(Bloomberg) — Village Roadshow Films Ltd. sued Warner Bros. claiming the entertainment giant is simultaneously releasing films in theaters and on WarnerMedia’s HBO Max service to drive subscription revenue for the streaming service, depriving the filmmaking company of theater revenue.
In the lawsuit filed Monday in state court in Los Angeles, Village Roadshow said it co-owns intellectual property rights on almost 100 films that it has paid Warner Bros. more than $4.5 billion to produce and distribute for 25 years.
It’s the latest battle between film producers and stars and distributors who are relying on new forms of revenue from streaming services. “Black Widow” star Scarlett Johansson sued Walt Disney Co. last year, claiming the release of the film on the Disney+ streaming service deprived her of theater revenue. She settled the suit in September.
WarnerMedia hatched a secret plan codenamed “Project Popcorn” to reduce box office and ancillary revenue from films to prop up HBO Max, which benefits only Warner Media, according to the complaint. Village Roadshow pointed specifically to the rush to release “The Matrix Resurrections” last year so HBO Max subscribers could watch it the same day it hit theaters.
Warner Bros. said in a statement that it has no doubt it’ll win the case.
“This is a frivolous attempt by Village Roadshow to avoid their contractual commitment to participate in the arbitration that we commenced against them last week,” Warner Bros. said.
Warner Bros. “sole purpose in moving the release date of ‘The Matrix Resurrection’ forward was to create a desperately needed wave of year-end HBO Max premium subscriptions from what it knew would be a blockbuster film, despite knowing full well that it would decimate the film’s box office revenue and deprive Village Roadshow of any economic up-side that Warner Bros. and its affiliates would enjoy,” according to the complaint.
Warner Bros. claims it released “The Matrix Resurrections” on HBO Max at the same time as in theaters because of the pandemic. But Village Roadshow says other films such as “Spiderman: No Way Home” were released only in theaters in late 2021 and broke box-office records. “Spiderman: No Way Home” sold almost $750 million worth of tickets in the U.S. and Canada since its release, and $1.8 billion internationally, according to BoxOffice Mojo.
“The Matrix Resurrections” on the other hand grossed $37 million in U.S. and Canadian theaters while the original “Matrix” took in $172 million in 1999.
Village Roadshow says it co-owns with Warner Bros. titles such as the The Matrix trilogy, Joker, the Ocean’s series, “Charlie and the Chocolate Factory” and “Edge of Tomorrow.” Its copyright ownership gives allows it co-create, co-invest the derivative rights to the franchise films, according to the complaint.
The case is Village Roadshow Films v. Warner Bros. Entertainment Inc., California Superior Court (Los Angeles)
(Updates with Warner statement)
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