Here's how Netflix's Warner Bros. acquisition poses risks to theatre industry

Netflix's recent announcement to acquire Warner Bros. Discovery has surely sent the streaming world into a frenzy, but the industry that could be hit the hardest is the theatre.

This unease is evident in Warner Bros. Discovery’s film studio and streaming service falling under the belt of Netflix. 

As Netflix is emerging victorious in a bidding war against Paramount, Skydance and Comcast, concerns are mounting over the future of theatrical releases.

Industry experts have raised an alarm at the adverse implications of this impending acquisition. 

Shawn Robbins, the director of analytics at Fandango, noted that many theatre owners view this outcome as unfavourable, fearing significant changes to the theatre industry.

Cinema United, the largest exhibition trade association, also voiced strong opposition, warning that the deal poses an unprecedented threat to theatres of all sizes, estimating that around 25% of the annual domestic box office would be removed if the deal takes place.

The biggest concern surrounding the Netflix-Warner Bros. merger is in Netflix's business model, which prioritises streaming over theatrical releases. 

Therefore, executives are worried that this could lead to fewer film productions for cinemas and shorter theatrical windows, further curtailing box office revenues.

Past trends indicate that studio consolidations led to a decrease in theatrical releases, a pattern seen when Disney acquired 20th Century Fox.

Although Netflix co-CEO Ted Sarandos has assured that Warner Bros. films will continue to be released in theatres, the specifics of these releases remain unclear, leaving the industry in uncertainty about whether these films will enjoy traditional theatrical windows or be limited to brief runs to meet award eligibility.

As the deal comes to a close, theatre operators appear frightened of the implications, hoping Netflix will honour its commitments while fearing the long-term effects on their business model.