Did Dune Just Save AMC Entertainment?

Studios undoubtedly realize their simultaneous movie release schedule is backfiring. Big-budget films are generating large returns at the box office, but the studios are undercutting the receipts they could have made by releasing them to their streaming services at the same time.

While simultaneous releases might have been necessary when the pandemic shut down theaters and, gave the studios a chance to highlight their streaming services, it's not sustainable. The studios need to abandon the practice quickly.

The box office results of Warner Bros. Dune illustrates just how critical theaters are to studios, and offer yet another example of why AMC Entertainment (AMC 9.63%) will survive. 

Image source: Getty Images.

A missed opportunity

The Frank Herbert epic opened to rave reviews, earning an 83% rating from critics on Rotten Tomatoes and a 91% audience rating. Dune raked in $17.5 million in its opening night debut, some $41 million over the first weekend, and $238 million worldwide. It will undoubtedly go on to earn blockbuster status.

But it also shows the mistake Warner Bros. made. By simultaneously releasing the film to AT&T's (T 0.92%) HBO Max on-demand video service, the studio gutted what could have been a massive opening over those initial three showings. Because most of a film's box office is generated in the first two or three weeks, Warner Bros. and other studios are limiting how much they can profit from their movies.

While many viewers did see the movie from the comfort of their living rooms, moviegoers still consistently prove they want the big screen experience.

Just look at Halloween Kills from Comcast's (CMCSA 1.48%) Universal Pictures, which also debuted on screen and on the Peacock streaming service. It had an even bigger opening than Dune according to Box Office Mojo, generating almost $23 million its first night and over $49 million its opening weekend. 

Yet it had the added benefit of being released ahead of the Halloween holiday when people are much more interested in seeing such scary fare. Had Universal not done a simultaneous release, though, it might have done even better.

What might have been

Look at any of the big-budget movies that have been released just this month and you can see what an exclusive theatrical showing does for a film's receipts.

Data source: Box Office Mojo. Table by author.

We know many movie studios are second-guessing their decision. Warner Bros., for example, after promising to simultaneously release its slate of 2021 films, signed agreements with AMC, Cinemark (CNK 0.55%), and Regal Cinema owner Cineworld (CNNW.F) guaranteeing a 45-day window of exclusivity for theaters beginning in 2022. Universal previously agreed to a 17-day period of exclusivity.

Disney (DIS -0.22%) might also abandon its simultaneous schedule following a blow up with Black Widow star Scarlett Johannson, who sued the studio over lost receipts she would have shared from an exclusive theater showing. Disney subsequently settled with the actress for an undisclosed sum, and other actors also considered suing, too.

Image source: Getty Images.

The lure of the big screen

While studios contend it was always just a temporary workaround to a difficult industry situation, having committed to the practice for a full year or more -- while also releasing some films only to streaming -- suggests they may have wanted it to be a longer-term solution.

Yes, the studios were able to bulk up their subscriber rolls during this period, but that likely had as much to do with limited movie availability and seating as it did to the movies that were available. 

With moviegoers showing they want to go to the theater to see films, theater operators look like they could bounce back sooner rather than later.