How Warner Bros. Will Pay Filmmakers for Movies Releasing on HBO Max

1 month ago

After Warner Bros.' controversial decision to release all of its 2021 films on HBO Max, the studio is determining how it will pay creators.

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After a controversial decision by Warner Bros. to release all of its 2021 films directly to streaming on HBO Max on the same day as their theatrical releases, the studio is now figuring out how it will compensate creators using this new model. WB announced its HBO Max release plan in early December and has since been widely criticized for the decision.

Directors, theaters, and talent representatives involved with WB have all spoken up about the deal in a fervent wave of backlash to what many consider a slap in the face. The Directors Guild of America penned a letter to Warner Bros. requesting a meeting to air their grievances. Christopher Nolan, the director of multiple silver-screen blockbusters, has been vocal about his opposition to the studio's plan. Theater companies that were planning for a much-needed uptick in premiere-date sales may protest the move by drastically reducing ticket prices in order to prevent WB from turning a significant profit. The affected parties raise some critical issues, but their backlash has been met with a subsequent backlash of its own: many have pointed out that streaming movies is a safer alternative to gathering in theaters during the coronavirus pandemic.

Warner Bros. is currently finalizing a series of agreements with different partners that will determine how filmmakers will be paid within this direct-to-streaming model. Details of the agreements have come to light thanks to anonymous sources involved in the conversations that have been made available courtesy of Bloomberg. Directors, cast, and crew will be guaranteed compensation for their movies independent of the movie's box-office numbers. Normally, a movie has to make a certain amount of money at the box office in order for filmmakers to receive a bonus. In this case, the bar will be set lower so that creators can be compensated despite lower box office profits. According to a provision called the "COVID-19 multiplier," the bar will fall even lower as more theaters close.

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Much of that money is coming from HBO Max. The streaming service has to pay Warner Bros. (and AT&T, which owns the studio) a sizeable fee to host its content, which will then be redistributed to creators. All 17 of Warner's 2021 releases will stream on the platform for a full month (31 days), beginning the day of their theatrical release. The model guarantees WB's partners will be paid for their movies, which isn't standard. The direct-to-streaming release still prevents the possibility of a much larger payday owing to a box office smash, but ongoing COVID restrictions put a limit on potential box-office profit either way.

Crucially, Warner Bros. did not consult with its partners before entering into the deal with HBO Max, and directors were understandably caught off guard. It seems the studio is working out a more favorable deal with filmmakers, likely because it is in their best interest to do so. WB won't benefit long-term from burning all of its bridges with talent. One happy side effect of the deal is that writers and crew members will also receive bonuses from the box office releases of their movies. The deal expires after this year, so Warner Bros. may be dealing with unforeseen consequences of the temporary solution down the line.

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