'Hard to Go Back,' Says Moffett of Warner's 2021 HBO Max Window Plans

Warner’s decision to release 2021 blockbuster titles simultaneously in theaters and with a one-month window on its HBO Max streaming service is “a very costly one for everyone involved,” MoffettNathanson’s Craig Moffett wrote investors Friday. “We have a hard time believing the messaging that this is only a temporary 2021 plan,” said the analyst, “even if that might be the current plan today. Once the windows change, it will be hard to go back.” It’s “hard to find any winners here,” he said, ticking off AT&T, participants/rights holders and U.S. theater owners who will suffer “another unexpected big hit.” Despite growing consensus that coming COVID-19 vaccines should help return the U.S. to some normalcy by mid-2021, the Warner Bros. decision “puts a damper on those expectations for movie attendance,” he said. It’s unclear whether U.S. exhibitors will agree to play the upcoming Warner 2021 movie slate, “given the unattractive terms of running films that are simultaneously available for ‘free’ on HBO Max,” though given the difficult position most theater owners are in today, it will be hard for them to hold the line on an exclusive theatrical window, he said. The Warner announcement is ahead of any expected update from Disney this week “of likely plans to alter their own traditional theatrical windowing strategy,” Moffett said. While studios have been pressuring exhibitors to shrink the theatrical window for some time, WarnerMedia is the first to “blow up the model by skipping an exclusive theatrical window altogether.” The Pay 1 window -- where studios typically break even on their original investment -- is now the HBO Max release, which “no longer generates cash; instead, it merely shifts content between WarnerMedia segments,” he said. Going all in on the biggest blockbusters seems “overly aggressive vs. a simple window change.” The move will likely spur new subscriptions to HBO Max, which until now “has simply not been all that differentiated" from HBO, which has "floated at a penetration rate of 1/3 of US Pay TV homes for many, many years," he said. “But at what cost?” Warner didn’t comment Friday.