Is "Red One" The Last Remnant From The Streaming Wars?

The Streaming Wars Pivot: Why Dwayne Johnson's $250 Million "Red One" Reflects Changing Hollywood Economics

 

Brent Lang and Rebecca Rubin have a new article on Variety about Streaming Wars. The holiday season often ushers in blockbuster films designed to entertain audiences and rake in profits. Dwayne Johnson’s "Red One", a $250 million Yuletide action movie, entered the fray under intense scrutiny. Its underwhelming $32 million opening weekend at the U.S. box office prompted questions about the film's value proposition in an era where streaming platforms are rethinking their lavish spending habits.

This article explores whether "Red One" signals a strategic evolution in the entertainment industry or remains a costly artifact of the streaming wars.

A New Equation for Film Success

The traditional yardstick for a movie’s profitability—earning at least 2.5 times its production budget at the box office—appears irrelevant for Amazon, the studio behind "Red One." With revenue strategies pivoting towards downstream value like merchandising, rentals, and subscriber retention, theatrical success is no longer the sole indicator of a film's impact.

Amazon MGM’s theatrical head Kevin Wilson articulated the company’s unconventional model: “If we can put these movies out theatrically and cover our P&A [print and advertising] costs, why wouldn’t we? We’re getting a massive marketing campaign that’s being paid for before the film gets to streaming.”

This approach reflects a growing trend among Silicon Valley-backed studios, which prioritize streaming subscriber gains over traditional box office triumphs.

The Changing Landscape of Hollywood Spending

"Red One" was greenlit during the streaming wars peak, a time when platforms fiercely competed for content to bolster subscriptions. Studios like Amazon and Netflix overpaid for high-profile projects, offering stars like Dwayne Johnson not only their standard fees but also additional buyouts in lieu of box office revenue sharing. These inflated budgets, however, are becoming unsustainable as streaming growth slows.

David A. Gross, of Franchise Entertainment Research, noted this shift: “Netflix made these kinds of movies when they first entered the theatrical business, but they don’t anymore. Apple has made them too, and they are cutting back.”

For streamers, the question is whether films like "Red One" can deliver lasting returns. Amazon’s justification lies in the ancillary revenues it anticipates—from licensing deals to product tie-ins—and the value of keeping Prime Video subscribers engaged. Yet, the opacity surrounding streaming viewership metrics makes it difficult to assess the film's true success.

The Theatrical Gambit: A Marketing Play?

Initially intended as a streaming exclusive, "Red One" was pivoted to theaters after strong test screenings. The movie earned an A- CinemaScore from audiences, suggesting solid appeal, despite critics delivering a harsh 33% score on Rotten Tomatoes. However, analysts question whether this hybrid approach—using theaters as a marketing funnel for streaming—truly justifies the costs.

"Red One" reportedly needs over $100 million to break even on its marketing and distribution budget alone, leaving its $250 million production cost in limbo. Cinema owners benefit from this experiment as theaters become valuable promotional tools for streamers. But critics argue that such ventures risk normalizing losses on the theatrical front.

A Sign of Retrenchment, Not Expansion

The entertainment industry’s golden age of unchecked spending appears to be drawing to a close. Studios like Apple and Amazon, with their immense financial resources, can afford to absorb flops like "Red One." For traditional studios, however, even smaller losses can be devastating.

As streamers re-evaluate their strategies, there’s growing pressure to justify blockbuster budgets with clear, measurable success. New models are emerging—such as Netflix’s exploration of bonus payments tied to viewership rather than lump-sum payouts—but these changes have yet to gain widespread acceptance among talent agencies.

Conclusion: What Lies Ahead?

"Red One" is emblematic of an entertainment industry in transition. While Amazon may write off its losses as a rounding error, the broader implications suggest a retreat from extravagant projects that lack clear financial returns.

This pivot could reshape Hollywood, favoring leaner, more strategic investments over lavish gambles. Still, until streamers adopt greater transparency in reporting success metrics, assessing the real impact of films like "Red One" will remain speculative.

Source: Variety

Photo Credit: Amazon/AI