first weekend, a paltry result that was 80% below the first 2016 movie’s record $133.7M August opening. The only theatrical HBO Max movie to open big and leg out was Legendary’s Godzilla vs. Kong with a $31.6M 3-day, $100.6M domestic and $468M WW result. Anecdotally Warners vouches it’s their most watched new Warner Bros movie on HBO Max, but Samba TV says it’s actually New Line’s Mortal Kombat with 5.5M U.S. households during the pic’s first 17 days. Don’t expect HBO Max to report viewership figures on their streaming service alone anytime soon: Executives believe figures are still nascent, not just for their OTT service, but the industry overall, and it will take some time before any numbers can be sized up by an-apples-to-apples measure.
At the same time, it’s the new theatrical titles which have spurred subscribers to sign-up. We’ve heard from insiders that those who watched Wonder Woman 1984 at Christmas, then watched HBO Max’s The Flight Attendant starring Kaley Cuoco which became a signature series for the frosh streamer, notching several awards and nominations. Since WarnerMedia announced the day-and-date plan, rival studios have long believed it was an overly ambitious plan in the long term, subject to lose subscribers once premium cinema fare was no longer available on HBO Max. Kilar isn’t worried: “I’m very bullish about 2022” says the CEO pointing to such series as Game of Thrones‘ spinoff House of Dragon and DC’s Suicide Squad series The Peacemaker.
Interestingly enough, the biggest cottage show for Warner Bros. Television currently is its 7x Emmy winner Ted Lasso, which isn’t on HBO Max, rather competitor AppleTV+. WarnerMedia executives yesterday in their sitdown with Deadline confirmed a third season of Ted Lasso; that writers are already breaking story. HBO Max head of Business Operations Andy Forssell, said that reason why Ted Lasso isn’t on the streamer is “because it predated HBO Max”. A season 4 hinges on whether Bill Lawrence, who has a deal with the studio, wants to continue with the series.
Says Sarnoff about putting the Warner Bros. theatrical slate on HBO Max, “The movies helped fill the gap from the Covid Shutdown. Everybody, the entire industry was struggling with that.”
“In 2022 we’ll go to a 45-day window and we’ll have a slate that goes to theatres exclusively and another slate that drives HBO Max. And then post theater exclusivity, the movies will come on Max in the next window. That will boost HBO Max as well. It will be a different kind of cadence, but an equally impactful one,” she added.
Discovery Communications is in the process of taking over WarnerMedia from AT&T and the expectation is that CEO David Zaslav is more interested in spending on content than AT&T was. That telecommunications company was mired in heavy debt and underestimated the costs it takes to run a first class studio.
It’s long been reported that Kilar won’t be a part of that new media company when it comes to fruition, that he has been negotiating his exit.
The CEO responded that his most immediate priority is WarnerMedia, “I said this in front of 28,000 people earlier a couple of months ago, we got a job to do here. We have to lead this company at a really important time.”
“At some point next year, I will be able to lift my head up, but now is not that time,” continued Kilar, “I’m a pretty busy person and I’m literally going all over the world leading this company along with Ann and Andy, I don’t have anything to share. I’m sure at some point next year after I think about it, I’ll have things to share, but certainly not now.”
In regards to the disruptive move to put the theatrical slate on the streaming service this year, Kilar told us, “You know what’s really disruptive? A pandemic. That’s really disruptive. I’m very, very happy and proud of how we conducted oursselves at WarnerMedia this past year and a half in the middle of a pandemic. We made a decision and in a pandemic there’s no perfect decision that can be made. It’s about optimizing and doing the best you can for your customers, your talent partners, for your exhibition partners, for audiences and fans and yourself as well.”
“If you look at the totality of what has happened in the last year, we’ve been the only company on the planet that has given 18 films to exhibitors, fully supportive with global marketing budgets, fully supportive with global cinematic releases in theaters and economically every participant was treated as though every film was a hit,” he said.
“We made a commitment to treat people fairly and generously, every single one,” said Kilar without mentioning Scarlett Johansson’s lawsuit with Disney over Black Widow going day-and-date on Disney+, “We worked tirelessly for the ensuing 3-4 months to do just that.”
“At the end of the day, we led the industry everyone followed our lead, whether it was Disney or Paramount. We took the brave first step. We don’t see this pandemic magically solving itself in the first quarter or even the second quarter,” added the CEO.
But will the theatrical window be crunched even shorter than 45 days in the near future?
“We haven’t even had a conversation about that in terms of Anne and myself,” answered Kilar.
“The only thing I can promise or predict, is that If you’re asking about ‘What do things look like over the next 10 years? Will they stay at 2022 levels and never change again? I wouldn’t take that bet because the world is going to change. Which direction, we don’t know,” he said.
“There will be a time and a place to make those decisions for 2023 and it will be a thoughtful decision where engaging with talent, engaging with agents, engaging with exhibitors and fans first and foremost,” said Kilar.
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