Warner Bros.' Simultaneous Film Releases Need New Success Metrics, CEO Says

As the Covid-19 pandemic continues to upend the entertainment industry’s playbook, WarnerMedia’s Ann Sarnoff is on the hunt for a new set of industry measurement tools—traditional box-office figures be damned. Sarnoff, the chair and CEO of WarnerMedia's studios and networks division, said that the pivot to streaming, and Warner Bros.' move to release its 2021 slate on streaming as well as in theaters, requires “a whole different set of criteria" to understand what successful releases looks like. “Unless you’re serving ads, the eyeballs in that day-and-date world are less relevant to the overall engagement of the service,” Sarnoff said at a CES 2021 virtual keynote presentation Wednesday. “The amount it costs you to acquire a subscriber, the churn level every month, how many people leave the service, what you can do to reduce the churn, reduce your cost of acquisition—it’s a completely different set of metrics that the industry is not geared to measure.” Those new metrics are sorely needed in a year when Warner Bros.’ 17 films in 2021 will appear both in theaters globally and on HBO Max to subscribers for no additional cost. The industry-rocking decision, which AT&T CEO John Stankey has defended, was one borne out of necessity, Sarnoff said. “We’re pivoting to be able to adjust to the environment we live in,” Sarnoff explained. “Do I wish the pandemic were over? Of course I do. But I have some amazing movies that I would like the fans to be able to see, and because so much of the market, especially in the U.S. and now Europe, is now closed down—60-plus percent of theaters are now closed—you can’t do it just by launching in theaters. We needed an alternative platform.” The decision also comes on the heels of the traditional theatrical release of Christopher Nolan's brain-bending thriller Tenet in late summer, even as many theaters remained closed. While Stankey had previously indicated that the company was underwhelmed by the title’s tepid $363 million box-office run (“I can’t say we walked away from the Tenet experience thinking it was a home run,” he said in October), Sarnoff said the studio was “happy with the results” considering the state of theaters and the challenges of marketing amid a pandemic. “It is really hard to spend the marketing you need to spend and launch when certain cities are opening and certain cities are closing, and you’re booking your marketing eight weeks in advance, so you’re shooting a moving target of how much of the market is going to be open or not,” Sarnoff said. “We just decided to be in it for the long game and just open the movie.” Warner Bros.’ 2021 titles will release in theaters globally, driving some box-office revenue in international markets where HBO Max, a U.S.-only service for now, is not yet operating. And while the release plan will almost certainly affect box-office numbers, so, too, would the pandemic—and Sarnoff said that box-office figures are no longer the best metric for movie studios to rely on. “What opening weekend is and was, was a proxy for the success of a movie, because there were formulas you could apply to then project ultimates of what your movie was likely to do,” Sarnoff said. “Sometimes those formulas worked and sometimes they didn’t. … But when more of the world is looking at streaming and looking for proxies of success, there will be things we learn sooner.” What those metrics will be is still up to the industry to iron out, but the pressure to get it done is already on. “The talent will want it,” Sarnoff said. “The talent will want to know how they’re doing. Everyone wants a barometer.” As the shift to streaming continues, Sarnoff is grappling with other business challenges, some of them internal. As franchises become crucial for entertainment companies looking to tap into devoted fan bases (think Star Wars, Star Trek and Marvel as prime examples), Sarnoff said she has had to overhaul company structures and silos to facilitate building out shows and films set in the company's popular DC Universe that can ladder up into a cohesive whole even as it is created for different teams and for different networks or platforms. Since joining in August 2019, Sarnoff has held weekly meetings on big franchises to talk collaboration and strategy. “One of the things I said to [the team] early on was, look, you don’t want your fans to be able to see your org chart—and boy, can they see it right now,” Sarnoff said. That had to change—fast. “Everything's connected now, and we're building a DC Universe plan that is a much more centrally connected, but individually executed,” Sarnoff said. “I think it's really upstream in the planning that it all needs to come together so people can still feel a pride of their individual efforts.”