‘Tenet’s’ dismal U.S. debut has some calling for a change in Hollywood’s approach to the blockbuster

For a movie like “Tenet” to work, a lot has to happen, financially speaking.

The film, directed by Christopher Nolan, needs to rake in dollars all over the world but especially in the U.S., where studios can keep as much 60 percent of the box office. To turn a profit, the movie basically has to net in America what Nolan’s “Inception” did a decade ago — $348 million in today’s dollars — or at least “Dunkirk’s” $200 million from three summers back.

Since it came to American theaters nearly two weeks ago, “Tenet” has taken in just $29.5 million.

The failure of the Warner Bros. movie domestically as many theaters remain closed and many theatergoers stay home has been a sharp wake-up call to entertainment veterans adjacent to the Hollywood studios, if not always those who run them. The results jettison hopes that moviegoing can regain even partial strength in the coronavirus era — and make spending hundreds of millions on blockbuster movies that can’t be released, as studios are continuing to do, look like a bad idea. Waiting, these veterans say, is not a strategy.

“There is a lot of denial going on among studio executives,” said Megan Colligan, president of Imax Entertainment, and former executive at Paramount and Fox Searchlight. “People are rushing to make these big-budget movies but not giving much thought to the fact there won’t be any place to put them.”

A growing number of voices like Colligan are instead urging a larger rethink, one that goes beyond postponing films a few months and instead recalibrates production and distribution for a time when theatrical tickets are a much smaller piece of the pie. While there are no easy solutions in the age of covid-19, they say that new approaches in making and releasing films are a necessity.

Such change might not be needed, these voices agree, if a vaccine were to become widely available and allow people to return to theaters in the coming months. But such a prospect is uncertain, and the potential persistence of the virus well into 2021, as some experts have forecast, could force a large number of theaters to permanently close while acclimating many consumers to not visiting them.

For several months, the hope was that releasing “Tenet” would make the theatrical waters safe for everyone else. Others would quickly follow — the action-comedy “The King’s Man,” the slasher throwback “Candyman” and the sequel “Wonder Woman 1984” were all scheduled for the weeks after. By November, the thinking went, the pool would really fill up, with Marvel’s “Black Widow,” Pixar’s “Soul” and the James Bond picture “No Time to Die.” And by Christmas it would be like theatrical moviegoing never left.

But “Tenet’s” weak performance has given the lie to this scenario. The trio of September-October movies have all been delayed, and most insiders think it’s just a matter of time before the November and December titles go, too. Studio executives can’t be blamed for the shelving: Even with a $300 million global gross, the high end of the current trajectory, “Tenet” will end up in the red.

But what happens afterward is much less clear. Forward-looking voices note that studios can’t keep making films for $200 million if there isn’t a steady stream of consumers walking through multiplex doors to fund them — after all, it’s all those ticket sales that enable the budgets and slick stars and sharp production values that come with them. Those voices have gotten louder in the wake of “Tenet’s” underperformance. They point out that it should change both how studios produce films and who they pick as their partners.

“In this climate, if you’re a studio, you need to be really aggressive in looking at which movies are worth making and cut everything else out,” said John Sloss, a longtime movie-business veteran best known for his work on 2019′s best-picture winner “Green Book.” He noted that would mean fewer $200 million-plus franchise movies, but also, potentially, an increase in the $10 million to $30 million branded comedies and horror movies that could deliver the same fan base at a much lower cost.

He also said traditional Hollywood companies need to shift their view on who is a potential collaborator. “I think studios need to look at the streamers more as production partners,” he said. A Netflix, Apple or Amazon, he said, doesn’t rely on theatrical box office for revenue and could finance these films without worrying that consumers will stay home.

These type of ground-floor collaborations have been rare — the two sides work together mainly when a studio flips a troubled movie to a streamer in postproduction — thanks to a built-in rivalry and because most studios want to control their own distribution.

Reformers agree that, even with movie theaters’ challenges, it’s unlikely studios would stop trying to use them for their biggest properties. But they say the studios should pour more resources into projects for venues outside of theatrical movies — Marvel and DC could take the money they’re using for blockbusters and use it to up the quantity of or production values on a Disney Plus or HBO Max series, for example. Or they could simply make the blockbusters for streaming in the first place, at a lower budget.

“Right now, Hollywood’s only solution seems to be to wait. The multibillion dollar question is, ‘Wait how long?’” said Rich Greenfield, an analyst at research firm LightShed. “They’re trying to will it back and there’s no evidence that will happen,” he added, noting he was unconvinced an effective vaccine would be widely available in the coming months.

Instead, said Greenfield, who has long advocated for more investment in subscription models, the companies should dramatically up spending for content on their subscription services by making their biggest movies for streaming or making more mid-budget films and playing the volume game — or both.

That’s especially attractive for companies like Warner Bros., with some 35 million subscribers to HBO and HBO Max, and Disney, with more than 60 million subscribers for Disney Plus. Traditional video on-demand rentals require that studios give a 30 percent cut to the cable provider. But if these companies offer a movie as a premium release on their own service, as Disney recently did for “Mulan,” they can keep all the revenue.

It’s also possible studios could give the movie free to subscribers; even if it means taking a loss on a given film, it will solidify the service as a must-have for many consumers.

There has historically been a resistance by studios to bypass theaters, given that box office is the only clear one-to-one way to finance budgets. But Greenfield says the math can work.

“Subscription [services] are incredible at scale — Netflix generates more money than Disney,” he said. “The problem is it requires a dramatic and complete shift in these companies’ business model. And many of them find it easier to just sit and hope things go back to normal.”

So far, studios have indeed shown little interest in pivoting; they are continuing to make a small handful of big-budget movies that aim to hit theatrical home runs.

Sony recently began shooting “Uncharted,” a long-in-development franchise movie based on a popular video game series. Universal this summer dived into production on “Jurassic World: Dominion,” the third movie in the rebooted series, which has thus far grossed nearly $3 billion in theaters worldwide. Warner Bros. last month resumed shooting “The Batman,” the reboot of the DC superhero film scheduled for release next year, though production was halted when star Robert Pattinson tested positive for the coronavirus.

All these movies are in the “Tenet” mold — production budgets approaching or exceeding $200 million and marketing costs in at least the $100 million realm — and need to attract consumers to come out to theaters to subsidize them.

Spokespeople from the five major studios would not comment for this story; a Disney spokesman referred to CFO Christine McCarthy’s recent public comments about the viability of the theatrical experience. But a high-ranking talent representative who works closely with them on such films offered an explanation for the business-as-usual attitude, saying it was less inertia than career justification.

“You have a $100 million of overhead and you’re paid a lot to run a studio. What are you going to do, not make big-budget movies?” said the representative, who spoke on the condition of anonymity to discuss matters more candidly. “I think you’ll see a tighter curation of what gets made and a harder lid on budgets. But the studios are not stopping on $200 million movies anytime soon. They’re just going to hope theater traffic is back to normal by the time they come out.”

Hybrid solutions are also being cited. “Mulan” was released as a $30 offering to Disney Plus subscribers in countries where the service is available and in theaters elsewhere. Disney has not revealed any streaming numbers yet. But even if only 10 percent of Disney Plus subscribers ordered it, it would put some $180 million in Disney’s pocket and go a long way toward covering the film’s budget.

Colligan notes there could be other ways to think creatively — possibly by imposing a more flexible system of windowing, the industry’s term for theatrical exclusivity.

In the covid-19 era, she said, studios could still release movies in theaters, but they’d go quickly to paid-digital platforms if the weekend averages fall below a certain level. This would allow for multiple revenue streams; it would maximize business in theaters that are open but offer an alternative if a “Tenet” happens again.

Historically, theaters and studios have been unwilling to build flexibility into the system and instead tend to haggle over the length of a window in absolute terms.

Still, some note that more than box-office dollars would need to be replaced. Theatrical releases are the giant waterfall that propels revenue downstream — merchandising, theme parks, TV rights. It’s unclear that movies released only on small screens can achieve the same feat.

“I think it’s a lot easier to do that if you’re Disney and people already know your properties from so many years of being massive hits in theaters than it would be if you’re another studio,” said Josh Spiegel, a Disney expert and commentator. “But even they’ll have challenges. Not everything can be ‘The Mandalorian,’” he said, referring to the Disney Plus “Star Wars”-universe hit. “They can’t spend on every show like they did on ‘The Mandalorian.’”

And he noted that the budget is what helped make the series stand out in an environment where hundreds of shows enter the streaming world unnoticed by most consumers every month.

Yet industry experts say studios need to think that way or risk penning their own downfall.

“I think if the pandemic has taught us anything, it’s that it’s a mistake to think everything six months from now will be like it is today,” Sloss said. “But it’s equally a mistake to think that everything will just be back to the way it was.”


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