AILSA CHANG, HOST:
As the movie industry debates the future of Warner Bros., one big question remains. What would Netflix acquiring Warner Bros. mean for movie theaters? Netflix CEO Ted Sarandos has called the traditional theater model, quote, "outdated." But he promised theatrical releases would continue if this deal does go through. To talk about whether the movie theater business model can survive, we're joined now by Ben Fritz of The Wall Street Journal. He's also author of the book "The Big Picture: The Fight For The Future Of Movies." Welcome.
BEN FRITZ: Thank you, Ailsa.
CHANG: OK. We probably won't know who's actually going to acquire Warner anytime soon because Paramount, of course, mounted a hostile takeover bid. But if Netflix does get this deal, what do you think we can expect for the future of movie theaters?
(LAUGHTER)
FRITZ: Well, I think there's a short run and a medium run question. In the short run, I think Netflix will certainly fulfill the promises they're making. And they will want to show that they're being, you know, good citizens. And they will release Warner Bros. movies in theaters, probably the same 10 to 12 films per year as they have been. The question everybody in Hollywood is worried about is, after a few years, do they start whittling that away? Instead of 10, is it eight? Instead of eight, is it six?
And if a deal closes, let's say, in 2027, could it be in a point by 2028, 2029 where the Warner Bros. subsidiary of Netflix is releasing only half as many movies as Warner Bros. has been recently? That would be really, really difficult for the movie theater industry. The box office is already below what it was pre-pandemic. And Warner Bros. releases a lot of big hit movies like "Sinners," like "Weapons," like DC and "Harry Potter" movies. It would be a real body blow to an industry that's already suffering.
CHANG: That said, does Ted Sarandos have a point, the Netflix CEO, that we need to someday wean the industry off of movie theaters? Because he has said that unless you're fortunate enough to live in Manhattan, most of the country cannot walk to a movie theater, and that streaming is about meeting the consumer where they are. Is there some merit to his point?
FRITZ: There's definitely merit. You know, a lot of people prefer streaming. And he always points out that, you know, when a lot of us think about seeing movies when we were kids, realistically, often, maybe it was on DVD, if it was before streaming.
CHANG: Yeah.
FRITZ: But on the other hand, they're called movies because they're made to be seen in movie theaters. Most filmmakers make their movies to be seen in movie theaters. They don't make them to be seen on a TV, let alone a tablet or a phone. And at some point, if movie theaters evaporate or become like this kind of niche business, people only go once or twice per year, then what is a movie but, like, a long episode of TV at some point, you know?
CHANG: (Laughter).
FRITZ: Like, movies lose their specialness.
CHANG: Yeah.
FRITZ: I think what makes a movie special is not just its length, it's that a movie is intended to be seen by many people together in a dark room with no distractions.
CHANG: It's communal, yes.
FRITZ: It's communal. And you don't look at your phone when you're bored. You pay full attention. And I think there's a very good argument that a lot of the most significant, culturally impactful movies in history have been culturally impactful because people saw them together.
CHANG: Well, let's take a look at just sort of the mechanics of this. There's a popular idea that studios pay movie theaters to show movies. But it's not that simple, right? Like, what's the real arrangement here?
FRITZ: Correct. They make deals with movie theaters where they split the box office revenue. And depending on the movie, it's usually between 50% and 60% goes to the studio. And the remaining 40% or 50% goes to the movie theater. So it's a very symbiotic relationship between the studios and the theaters.
CHANG: Based on your reporting in the last decade or so, whether Warner Bros. is bought by Netflix or bought by Paramount, do you see the movie theater model changing in the future to become more viable? And if so, how?
FRITZ: Yeah, well, the direction the movie theater industry is going is to try to make it more of an expensive, premium experience to make up for the fact that people are going less. That's why IMAX is having such a good year right now, and why you see more and more recliner seats in theaters and really nice food and so on. And that's sort of where we're going more and more, unfortunately. Unfortunately, I would say, for people who love movies because it's kind of like going to the traditional theater.
CHANG: Yeah.
FRITZ: Like going to see a play or a musical, you know?
CHANG: Right.
FRITZ: People only go once in a while, but it's expensive. That's what the theaters are going to have to do to make up for the fact that there's fewer and fewer movies in theaters and people go less often. And I don't think theaters will ever go away. I think there will always be people who like movie theaters. And there will always be certain movies like your Nolan movies, your Spielberg movies, your James Cameron "Avatar" that's about to come out. People are like, this is worth it in the theater.
CHANG: Yeah.
FRITZ: But it might just become a little bit more of a niche experience.
CHANG: Exactly.
FRITZ: And it's less of a mass entertainment than it used to be.
CHANG: Ben Fritz covers the entertainment industry for The Wall Street Journal. Thank you so much for joining us, Ben.
FRITZ: Sure. It was my pleasure.
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