With Covid-19 having decimated movie schedules and forced the closure of many studios, it was perhaps inevitable that Warner Bros. would eventually make the decision to release all 2021 movies simultaneously through theatres and its streaming service HBO Max. The biggest problem though was that due to the studio’s poor communication with its filmmaking partners, many people were quite upset about it and it received plenty of backlash from the industry.
The reason many writers, directors, and actors were so upset by the movie from Warner Bros. is that many of them receive a percentage of box office receipts as a form of compensation from their respective movie. Having your movie open up via streaming simultaneously means that any box office earnings are reduced even further (even though Covid-19 would’ve already accounted for most of that) and many people were not impressed. Warner Bros. decided to revisit its contracts with people to readjust them for this new release strategy.
Bloomberg has revealed some of the details of how compensation in these new contracts will look. In these adjusted contracts, directors, cast, and crew will be guaranteed compensation for their movies independent of the movie’s box-office numbers. Whereas a movie normally must make a certain amount of money at the box office in order for filmmakers to receive a bonus now, the bar will be set lower so that creators can be compensated despite lower box office profits. According to a provision called the “COVID-19 multiplier,” the bar will fall even lower as more theatres close.
These new details make a whole lot of sense given the circumstances. Much of the money from that movie revenue will also be coming from HBO Max itself, with the service paying Warner Bros. a sizable amount to host its content. While they are all owned by the same company, HBO Max will be expected to pay for its material much the same way any other streaming service would, except only that it will likely be at a reduced rate to third-party content. The details of the contract between HBO Max and Warner Bros. are not immediately clear though.
What also isn’t clear is exactly what the respective unions and guilds feel about the current contract details and whether it will be widely accepted by the industry or not. Given the current situation, I think outside of specific details on the numbers involved, it all makes a lot of sense and so should be well received.
The landscape of movie releases is changing and as such, studios need to update how they compensate filmmakers and measure how a movie is considered financially successful or not.
Last Updated: January 11, 2021