AT&T CEO Defends Controversial Warner Bros. Movie Release Plan as HBO Max Base Grows

AT&T executives are doubling down on the company's stunning decision last week to make Warner Bros.’ entire 2021 theatrical slate of 17 films available to stream on HBO Max the same day the films debut in theaters. After a bruising weekend of criticism and pushback from directors, stars and critics alike, AT&T CEO John Stankey defended the unprecedented move as a “win-win-win”—one that, for WarnerMedia, would help fledgling streamer HBO Max “penetrate the market faster.” “Our feeling is, there’s a win-win-win type of solution here,” Stankey said today at the UBS Global TMT Virtual Conference. “There’s a win for us, there’s a win for our customers, and there’s a win for our partners. And any time you’re going to change a model, I know it creates a degree of noise, and this is certainly no exception. But I think, ultimately, rational parties will step back and look at this and say, 'Giving theater owners a predictable release of content over the next several months that they can plan around and start to work their business around is a good thing for them.'” The decision, which comes as conditions for theater owners and studios remain unfavorable amid the unrelenting Covid-19 pandemic, will almost certainly spell the end of the theater industry’s traditional 90-day release window, and may forever change consumers’ expectations around movie-going. Pragmatically, it’s a sign that WarnerMedia believes the theater business will be particularly slow to recover. The company did not want to hold onto the titles until theaters could operate more fully “because snowplowing all theatrical content into late ’21 or early ’22 probably isn’t going to help anybody,” Stankey said. And even then, the studio is bracing for a slow return to theater seats. “One of the unfortunate effects of the pandemic is there has basically been no theatrical exhibition business, and that’s painful for a lot of people,” Stankey said. "In the theatrical business, we are going to be in a situation where the psyche of the population, people’s willingness to go back into large venues … that’s going to be a little bit of a prolonged recovery.” Another option on the table—selling the titles at a premium to other streaming services on the market—could bring in immediate licensing revenue, but would undercut the long-term plans of building out WarnerMedia’s streaming ambitions. “Going and giving those people that are some of your most significant competitors additional arms is probably not the most intelligent way to deal with that content,” Stankey said. The decision, which Stankey said would “give customers choice,” has rankled feathers across the industry, and some industry bigwigs have forcefully pushed back. Director Christopher Nolan, whose film Tenet premiered in theaters this year to disappointing box office returns, told The Hollywood Reporter on Monday that “some of our industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service.” Despite the bruising response, HBO Max will certainly benefit from the movie slate, which Stankey said would help the streamer “penetrate the market faster and quicker” while also helping to keep customers engaged. Even ahead of the release, HBO Max is growing. The service is approaching 12.6 million activated users, nearly 4 million more than the 8.6 million direct sign-ups the company reported at the end of September during AT&T's third-quarter earnings. Time spent on the service is also increasing: Stankey said that in the last 30 days, the number of hours HBO Max customers spent watching the service grew 36%. “We’ve been not only on plan for what we communicated, but we’re actually ahead of plan,” Stankey said.