• by Karlene Lukovitz  @KLmarketdaily, December 4, 2020

WarnerMedia CEO Jason Kilar is declining to say whether the company’s precedent-setting decision to release all of its movies on HBO Max domestically at the same time as in theaters is likely to continue after 2021.

“I learned long ago not to make statements [about what may happen] over a year from now,” Kilar told CNBC in an interview following yesterday’s announcement.

Investors signaled they read the new policy as a devastating blow for the movie theater business, sending AMC Entertainment’s stock down 16% and Cinemark’s down 22% yesterday.

WarnerMedia didn’t address financials with theater chains prior to its announcement, according to a CNBC source — and AMC, which bought into and publicly supported the “hybrid” release model when it was introduced for “Wonder Woman 1984” less than two weeks ago — now appears less than thrilled at the policy’s rollout.

“Clearly, Warner Media intends to sacrifice a considerable portion of the profitability of its movie studio division, and that of its production partners and filmmakers, to subsidize its HBO Max startup,” Adam Aron, CEO and president of the world’s largest theatre chain, told CNBC. “As for AMC, we will do all in our power to ensure that Warner does not do so at our expense. We will aggressively pursue economic terms that preserve our business.”

Kilar, however, downplayed the policy’s ramifications, saying everyone should “take a breather,” and revisit the situation after seeing how the next six to 10 months play out.

The so-called hybrid model calls for new titles to be available on HBO Max in the U.S. (in both 4K Ultra HD and HDR format) for one month, at no additional cost for Max subscribers, at the same time they are released in U.S. and international movie theaters.

Following the month-long HBO Max access period in the U.S., new films will leave the streaming platform and continue their runs in U.S. and international theaters, “with all customary distribution windows applying,” WarnerMedia said in its announcement.

Internationally — where most revenues are generated for U.S. tentpole films — movies will continue to be released first in theaters, with existing windowing agreements.

Kilar reiterated that the decision to apply the strategy to all Warner Bros. Pictures releases next year is a response to the pandemic’s continuing impacts on theater chain operations, particularly in the U.S. “That’s why we’re doing it. We haven’t spent one brain cell on what the world looks like in 2022,” he asserted.

At the same time, however, he predicted that even if the hybrid policy were to become permanent, “for the next several decades there will be a very large volume of consumers worldwide that will choose on any given night, especially a Friday or Saturday night, to go out to a theater to be entertained by a great Warner Brothers movie.”

In a separate interview, with Deadline, Kilar said that the hybrid model will “optimize the economics” under circumstances in which medical experts are projecting that public events like movie going will continue to be impacted through most of next year.

The model is designed to generate revenue for HBO Max by using the big movie releases to attract new subscribers, while also enabling box-office revenue, he acknowledged. WarnerMedia’s view is that simultaneously debuting films on the SVOD will help drive maximum word-of-mouth that will benefit theaters as well as Max, and justify the large marketing push that each film will receive.

“We’re here for the long term, in terms of theatrical exhibition and obviously in investing heavily in motion pictures and also investing heavily in the marketing of those motion pictures,” he said.

“We do believe, and others might have a different opinion, this is the way to do the most important thing we can for the theatrical exhibition community, which is to provide them a steady stream of new and fresh movies and motion pictures that they can count on, and consumers can count on,” he added.

Economically, WarnerMedia believes that the hybrid model is “the right thing to do” for movie fans, exhibition and industry talent, Kilar stressed.

Warner Bros. Pictures Group’s 17-title release lineup for next year includes “The Little Things,” “Judas and the Black Messiah,” “Tom & Jerry,” “Godzilla vs. Kong,” “Mortal Kombat,” “Those Who Wish Me Dead,” “The Conjuring: The Devil Made Me Do It,” “In The Heights,” “Space Jam: A New Legacy,” “The Suicide Squad,” “Reminiscence,” “Malignant,” “Dune,” “The Many Saints of Newark,” “King Richard,” “Cry Macho” and “Matrix 4.”