In 1997, a father of two named Marc Randolph intended to start a company. The problem was, he didn't know what kind of company to start and finally made a list of ideal business ideas. And a friend named Reed Hastings was asked to comment on whether the ideas he sparked made sense or not.
Randolph was thinking of starting a personal toothpaste company. Hastings, through his business analysis, said no. On another occasion, Randolph wanted to start a baseball bat manufacturing company. Hastings turned it down. "That will never work," he said. The same remarks were expressed for 114 Randolph's suggestions, ranging from special shampoos, formula dog food, to custom surfboards.
One day, after waking up all night because he had to accompany his children to watch the film Aladdin, Randolph came up with the idea of renting a film cassette via the website and sending it via post to Hastings. Not saying it wouldn't work, Hastings ventured. He admitted that he had just been fined 50 dollars by a video rental shop because he was late returning the film tape. Hastings paused, pondering, then said maybe to Randolph's idea.
For Randolph, the business idea Hastings labeled maybe hadn't caught his eye yet. As a result, to get a different opinion, Randolph went to another friend, Alexandre. Unfortunately, not favorably received, Randolph was even ridiculed.
"Ah, shit!" said Alexandre. For him, the advent of the internet and the birth of Napster made tapes obsolete. Delivering films directly to audiences via the internet was the business Randolph should be running. The problem was, in the late 1990s, the internet was still young, and delivering films directly to audiences through it, or as we know it as streaming, couldn't be achieved given the limitations of technology.
But Randolph was reckless, and Hastings financed the recklessness by 10 million dollars. As Randolph wrote in That Will Never Work, the idea that was originally called Kibble eventually became Netflix. The postal film cassette rental company has become a master of streaming.
Netflix allows anyone to watch movies without having to leave the room. In 2011, Netflix had 21 million paid subscribers, which increased to 77 million in 2016. When theaters around the world closed due to the COVID-19 pandemic in 2020, the number of paid Netflix users jumped to 210 million.
These advantages have made many companies follow in Netflix's footsteps, such as Amazon Prime Video, Hulu, and Viu. Not to be missed, Hollywood studios also don't want to lose. The Walt Disney Company has finally released Disney+, and because it's not certain when the corona pandemic will end, Warner Bros., the studio that owns Harry Potter and Batman, has finally jumped into the realm of movie streaming, not halfheartedly but sincerely, at least for the next 2021.
Stepping in 2020, Tenet was one of the most anticipated films. Forget the actors. The name Christopher Nolan, the director, is the surest guarantee that Tenet is an extraordinary film. In Nolan's hands, the superhero genre that is often referred to as children's films has finally transformed into an extraordinary film through the trilogy of The Dark Knight. Nolan was also able to make Leonardo DiCaprio's dreams both confusing and exciting. Just look at Nolan's hand mix for Following, Memento, Insomnia, The Prestige, and Interstellar. It's very impressive.
The thing is, Tenet was about to be screened in the worst year in modern human history. Warner Bros. the studio that produces Tenet, originally planned to screen the film on July 17, 2020. As corona was still rampant, screening was postponed to July 31. And because corona wasn't over yet, the dates had been pushed back to August 12. Unfortunately, the corona was still there. Finally, in the midst of the corona threat, Tenet has been playing since last September.
It's easy to guess. Tenet failed in the market because of the lack of open cinemas and the public's fear of contracting corona. In the first week, Tenet only gained revenue of 9.4 million dollars and jumped to 57 million to date. This figure is very small when compared to the production cost of Tenet, which is 200 million dollars.
Other Warner Bros. feature films have suffered a similar fate. However, the 97-year-old studio is moving fast. In late November, as reported by The New York Times, Warner Bros. called up two of Hollywood's biggest agencies, Endeavor and Creative Artists Agency, representing Gal Gadot and Patty Jenkins. During the meeting, Warner Bros. asked permission from Gadot, the lead actor, and Jenkins, the director, for Wonder Woman 1984 to be launched on its film streaming service, HBO Max, on the condition that it coincided with the show's schedule. This action violates the tradition of Hollywood studios where movies were shown 90 days ahead of time before they were available on movie streaming services or on DVDs.
Gadot and Jenkins agreed on the main reason: compensation for more than 10 million dollars each. The large compensation was given to treat the traditional Hollywood filmmaker-style income scheme. Traditionally, filmmakers have received two revenue streams: down payments and movie success bonuses. The down payment is fixed and can be enjoyed immediately by filmmakers while the bonus is received if the film is successful in the market with the main indicator of cinema ticket sales. When a movie is directly released via streaming, the bonus income immediately evaporates because the indicator of success in streaming is the number of subscribers. And a large number of subscribers can't be referred through a film or two.
After being approved by Gadot and Jenkins, the CEO of WarnerMedia, a subsidiary of Warner Bros. that oversees HBO Max, announced that 17 feature films, such as The Suicide Squad, Godzilla vs. Kong, Dune, The Matrix 4, In the Heights, Cry Macho, The Conjuring: The Devil Made Me Do It, Space Jam: A New Legacy, and The Many Saints of Newark, will launch on HBO Max in 2021.
Instead of absolutely copying the Netflix scheme, Warner Bros. will release its flagship films on HBO Max within one month of each film's release schedule. After one month, the films will be distributed in the conventional way, which is sent to be packaged into DVDs or sold digitally through iTunes. Not only that, Warner Bros. created a weird business scheme, which forced HBO Max to buy licenses for these films at a minimum cost of 10 million dollars or 25 percent of production costs.
In order for HBO Max to attract the hearts of the public, Warner Bros. also includes contents belonging to Cartoon Network, TNT, and CNN, which it owns. Noted that, HBO Max offers more than 10 thousand broadcast hours. Unfortunately, this amount of contents have to be exchanged for a subscription fee of 15 dollars, which is the most expensive when compared to the subscription fees for Netflix and Disney+ combined.
Unlike Gadot, many Warner Bros. filmmakers fight back. They, such as Denzel Washington, Margot Robbie, Will Smith, Keanu Reeves, Hugh Jackman, and Angelina Jolie, expressed disappointment. They protested because only Gadot was invited to discuss it. Still referring to The New York Times report, the Warner Bros. directors plan to boycott and start calling it Former Bros.
The loudest is, of course, Christopher Nolan. He called HBO Max the worst streaming service ever.
In an interview with Vox journalist, Kilar said that Warner Bros. decided to switch its films to streaming because of compulsion.
"I would say that if you were choosing between three possible scenarios, of course, anyone is going to choose the one that is most favorable to them. The current environment that we're living in, in the pandemic, there are no choices like that," said Kilar.
The New York Times said that the main reason why Warner Bros. looked serious about entering the world of streaming wasn't because of corona but the business strategy of AT&T, the telecommunications provider company that owns it.
AT&T wants to make HBO Max a bonus so that its customers stay on every time they subscribe to the internet. HBO Max is also AT&T's bargaining power to get new customers. For AT&T, if only 0.01 percent of its customers were still loyal to them because lured by HBO Max, that would amount to 100 million dollars in revenue.
HBO Max is tantalizing but also controversial.