2021 is nearly complete, and we’re ten months into year one of “Day-to-Date” new movie releases. You know, the new business model where top films are being released simultaneously to streaming platforms and in theaters for the first 45 days.
Tech mavens thought by the time we got to October that movie theaters would only be back for the day of the dead. Optimistic cinephiles thought they’d be gloating at the rejection of streaming and the celebration of the movie-going process. Pessimistic ones likely expected to have one of their favorite activities gone the way of the dodo. So far, none of those thoughts have come true.
2021 is just…a weird year for the movie business. There have been all sorts of twists and turns, so let’s try to run the tape and make sense of this.
The Beginning of Streaming New Movie Releases
WarnerMedia and HBO Max kicked off the use of streaming new releases in December 2020. The company made a pandemic-centric move, announcing they would release Wonder Woman 1984, the delayed follow-up to the 2017 global smash Wonder Woman, directly to audiences via streaming on HBO Max, rather than let the film sit on the shelves with movie theaters (at least in the U.S.) mostly closed. Unlike other experimental streaming releases in 2020, WW84 would have no additional cost to subscribers.
The film industry initially had an unsure and begrudgingly supportive reaction to the WW84 streaming release. Which lasted all of 47 seconds.
The indifference immediately vanished when Warner followed it up by announcing—allegedly with no communication with talent, agents, or guilds who learned about it on Twitter—that all of their 2021 lineup would be released via “Day-to-Date” streaming, meaning the film would be available to stream in your house the same day it was available in theaters for the first 21 days. No direct transaction for each film needed to take place, as it would be “free” to subscribers. Hollywood was less than excited.
Ultimately, before the lawsuits from guilds, film companies like Lionsgate WarnerMedia made it simple. They quickly settled and guaranteed filmmakers money and restructured their bonuses ahead of the releases. Remember this. We will be coming back to it shortly.
HBO Max trumpeted excellent numbers for Wonder Woman 1984. A piece in the Hollywood Reporter stated that WarnerMedia saw 23% of the people who watched WW84 were new subscribers. The article also noted the movie was streamed for 2.2 billion hours. WarnerMedia and their parent company AT&T appeared willing to lose money now for a long-term play to build their subscriber base. The number being tossed around was $12 billion in annual revenue, if they eventually reach 120 million subscribers at $144 a year. For reference, Netflix is the gold standard everyone is chasing with 202 million subscribers globally.
HBO Max currently reports just around 70 million subscribers. They count a “subscriber” as anyone who can access HBO Max through their HBO or HBO Max subscriptions, whether they touch the app or not. So HBO Max, technically, has 12.5 million direct subscribers, which has grown by 10 million in its first year.
Streaming Can Be Lucrative for Some
While this is all a very impressive movement to streaming, the past year or so still wasn’t impressive enough to stop WarnerMedia from signing back-to-theater exclusive deals for 2022 with Regal Cinema in March. Then, AT&T declared they were going to make a complete 180 and get OUT of the content business and spin-off WarnerMedia, HBO, and Discovery+ into its own unit.
Huh?
Alright, well what about some other players out there?
Amazon Prime had quite the time getting Paramount’s Coming to America 2, a sequel 33 years in the making starring Eddie Murphy and much of the original cast. Despite polarizing reactions online and a Rotten Tomatoes score that’s half the original, the film was deemed a huge success by studio executives at Amazon Prime.
Nielsen ratings note the film snagged 41.6 million hours watched. And since the movie was free for subscribers, Amazon Prime generated zero dollars directly from those hours. Ditto for Paramount, the studio that sold it to Amazon Prime. (Don’t cry too hard for Paramount. They sold it for roughly $125 million. But they didn’t get paid in their normal transactional manner via movie ticket sales, where the sky could’ve been the limit.)
Wonder Woman did $822 dollars at the box office. The sequel, released during the pandemic in December 2020, did $116 million, against a $200 million production budget. So to run the numbers back, we have 2.25 billion hours watched, 24% new subscriptions attributed to a movie, $116 million in cash, 45 million hours watched, and also maybe a zero somewhere?
I’ve never been good at math, so it’s extra hard for me to see how the conversions work. One second—I’m going to consult my handy “Shrute Bucks-to-Stanley Nickels” conversion chart for some answers. But it’s all going to be okay. Because July 9th was coming, and the masters of the modern blockbuster are finally here to toss their hat in the ring, which is the hot mess of 2021.
Problems for New Films Arise
Even though it sat on the shelf the longest, Marvel and Disney’s Black Widow was the biggest and most-anticipated release of 2021 up to that point. Unlike the HBO model, streaming fans not only needed to have a Disney+ account, but they also needed to pay $30 for the new release, just like the company did a year earlier with the live-action Mulan during the height of the pandemic. This was now all going to make sense.
And it totally did! Creatively, the film features fantastic performances from its cast and landed well with Rotten Tomatoes and audiences. It also had fantastic numbers both with theaters and streaming opening weekend. Everything was fine. And then it wasn’t. The numbers fell off a cliff in week two. That’s when the lawsuits hit. Remember when I said “Hey, so remember this for later” when we were talking about WarnerMedia? Good, because it’s later.
Unlike WarnerMedia, Marvel and Disney didn’t make any guarantees or choose to restructure Scarlett Johansson’s contract in terms of bonuses. I had a few friends from college reach out and were asking me to explain what her gripe was and if it was simply “big stars complaining.” One of my pals is in high-end sales commission, so I could make an easy analogy for him.
Here’s an oversimplified breakdown. Films make money from several revenue streams. For wide-release films, it looks something like this:
(1) – Box Office/Theatrical
(2) – Direct Purchase: This includes physical media like DVDs and Blu-Rays, as well as digital downloads from iTunes, Amazon Prime, etc.
(3) – TVOD (Transactional Video on Demand): That is, rentals through iTunes, Amazon Prime, etc. and any cable outlet pay per view.
(4) – 1st Run Subscription Commercial-Free: So…movies channels like HBO, Starz, Cinemax, Netflix, and even Disney+.
(5) – Broadcast Television Network with Ads
(6) – Cable Broadcast with Ads
From all of this, the lead, the big-name casts, Executive Producers, Producer, Director, and even writers will get back-end points (We’ll keep it simple and call it “bonuses”) based on how the film performs. There are different pay scales and escalators for each category, with the majority of money coming from the theatrical release. So if the theatrical release is massive for an Avengers-backed film, one could assume Johansson, the star, would stand to make a big bonus off of the film if it was a box office release only. That’s where things get muddy.
Why Scarlett Johansson’s Lawsuit Matters
Think of the new release structure this way. Let’s say you work for a home builder selling new houses and your contract has a downside guarantee salary and heavy commission structure. You get paid commissions on the homes you sell, but houses come intentionally basic. Both the product offerings and the structure of your deal are built around upgrading the kitchens. That’s really where you make your money. That’s been industry standard, and more importantly, that’s what your contract lays out.
You come to work one day. A nice couple is waiting for you at the model starter home to discuss their desired upgrades. Then, you’re surprised to find a state-of-the-art kitchen—granite countertops, amazing appliances, the whole shebang on display. Your demeanor changes when the couple shows you the brochure they got from the home builder, which says now this state-of-the-art kitchen comes standard. Your company just took your biggest area of commission and GAVE IT AWAY. They did so without telling you, in violation of the contract.
That’s basically the position Johansson was sitting in.
Let’s carry that hypothetical out farther—perhaps the home builder did this on purpose, possibly colluding to cut a deal with the actual kitchen suppliers. That means the home builder negotiated a deal where it actually cost them less to trick out those kitchens than pay you the agreed-upon commission rates. And they did this knowing it would make it nearly impossible for you to reach your milestones. Hence, they don’t owe the money projected.
That’s the crux of the issue. Johansson’s contract stated the film would have a wide theatrical release. And Disney’s defense was “Yeah, but it doesn’t say exclusive wide theatrical release.” Johansson and her team basically countered that Disney’s statement wasn’t in good faith because only an idiot would think a simultaneous same-day release wouldn’t destroy the box office.
It’s important to understand, by the way, that films don’t do Avengers money (i.e., numbers followed by the word “billion”) because of an awesome opening weekend. It’s long theatrical runs and the international box office that are responsible for that.
The fight then got getting nasty. First, Disney pointed to the strong opening weekend for Black Widow, stronger than many other Marvel movies. When that didn’t deter things, Disney began to accuse her of being greedy and insensitive to the pandemic, which is suspect given that Disney brought in $125 million in “Day-to-Date” streaming, which they’re trying to prevent being added to the film’s global office number of $367 million. Combining those two figures would put Johansson in the bonus money round.
Disney had been lobbying that the arbitration take place in private, rather than in a public courtroom. And ultimately, they got their wish. In late September 2021, Disney and Johansson settled the lawsuit in private with details of the final deal undisclosed.
And not to be left out totally, Netflix recently made moves to skirt this type of issue by outright purchasing two films of Rian Johnson’s Knives Out franchise for $465 million.
Things are definitely changing, and 2021 will be looked back on as a catalyst year for change in the film industry, but it’s still going to be a little while before we really know what the new landscape looks like.
Dan Napoli is the Head of Creative & Post-Production for Hurrdat Films. He has over 20 years of experience in the video production and film industry as a writer, director, and editor with nearly two-dozen documentaries to his credit. He also co-hosts “Yellin’ In My Ear,” a podcast centered around ‘80s & ‘90s Gen X pop culture, and “Reel Life,” where he interviews fellow documentary filmmakers about how they took their latest project from the real-life event to the film reel. His two most recent films, Best Kids In Texas and 50 Summers, are currently streaming on Amazon Prime Video and Apple TV.