Warner Bros sued for concurrent launch of Matrix Resurrections on HBO Max and theatres

Village Roadshow Entertainment Group, co-producer of The Matrix Resurrections, has sued long-time partner Warner Bros. Entertainment and related entities (WB) for releasing the movie simultaneously on HBO Max and in theatres. Village Roadshow also alleged that WB pushed forward the release date of The Matrix Resurrections which was previously slated to be released in 2022. According to Village Roadshow, this was so that the movie could be included with the slate of films that WB planned to release simultaneously on HBO Max and in theatres, "all while moving WB's wholly-owned films to 2022 so that they would not suffer the same decimating fate".

According to a press statement issued by Village Roadshow, the complaint alleged "deliberate and consistent coordinated efforts" by WB "to eviscerate the significant value of Village Roadshow's intellectual property in order to prop up the new HBO Max streaming service owned by WarnerMedia, the ultimate parent of WB, without providing any accounting".

Village Roadshow added that doing so would "shut Village Roadshow out of its legal and contractual rights to co-own and co-finance the sequels, prequels, spinoffs, and other derivative works of the nearly 100 films that Village Roadshow funded and co-owns" with WB. 

While WB cited the pandemic as part of its rationale for releasing The Matrix Resurrections on its streaming platform and in theatres, Village Roadshow said that other films, such as Spider-Man: No Way Home, were released in late 2021 without a simultaneous streaming service release, and broke box office records.

Village Roadshow alleged that the move by WB to shift the release date of The Matrix Resurrections was to "create a desperately needed wave of year-end HBO Max premium subscriptions from what it knew would be a blockbuster film". This was despite knowing very well that the strategy would "decimate the film's box office revenue and deprive Village Roadshow of any economic upside that WB and its affiliates would enjoy, especially as compared to a 2022 exclusive theatrical release," The Hollywood Reporter said citing the lawsuit. 

The Matrix Resurrections raked in only US$37 million domestically while Spider-Man: No Way Home, which was released around the same time, grossed nearly US$750 million, The Hollywood Reporter added.

In support of its allegations, Village Roadshow's complaint quotes WB and WarnerMedia executives, including WarnerMedia CEO Jason Kilar, boasting of the success of its effort, code named "Project Popcorn." Per the complaint, Kilar is quoted as saying its "day and date" release plan "is going to optimise the economics" in part because of "what we anticipate to be more subscribers coming into HBO Max who choose to do so because of the presence of these films." The complaint also quotes Kilar as saying "We'd make the same decision again," even though that decision "ensured that The Matrix Resurrections would be a bust at the box office . . . [and] inflicted serious harm to the entire Matrix franchise".

According to The Hollywood Reporter, Village Roadshow is withholding substantial payments for its portion of production expenses for The Matrix Resurrections as a result of the alleged breach of contract. It is also pushing for an accounting of all of WB's earnings over the latest Matrix movie. This includes the value earned by using the movie to drive HBO Max subscriptions. MARKETING-INTERACTIVE has reached out to WB for comment.

Over the past 25 years, Village Roadshow has paid WB over US$4.5 billion to produce and distribute 91 films, for which Village Roadshow co-owns all intellectual property rights, including a share of the films' global copyrights, according to the complaint. Those films include blockbuster hits such as The Matrix trilogy, Joker, the Ocean's series, Charlie and the Chocolate Factory, and Edge of Tomorrow.

"As detailed in the complaint, Village Roadshow's copyright ownership gave it the most sought-after rights in Hollywood: the perpetual right to co-create, co-invest and co-own the derivative rights to extremely successful tent pole films and franchises," said Mark Holscher, a Kirkland & Ellis litigation partner who represents Village Roadshow. Holscher added: "Warner Brothers has a fiduciary duty to account to Village Roadshow for all earnings from the exploitation of the films' copyrights, not just those it can't hide through sweetheart deals to benefit HBO Max."

At the same time, the complaint also alleged that WB sought to deprive Village Roadshow of its contractual rights for films including Charlie and the Chocolate Factory in 2005, even though the latter co-financed and co-owned it. WB was also alleged to have taken the stance that the upcoming WB film, Wonka, is not a prequel to Charlie and the Chocolate Factory even though it tells the backstory of Willie Wonka, a character from Charlie and the Chocolate Factory. 

Village Roadshow also alleged that WB had insisted it relinquish its co-finance and co-ownership rights for Edge of Tomorrow. However, because Village Roadshow did not do so, WB said it would "forgo further development of this title", the complaint said.

Village Roadshow is not the only one to have pushed back on the simultaneous release of films in theatres and streaming platforms. Last July, actress Scarlett Johansson sued Disney for breaching the contract because Black Widow was streamed on Disney+ alongside a theatrical release. Johansson previously alleged that Marvel Entertainment "guaranteed an exclusive theatrical release" for Black Widow and her salary was also dependent in large part on the film's box-office performance. The suit alleged that Disney "intentionally induced Marvel's breach of the agreement, without justification," The Wall Street Journal previously reported. Both parties settled the suit late last year.

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