Will ‘Wonder Woman 1984’ be the biggest movie to stream yet?


Pity the movie studio chief.

Imagine for a moment that you are Ann Sarnoff, the head of Warner Bros., the venerable Hollywood studio founded in 1923 by Harry, Albert, Sam and Jack Warner. Sarnoff took the job running the studio not long after it was acquired by AT&T, a phone company with little interest in the norms and traditions that have governed Hollywood for decades.

As if the task of overhauling a 97-year-old studio for the internet age weren't hard enough, Sarnoff must now respond to a global pandemic that has rendered it all but impossible to release movies. At this moment, Sarnoff is debating what to do about "Wonder Woman 1984," the sequel to the hit movie based on the DC superhero.

(She is not acting alone. Her boss, Jason Kilar, was in LA this week and has strong opinions about the future of movies. Her deputies actually run the movie side since she oversees far more. But Warner Bros is her kingdom.)

In the before times, Warner Bros. was going to release the movie in August. Most box office experts expected "Wonder Woman 1984" to be one of the year's biggest hits. But that was then and this is now. Warner Bros. already delayed the movie's release, first to October and then to Christmas Day. If they want to release the movie Christmas Day, they need to decide now so they can restart the marketing campaign.

Sarnoff faces three choices:

Option 1: Stick with the date, and release the movie in theaters as planned.

The studio has already spent millions of dollars on advertising for its previous release dates, and would have the Christmas period all to itself. People are going to movie theaters in China and Japan, the two largest markets after the U.S. The reasons to proceed as planned end there.

Warner Bros. tried this once before with "Tenet," the thriller from director Christopher Nolan. The movie did respectable business overseas, grossing close to $300 million, but it made just $55 million in the U.S. The film cost $200 million to produce and grossed just $350 million. Accounting for theaters' share of ticket sales and the cost of marketing, "Tenet" was a loser.

"Wonder Woman 1984" also cost a reported $200 million to produce. It would need to gross triple that to even smell a profit. No movie has grossed $600 million this year, not even in China. It's one thing to lose money on "Tenet," a gamble on an original idea with no movie stars. It's another to lose money on "Wonder Woman 1984," a sure thing that is a cornerstone of the DC movie franchise.

Option 2: Punt to next year.

This is the safest choice. Warner Bros. has already moved it twice, so there's little harm in doing so again. All the other studios have abandoned 2020, and saved themselves the headache of dating, undating and redating a movie. While next summer is crowded with releases like "Fast & Furious 9," "Venom: Let There Be Carnage" and "Top Gun: Maverick," there is an opening in early June.

However, there is no guarantee that movie theaters are open at full capacity by next summer. If Warner Bros. moves "Wonder Woman 1984," movie theaters around the U.S. are expected to close until 2021, which means a lot of theaters may close for good

Option 3: Release it for a week or two, and then shift it to HBO Max.

Kilar has restructured WarnerMedia and fired staff with one goal in mind: building up HBO Max, its new streaming service.

HBO Max has gotten off to a rocky start. Many people who already pay for HBO don't understand the difference between regular HBO and HBO Max, nor do they understand how to access the service. Amazon and Roku, the two leading set-top box providers, don't offer it. Few if any HBO Max originals have set the world on fire.

While Warner Bros. has released a handful of movies on HBO Max, none of them is in the same league as "Wonder Woman 1984." Releasing the movie on HBO Max around the holidays would entice millions of people to sign up for the service. Once they get inside the app, they are going to like what they see. It has a deep and diverse library of movies and TV shows – the best programming of all the services (at least for a U.S. viewer).

Warner Bros. could still give the movie a proper theatrical run in territories that have a better handle on the virus, many of which don't have access to HBO Max yet.

Still, this is the definition of short-term pain for long-term gain. Movies like "Wonder Woman 1984" make more money in theaters than they do on streaming services. That's why studios have pushed almost all of their biggest titles into 2021. It's also why any producers or actors that stand to collect a share of the film's profits may oppose the move.

The only way this works for WarnerMedia is if the company not only convinces millions of people to sign up for HBO Max because of "Wonder Woman 1984," but keeps them around. (Going all in on streaming, as Rich Greenfield would say.) Otherwise, it's a financial disaster.

So, what would you do? – Lucas Shaw

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Disney already won the streaming wars

Source: Disney +

Source: Disney +

Earlier this week, Disney reported a $1.1 billion loss at its theme parks, a 52% decline in sales at its movie studio -- and Wall Street celebrated. The company's stock jumped as much as 7.3%.

That would have been unthinkable one year ago considering that theme parks are Disney's most profitable business and the movie studio is its engine for big new franchises. But Disney also reported 73.7 million subscribers for its Disney+ streaming service. That is, no matter how you parse it, a staggering figure.

Netflix reached 73 million subscribers in the final quarter of 2015, at which point the company was 18 years old. Its streaming service was seven years old. Disney+ did it in 11 months.

That's not an apples-to-apples comparison. Netflix toiled for years creating the market for subscription video services, and Disney is now drafting off of its success. But even Netflix chief Reed Hastings has said Disney's performance caught him by complete surprise.

How about this for a comparison: Comcast's Peacock signed up 22 million users in its first five months. That seems pretty good until you consider that Peacock is free. Disney+ signed up 33.5 million customers in its first five months while charging people.

There are reasons to remain skeptical. India and Indonesia account for about 25% of all Disney+ subscribers. In India, even premium Disney customers pay about $20 a year – less than one-third of the cost in the U.S. Overall, the average Disney+ customer pays just $4.50 a month, while the average Netflix subscriber pays closer to $11.

Disney+ so far has had just one hit TV series -- "The Mandalorian," which is  about five times more in-demand than any other original series, per Parrot Analytics. ("Hamilton" isn't included because it's a movie.)

Parrot Analytics

Parrot Analytics

Yet I'd argue the service's reliance on one show (and its library) is a good omen, not a bad one. If there's one company that can be trusted to produce must-have programs on a semi-regular basis, it's Disney.

It has yet to release a single Marvel show for Disney+, but the first one, "WandaVision," has already generated more interest online than anything since "The Mandalorian."

Blackpink is the Biggest Pop Band in the World

The Korean foursome sits atop the latest edition of our Pop Star Power Rankings. Blackpink has been the most popular act on YouTube for the past couple of months, generating more than 1 billion views in October alone. The group was also the second most popular act on Spotify. 

We created these rankings to reflect the changing nature of pop stardom, and the ascension of Blackpink exemplifies those changes.

Alongside the boy group BTS, Blackpink has achieved a level of global popularity unprecedented for a pop group from Korea. Social media, paired with global distribution from YouTube and Spotify, has enabled K-pop bands to develop followings all over the world. The U.S., Brazil and Mexico are three of the six biggest markets on Spotify for Blackpink's new single, "Lovesick Girls." At the same time, BTS has more Spotify listeners in the U.S. than in any other region.

Video game prices rise for the first time in 15 years

Video games have cost $60 since at least the 1990s, but video game publishers are now starting to charge $70 for new titles, including the new Call of Duty and NBA 2K21. The price increase is timed to release of new consoles: the Xbox Series X and the PlayStation 5.

"Inside publishing houses, a price hike has been plotted and dissected by executives for years," write Olga Kharif and Takashi Mochizuki. "They point to inflation, as well as the ballooning cost to develop triple-A games, as justification." A pandemic is a strange time to hike prices, but video games have also never been more in-demand.

Spotify drops another $235 million on podcasting

Spotify agreed to acquire Megaphone, which specializes in advertising technology, for $235 million. The deal will enable Spotify to place advertisements in podcasts that are listened to on rival services.

Spotify is working really, really hard to prove there is a big advertising business in podcasting. Will there be? Nobody knows. But we do know Spotify has now spent more than $800 million buying podcast companies over the last two years, and that doesn't include deals with Joe Rogan or the Obamas.

ESPN whacks its esports staff

The sports media giant "will no longer publish new news or articles and will also see its social media accounts go dark in the days ahead," according to the Sports Business Journal.

These cuts say as much about the struggles of esports as they do about ESPN. Yes, ESPN is firing staff as a result of the pandemic (and cord cutting). But esports has also failed to live up the hype over the past few years.

Weekly Playlist

Should any of you be curious what the kids are listening to these days, I put together a playlist of songs from the artists on our Pop Star Power Rankings. Anyone out there watching 'A Teacher' or 'Woke'?

Columbia's Business of Entertainment


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