Warner Bros. Revamping Movie Compensation in HBO Max Era

Following Warner Bros. Pictures’ decision to release its 2021 theatrical slate concurrently on subscription streaming service HBO Max in consumer homes (for 31 days) due to the ongoing pandemic, some content creators and talent representatives cried foul, claiming they and their clients were being shortchanged by the new policy.

Now the studio has reportedly implemented new guidelines aimed at better compensating talent and production during the pandemic, according to Bloomberg, which cited sources familiar with the situation. Warner will now pay producers and talent from fees generated by Max to offset lower box office revenue and performance-based bonuses.

Hollywood has often compensated producers and talent with upfront compensation and the potential for a lot more on the backend depending on a movie’s box office success. Actor Robert Downey Jr. reportedly earned $75 million from Disney/Marvel Studios’ Avengers: Endgame under such an arrangement.

But with the pandemic severely curtailing the U.S. box office, Warner’s decision to release movies direct to consumers all but ended that traditional compensation channels, angering filmmakers such as Christopher Nolan and Denis Villeneuve, whose movies Tenet and the upcoming sci-fi remake Dune are released through the studio.

“AT&T has hijacked one of the most respectable and important studios in film history,” Villeneuve told Variety. “There is absolutely no love for cinema, nor for the audience here.”

Talent agencies complained the Max/theatrical strategy “unilaterally determined” a financial value for their clients’ work to “benefit the long-term prospects of HBO Max and the finances of AT&T,” according to Richard Lovett, president of the CAA agency.

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, contends the premium VOD distribution strategy hasn’t proven to be as much of a threat to exhibitors as previously thought. Indeed, Disney has yet to release financial data regarding its decision to offer live-action Mulan directly to Disney+ subscribers for an additional $29.99 fee.

“We think the exhibitors will aggressively negotiate for far fewer films to be released day-and-date on HBO Max, based on the timing of vaccine distribution instead of the full calendar year,” Pachter wrote in a Jan. 11 note.

WarnerMedia contends the situation remains fluid with Warner planning to return to the traditional theatrical window in 2022 following vaccine inoculation.

“Our orientation in these situations is always to be generous,” WarnerMedia CEO Jason Kilar said in a recent interview.

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