Warner Bros faces lawsuit for Matrix Resurrections' early release as box office revenue falters

Village Roadshow Entertainment Group sued Warner Bros on Feb 7 for a breach of contract over the studio’s decision to release Matrix Resurrections simultaneously on HBO Max and in theatres due to which the box office suffered a great loss.

According to The Hollywood Reporter, the lawsuit heightened the hostility between those in the movie industry who make millions of dollars through theatrical releases and major media companies that have turned to prioritise growing their streaming services.

“Warner Bros’ sole purpose in moving the release date of The Matrix Resurrections 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 upside that Warner Bros and its affiliates would enjoy, especially as compared to a 2022 exclusive theatrical release,” read the complaint filed in the Los Angeles Superior Court in California, USA.

Warner Bros issued a statement saying, “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. We have no doubt that this case will be resolved in our favour.”

Village Roadshow alleged the early release coupled with the joint release in theatres and on HBO Max caused Matrix Resurrections, which was to be released in 2022, to underwhelm at the box office. The blockbuster sequel has grossed only $37 million domestically compared to nearly $750 million by Spider-Man: No Way Home, which is also a sequel to a blockbuster franchise and was released around the same time.

Actors, producers and other partners who have suffered financially from this move instead of the regular, exclusive theatre release have pushed back against the prioritisation of streaming platforms.

In July 2021, Scarlett Johansson sued Disney claiming a breach in contract when Black Widow was made available on Disney+ on the same day as the theatrical release. She claimed Disney intended on steering viewers towards its streaming service instead of theaters to boost its value and lower her compensation, which was tied to Black Widow’s box office performance.

Disney maintained that it renegotiated Johansson’s contract so she could be made whole. The case settled in Sept 2021. Terms of the deal weren’t disclosed.

In the lawsuit, Village Roadshow alleged Warner Bros executives’ “Project Popcorn” — which typically gives movie theatres an exclusive window of at least 45 days before the films are released on home platforms — led viewers to shift from theatres to HBO Max. As part of the plan, Warner Bros moved up the release of Matrix Resurrections from 2022 to the end of 2021 to up their year-end subscriptions.

“Warner Bros agreed to allow its sister company to stream Village Roadshow’s tent pole film, on the same day of its theatrical release, for no additional revenue so that its sister company could increase its subscribers and subscription revenues with the additional benefit of boosting its parent company’s stock,” wrote Mark Holscher, a representative of Village Roadshow.

The lawsuit claimed that no such deal was reached with Village Roadshow over Matrix Resurrections, adding that the rushed release caused pirated versions to come about, causing another hit to the box office revenues. The complaint argued that the movie’s poor financial performance impacted the value of the franchise and it appears that no more instalments will follow.

In the lawsuit, Village Roadshow also raised other issues it has with Warner Bros over ongoing projects. It said that the studio refused to recognise its right to partnership in Wonka by denying that it's a prequel to Charlie and the Chocolate Factory, which they co-own.

Warner Bros is trying to cut Village Roadshow out of a TV series based on Edge of Tomorrow as well, according to the lawsuit, allegedly refused to proceed with any project concerning the series that involves Village Roadshow as a financial partner.