So, here’s a good example of why everyone in the movie business wants to jump off the Hollywood sign: If Warner Bros. spends $130 million on an adult drama, then opens it to $20 million domestic over a five-day holiday weekend, the knives come out. That’s an outright flop, an embarrassment never to be mentioned in a Burbank commissary, even if the movie goes on to generate decent viewership on HBO Max, Warners’ sister streaming service. In fact, I can’t really cite a recent example of this happening at Warners because its executives know better than to make $130 million adult dramas without genre elements or known I.P.

But check out today’s media coverage of Air, the Ben Affleck-directed adult drama starring Matt Damon and friends, which Amazon snapped up before production began for, yes, $130 million, and opened to $20 million over the five-day holiday. “A solid result for an R-rated drama,” raved Variety. “A great start,” beamed Deadline. “What the hell?” declared me before I slammed my head against my MacBook.

Now, we all know money means very little to Amazon Studios, or at least content isn’t the company’s core business, as it is for, say, Warner Bros. Discovery, even though Amazon C.E.O. Andy Jassy is laying people off these days. Amazon also isn’t alone in wildly overpaying for movies that no traditional studio would touch (cough… Netflix, Apple… cough). The recent death of the $130 million Nancy Meyers rom-com, which Netflix passed on after the ask of a $20 million budget increase, is a good example of how few options are available for movies of a certain cost and potential audience. But in theatrical terms, Air is a $130 million release that, even with tens of millions of dollars in marketing and great word-of-mouth, will likely top out at less than half that in U.S. theaters. Not a hit.  

Theatrical as Marketing

Yet, just like those Warner Bros. movies on HBO Max, Air will likely do very well on streaming. (Amazon hasn’t said, or even decided, when that will be.) But unlike Warners movies that underperform theatrically given their budgets and do well on HBO Max or other home video windows, Air will probably be considered a big hit. But is it? Should it?      

True, Amazon wasn’t exactly boasting to trade reporters about that sky-high acquisition cost, and the producers’ actual outlay to make the movie was about $90 million, still a lot for a story about marketing but not shake-your-head astronomical. The way the deal went down was Peter Guber’s Mandalay had the script, Air Jordan, by Alex Convery (Affleck and crew basically re-wrote it, I’m told) and went to Skydance via its relationship with Skydance Sports head Jon Weinbach, who then got the life rights from Sonny Vaccaro, Damon’s character. Skydance lured Affleck, who said he could make the movie for $90 million under his new company, Artists Equity (more on that on Thursday). Then Amazon paid Skydance the $130 million, Affleck got the very generous budget that he wanted—this is definitely the most expensive movie shot mostly in an office building—and the extra $40 million was divvied up between producers and rights holders. Affleck also baked in profit participation for some of his key people, all on Amazon’s dime.

The movie turned out great, so congrats to everyone that got Amazon to pay for it all. The industry enthusiasm over Air is probably due to excitement that Amazon pivoted to give Affleck’s well-reviewed crowd-pleaser a run in 3,500 domestic theaters. The beleaguered theater chains are certainly loving it. And deep down, Hollywood people want these kinds of movies to work in theaters. Or maybe the economics of streaming are so opaque now that nobody really knows how to apply the traditional box office metrics when a streamer does a theatrical exclusive, so we just assume if it does O.K. for the kind of movie it is, it’s a hit.  

After all, the thinking around town these days has shifted from all-in-on-streaming to the notion that theatrical gambits should be celebrated because, in success, they help the streamer justify the cost of production. And even if they fail, the theatrical release still provides the necessary marketing to let everyone know about the movie—and the actual business is in the service, anyway. “Amazon is taking a swing,” Kevin Wilson, Amazon’s distribution executive in charge of the Air release, told Variety. “But I don’t think you can replace what Air has gotten this weekend in terms of publicity, word-of-mouth and marketing from going to theaters.”

Marketing from going to theaters. That’s the key phrase, and Wilson isn’t wrong, of course. Study after study shows that viewership of films that debut in theaters with studio-sized campaigns tend to perform much better on streaming, just as they did for decades on television and pay cable. Since the advent of the VHS cassette, theaters have basically fueled home entertainment, where the studio accountants (and profit participation litigators) know to look for the real money. You can make your numbers on theaters, of course, but the open secret has always been that the high-profile misses often become profitable pretty quickly downstream thanks in large part to that awareness. 

It worked back when DVDs were floating Hollywood, and it’s why the Netflix Top 10 is now filled with licensed theatrical star vehicles from five or 10 years ago. People remember them, so they click. And it’s why Amazon’s decision to pour tens of millions of dollars into P&A for Air will likely do wonders when it drops on Prime Video, even if the economics of the theatrical release don’t really make sense on their own.  

So what is the right amount to spend on a movie when the goal is a decent theatrical run, which is really meant to fuel robust streaming? What, exactly, is the right calculus to declare a hit? Nobody seems to know, not even Amazon, with its vast resources and data. Remember how everyone made fun of career TV executive Jen Salke when she won the top Amazon content job and went on a $50 million Sundance spending spree, only to see those movies, like Mindy Kaling’s Late Night and Brittany Runs a Marathon, bomb in theaters? “It was like, why would we put ourselves through that step if it’s going to tear down the film and require us to double our investment in marketing to get to Prime to kind of turn that story around?” Salke told the Times this week. That doesn’t sound like someone who sees the value of a theatrical release.

But now Salke has changed her tune, no doubt influenced by having a fun, commercial drama in Air, big stars like Affleck and Damon to promote it, and Amazon’s fresh acquisition of MGM, with its recent hit, Creed III. It’s worth remembering that most of the MGM movies released in its final years under Anchorage Capital were pricey adult dramas like Air, except not particularly crowd-pleasing—Licorice Pizza and House of Gucci and Bones and All, among others, that did not make money in theaters, given their budgets.

Would those MGM movies now be declared hits under Amazon? Probably, as long as the marketing made us all remember them.