• Warner Bros. likely wont be followed by other studios as it shifts to release movies digitally and in theaters
  • HBO Max's expensive price means it can break even with fewer new additions than competitor services
  • That said, other studios are watching closely as they search for new business models going forward

The decision by film studio Warner Bros. to boldly go where no production company had gone before and launch its movies on HBO Max alongside traditional theaters is likely one it will be making alone. Other movie studios face greater barriers and while more than happy to see how the experiment turns out won’t be going digital anytime soon.

Warner Bros. was well aware of this when they first made the call. In an interview with the podcast Sway, WarnerMedia CEO Jason Kilar explained that he never expected competitors to follow such a novel business model.

“I know that there’s a lot of different companies that think differently,” Kilar said. “It’s possible that some people might follow where we’re going, but I wouldn’t bet on it. Ultimately it’s the customer that is going to tell us which way this should go.”

For one thing, other companies charge dramatically less than Warner Bros. for their streaming services. When HBO Max costs $15 per month, it needs far fewer people to buy in to recoup its theater losses than services like Disney+ or Peacock that charge around $6 monthly.

“The number of incremental subs needed to justify abandoning a theatrical release model is not trivial,” said Bank of America analyst Jessica Reif Ehrlich in a note published by CNBC. “If the whole U.S. industry were to shift to a day and date streaming model, we estimate 62 million U.S. incremental subs at $10 average.”

Warner Bros
The Warner Bros logo outside the Warner Bros Studio lot in Burbank, California, 30th September 2008. Amy T. Zielinski/Getty Images

All this isn’t to say that other studios aren’t experimenting with their models at all. NBC Universal is looking to shorten theater release windows to just 17 days, and other studios are watching closely to see how Warner’s gamble pays off.

“It’s pretty clear that the theatrical windows will evolve and get shorter,” said Viacom CEO Bob Bakish at a TMT conference. “Some of these new monetization paths that we’re seeing are going to be more common. People are going to use films to drive over-the-top products. People are going to look for alternate monetization, and that’s going to be the norm.”