Late 2020 shook up the entire film industry. Thanks to COVID-19, Warner Bros. moved its entire slate to HBO Max. Films will debut on the same day as they go into theaters. Then they will run on the website for a month before being pulled and releasing digitally elsewhere. 

This was all done to jumpstart the streamer so it could keep up with viewership and commercial viability from places like Amazon, Netflix, and Disney+. 

But the major concern, aside from the monumental shift of traditional formats, is how talent, writers, and the director will be compensated for their efforts. Traditional bonuses and payouts required money made at the box office. 

That doesn't include production companies, like Legendary, who put up some of the budgets to make these movies, like Godzilla vs. Kong

So how will this all work? 

When the movie debuts, those entitled to a bonus that would normally be triggered by a specific dollar amount at the box office, will get that bonus when the film reaches half that specified amount. So if $100 million in earnings used to trigger your bonus, now $50 million does the trick. 

But what if more theaters close down? 

Then the threshold will adjust. There is a stipulation called the “COVID-19 multiplier," which means those who would normally participate in profits from box-office receipts will continue to do so, as well as benefit from on-demand and online sales. So people renting online and paying will count toward your bonus.

Finally, HBO Max will pay Warner Brothers a fee for its initial 31-day window for the movie on HBO Max. That money will be shared with profit participants, cast, and crew. Yes, crew members will also take part in this profit share, though there was no detailed breakdown to show who is earning what. That will be interesting to study when the information becomes available. 

These all seem like good deals, but I doubt they'll do much to quiet filmmaker complaints. This is all still a move by AT&T to gather more people to the app, and still places all the influence on people watching online. 

There are reports that WB has tried to tell people that they can actually make a lot more money debuting the movies on HBO Max and with the lowered thresholds. But there are just as many reports saying filmmakers and companies have asked for their contracts to be altered according to these new terms. 

But these kinds of payouts will only happen in 2021, and no one should expect to see them moving forward. WB has said when theaters revive they'll go back to the old way of distribution. But if HBO Max isn't booming by then, it's hard to see them switch course. And even if HBO Max is booming... why change what's been working? 

Let us know what you think in the comments. 

Source: Bloomberg