The company that co-financed the “Matrix” movies has sued Warner Bros. for a breach of contract, accusing the Burbank studio of destroying the value of its key franchise by releasing the latest sequel on streaming service HBO Max and in theaters at the same time.
The lawsuit is the latest example of a flashpoint in Hollywood after studios put some of their biggest movies on streaming services as the lingering COVID-19 pandemic caused uncertainty at the box office and media giants pursued direct-to-consumer strategies.
Los Angeles-based Village Roadshow Entertainment Group, which has co-financed and co-produced Warner Bros. films since 1997, on Monday accused the studio of sacrificing box office and franchise value to boost subscriber numbers for its sister streamer HBO Max. Warner Bros. and HBO Max are both owned by WarnerMedia, a unit of AT&T.
“The Matrix Resurrections,” the latest film in the series starring Keanu Reeves, grossed a paltry $37 million in the US and Canada after its December release.
“WB’s strategy not only ensured that ‘The Matrix Resurrections’ would be a bust at the box office, but it also inflicted serious harm to the entire ‘Matrix’ franchise,” the company said in its complaint, filed in Los Angeles County Superior Court . “There can be no doubt that the abysmal theatrical box office sales figures from ‘The Matrix Resurrections’ dilute the value of this tent pole franchise.”
The Wall Street Journal first reported the lawsuit.
“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 in a statement. “We have no doubt that this case will be resolved in our favor.”
Warner Bros. in late 2020 decided to release all of its 2021 movies on HBO Max and in theaters at the same time, in a strategy called “Project Popcorn.” The tactic brought millions of new subscribers to HBO and HBO Max, which now count 73.8 million combined subscribers and are trying to compete with Netflix and Walt Disney Co.’s Disney+ and Hulu.
The new lawsuit comes after Scarlett Johansson last year sued Disney for inducing a breach of contract by releasing “Black Widow” on Disney+ for a $30 fee while it was being released in theaters. The actress said the decision cost her substantial bonuses that were based on box office benchmarks. The two sides settled in September.
Village Roadshow has accused Warner Bros. of not allowing it to invest in the upcoming film “Wonka,” which tells the backstory of Willie Wonka. The complaint also alleges that Village Roadshow, which co-financed the 2005 film “Charlie and the Chocolate Factory,” is entitled to co-finance and co-own “Wonka.”
Village Roadshow also alleged that Warner Bros. has pressured the company to give up its rights to co-finance a TV show based on the movie “Edge of Tomorrow,” which it co-financed.
The company said it has paid $4.5 billion to produce and distribute nearly 100 Warner Bros. films over the years.