Warner Bros. and HBO Max launch a mini label to make streaming movies

Movie studio Warner Bros. and HBO Max are launching a new division that will specialize in making movies specifically for streaming, the companies said Wednesday.

The unit is designed to produce films for HBO Max, the upcoming streaming service owned by the Burbank-based studio’s parent company, AT&T Inc. The new division is expected to make eight to 10 films a year for the direct-to-consumer platform, which launches in May.

Movies produced by the new label, dubbed Warner Max, will carry production budgets of $30 million to $60 million, according to people familiar with the matter who were not authorized to comment.

The initiative, a joint venture overseen by HBO Max’s Chief Content Officer Kevin Reilly and Warner Bros. Pictures Group Chairman Toby Emmerich, reflects a need among HBO Max and its competitors to fill their pipelines with original movies.

“We are going to deliver a collaborative and lean process for talent, make a range of quality films, and provide a platform for each of them to have cultural impact,” Reilly said in a statement.

The division also allows Warner Bros. to hedge its bets on mid-budget movies — such as romantic comedies and adult dramas — that have become less viable at the multiplex.

Warner Bros., run by former BBC executive Ann Sarnoff, has long prided itself on its ability to make not only big-budget franchise films, but also the comedies and smaller dramas that once kept multiplexes humming. The market for those movies, however, has become increasingly challenging.

In 2019, Warner Bros. released a string of mid-tier films that floundered at the box office, including “The Kitchen” (starring Melissa McCarthy), “The Goldfinch” (based on a Pulitzer Prize-winning novel) and “Motherless Brooklyn” (starring and directed by Edward Norton).

For studios, movies with massive budgets are ironically now considered safer bets because they have the spectacle and brand-awareness to make people want to see them on a big screen as soon as they’re released. Whether or not a movie has enough of a draw to justify a full theatrical release (and the pricey accompanying marketing campaign) is now a routine question for studio executives.

The company said Warner Bros. and its New Line Cinema unit will continue to make mid-budget movies for theatrical distribution, while Warner Max will create movies for audiences that would be best reached through the streaming service.

Warner Bros. has not ruled out the possibility that some Warner Max movies will be released in at least some theaters, people familiar with the matter said. However, the intention is to make movies for the streaming platform. Cinemas have generally balked at screening movies that don’t follow a traditional release pattern, in which films generally aren’t available for home viewing until 90 days after their theatrical debuts.

Warner Max’s creation comes as streaming services are growing hungrier for film content to draw and retain subscribers.

Netflix initially built its subscriber base through original TV programming with shows such as “House of Cards.” But over time, the company and other streamers have come to increasingly rely on movies they either produce or acquire. Netflix has filled its service with romantic comedies such as “Always Be My Maybe,” animated films such as “Klaus” and Oscar candidates including “The Irishman” and “Marriage Story.” Amazon Prime has also made film a focus, with Sundance Film Festival pickups such as “Brittany Runs a Marathon.”

This is not the first time Warner Bros. has had a specialty division for smaller movies. Warner Independent Pictures launched in 2003 to release such films as “Before Sunset,” but folded in 2008.

AT&T aims to build on the success of HBO, known for prestigious shows, including “Game of Thrones” and “Succession,” and expand its audience with more content from other divisions. AT&T bought HBO, Warner Bros. and the rest of WarnerMedia in 2018.

In addition to HBO’s series and Warner Max movies, HBO Max will feature shows such as new “Looney Tunes” cartoons, “DC Super Hero High,” “Grease: Rydell High” and “Dune: The Sisterhood.”