The Biggest Movie of 2020 Debuted On Your Laptop

A case study of Wonder Woman 1984’s innovative digital release strategy.

Via Rolling Stone

Warner Bros. released Wonder Woman 1984, a key installment in its DC cinematic universe, in theatres on Christmas Day. The film was simultaneously released on its streaming platform, HBO Max, for one month. After that month, the film became available on video-on-demand services like Amazon and Apple for a $20 rental.

That may not strike you as particularly strange. Movies release on streaming platforms all the time: remember when everyone got upset because Netflix owned the rights to Roma? So yeah, Wonder Woman 1984’s “day-and-date” release wasn’t entirely novel. But in a world of declining ticket sales and heavyweight streamers, a blockbuster of this magnitude disrupting the traditional release cycle is groundbreaking.

Via Project Disco

WW84 rewrote that script, leaving the entire industry asking: did it work? In order to evaluate its success, we’ll need to look at the movie’s performance in theatres, on HBO Max, and during the subsequent video-on-demand period.

Theatrical Performance

At its peak, WW84 was shown in 2,000+ theatres. It had a weak domestic opening during the holidays — only $16M — before eventually amassing $42M in the US market and another $116M internationally. A total box office of $168M is nothing to scoff at… but it is a serious dropoff from the franchise’s previous installment.

Woman Woman (2017) totalled $822M with a roughly equal split between US and international markets. In a world without COVID-19, we might have expected that number to increase significantly for a sequel. For reference, DC’s first installment in their tentpole franchise came in 2013 when Man of Steel earned $668M internationally. Its sequel grossed $873M only three years later.

With an estimated budget of $200M, WW84 failed to make a profit in theatres. Without increased theatre capacity in international markets, the loss would have been even more significant. Its performance in the United States hardly made a dent in its production costs, let alone marketing expenses.

Streaming Success

Calculating success at the box office is pretty straightforward (i.e. how many people bought a ticket). It’s harder to tell how the film performed on a streaming platform. Like many streamers, HBO is secretive with its data. It’s much easier to find out how many viewers tuned into a primetime FOX program than the latest Netflix series.

Nielsen estimated HBO Max viewers watched 2.25 billion minutes of WW84 during its opening weekend and Samba TV estimates 3.03 million HBO Max households watched the film during that same period. Calculators at the ready: we can estimate the average household watched 750 minutes of WW84 during its first week on HBO Max. The movie is only 155 minutes long. The data here comes from third-party estimates that are extrapolated from samples. It’s guesswork. It is clear, however, that at least 3 million viewers tuned in to watch on HBO Max.

The key metric that matters to HBO Max is subscribers: specifically new subscribers and satisfied existing subscribers. Today, SVOD streamers are singularly focused on customer acquisition and churn.

By those metrics, WW84 was a resounding success. The film drove more sign-ups in its opening weekend than any other SVOD release and was viewed more in its first week than any other SVOD film — think Hamilton. Almost a quarter of those viewing WW84 signed up for HBO Max in order to watch the superhero sequel over the Dec. 25–27 weekend. That’s a big win for subscriber growth. Among that cohort of sign-ups, 14% said they will continue to subscribe — thus reducing churn and extending the lifetime value of new subscribers. According to a Screen Engine survey, among existing HBO Max customers, 19% said they would likely have canceled their subscriptions had it not been for WW84. Yet another check in the churn column for HBO Max.

Via Antenna

Video On Demand

Wonder Woman 1984 left HBO Max after one month and transitioned to video-on-demand. It had varied success across platforms, rising as high as #2 on Fandango NOW and Google Play, while only reaching the #5 spot on Apple TV. Those numbers have slowly declined over time.

There are two things to keep in mind. First, HBO Max would prefer that customers use their platform to watch WW84, even if the customer jumps ship after a single month. A VOD rental splits the price between more parties: everybody gets a smaller piece of the pie. A month of HBO Max subscription goes right into their own pockets. Second, it’s actually advantageous for customers to avoid VOD. A single month of HBO Max costs $5 less than a full-price WW84 rental from another provider.

The middling results on VOD aren’t surprising and, if anything, they’re another indicator that potential viewers opted for HBO Max rather than waiting for the hefty price tag on iTunes.

Well… Was it Worth It?

WW84 was destined to fail in US theatres, but managed to recoup some costs overseas and — most importantly — successfully drove customers to HBO Max. For good measure, it pulled in a few dollars on VOD afterwards.

Warner Bros. could have decided to push back Wonder Woman 1984 until US capacity is expected to increase, like countless other studios have done with their slates. In fact, WW84 was originally scheduled for August and then October before finally releasing on Christmas Day. Another delay was likely tempting, but there’s only so far that studios can push back their releases. They have other films coming down the pike and, as other studios make similar choices, it creates a glut of releases during a shorter period of time. That increased competition is a no-no for studios competing for ticket sales. Especially with Warner’s slate of upcoming blockbusters, a further delay may not have led to a significantly larger box office for WW84.

With that in mind, the decision becomes clearer. Warner Bros. had a chance to turn a losing venture into a winning one. WW84’s hefty budget was a sunk cost. There was not a clear opportunity in the future to turn a profit via ticket sales. Although a digital release likely cannibalized some theatrical revenue, it was a successful gamble: Warner Bros. made money by converting HBO Max subscribers.

There’s one caveat to that success story: it assumes that these subscribers were customers that wouldn’t otherwise have joined the service in the near future. If not, then WW84’s digital release wasn’t a necessary factor in HBO Max gaining long-term subscriptions. The data here is incomplete. It’s clear that some customers joined the service because of WW84, but would the impending release of Zach Snyder’s Justice League have converted those same customers? HBO’s hope is that those customers were persuaded to join by WW84’s digital release.

While WW84’s digital strategy was a clear success considering the circumstances, it isn’t obvious if the strategy could have the same success moving forward, in part because of a key consideration that we haven’t yet addressed: this pissed people off.

Christopher Nolan, a frequent collaborator with Warner Bros., slammed their choice to release all 2021 films on HBO Max: “[Movies are] meant to be out there for the widest possible audiences… and now they’re being used as a loss-leader for the streaming service.” Access isn’t the only concern. Creatives are often paid based on theatrical performance and, while we can expect a similar dynamic to evolve with digital views, it’s unclear how this move will affect their wallets. In a corporate statement, AMC Theatres said that they were “fully onboard” with the decision after “active and deep dialogue” with Warner Bros: they’re playing nice.

Creatives, theatre operators, studios, producers, and consumers are all scrambling to carve out their role in this new paradigm. Stay tuned next week for a closer look at how all of these stakeholders have been affected and their best routes to success moving forward. In the meantime, check out last week’s installment on the trends that put us here.

By James Ostrowski and Alec Winshel

NYU student studying media and entertainment business.

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