Five months after strutting out of the Sundance Film Festival with a bag full of splashy acquisitions, Amazon Studios has been thrown off balance by a box office losing streak and the departure of one of its top executives.

One of its highest profile Sundance buys, Mindy Kaling’s “Late Night,” has proven to be a painful failure. It has earned only $11.3 million in North America, where it’s been playing on over 2,000 screens for the past two weeks. That’s a poor result given that Amazon plunked down a hefty $13 million for domestic rights to the picture. What’s worse, the marketing budget on “Late Night” topped out at $33 million. Rival studios project that Amazon could lose roughly $40 million on the comedy’s theatrical run.

The impact of the flop was compounded by the news this week that Bob Berney, the division’s inaugural marketing and distribution chief, is stepping down from his role and will be off of Amazon’s Culver City, Calif. lot by Friday. Berney announced he was leaving on Monday after calling his staffers into a conference room to purportedly talk about the marketing campaign of an upcoming film.

“This is a misdirect meeting,” said Berney, before announcing his departure to stunned employees, according to an individual present. Some staffers started to cry or choked up. The mood at the office has been grim.

The announcement may have come as a surprise, but Berney had been unhappy in recent months. He felt marginalized, believing he was being frozen out of the inner circle of his boss, Amazon Studios head Jennifer Salke, insiders familiar with the company said. Berney hung on until he reached the four year mark, typically the length of time it takes for Amazon employees’ stock options to vest. A source close to the company disputed that Berney had been sidelined.

The failure of “Late Night” and Berney’s departure have left people in the business wondering about the strength of Amazon’s commitment to making movies. Salke has been primarily focused on building up the company’s television pipeline, spending more of her time on ambitious series such as “The Hunt” and “The Lord of the Rings.” Film production has languished in recent months, with Amazon slowing down its in house projects. The company is making “Chemical Hearts,” a low-budget coming-of-age drama with “Riverdale” star Lili Reinhart and it has several other films in various stages of development, but aside from that, things are quiet. They also have deals for straight-to-service feature films for Amazon Prime and multi-picture agreements with Nicole Kidman and Jordan Peele that have yet to announce or order specific projects.

At the same time, however, Amazon has been active on the acquisition front, loading up on projects that were championed by Salke and her team during a $50 million shopping spree at the Sundance Film Festival. It’s unclear who might replace Berney, a crucial role since the studio took its distribution operation in-house. Amazon flagship hits like “The Big Sick” and “Manchester by the Sea” were released by third parties, Lionsgate and Roadside Attractions, respectively. In the interim, marketing department staffers will report to movies co-head Matt Newman.

Berney was one of the last men standing from the regime of Roy Price, Salke’s predecessor who was dismissed from the company in 2017 following accusations of sexual harassment. Despite his long experience in Hollywood at indie houses like FilmDistrict and IFC Films, rumors of Berney’s imminent departure had been bubbling since last December when the studio ended a lackluster year of releases like “Suspiria,” “You Were Never Really Here” and “Beautiful Boy,” all of which lost money.

While many were critically praised and garnered awards attention, none among them grossed more than $7 million at the box office, a grim return for a company widely perceived as willing to spend whatever it takes to compete with the major studios and its chief rival, Netflix. When the films didn’t work, Amazon’s marketing department and Berney often found itself shouldering the blame. The film division’s performance hasn’t been able to match that of Amazon’s television arm, which has been blessed with Emmy winners such as “The Marvelous Mrs. Maisel” and buzzy favorites such as “Fleabag.”

Going forward, Amazon appears to be borrowing a page from Netflix when it comes to releasing movies. The company made a point of talking up its commitment to traditional theatrical releases, but Salke wants to change things. “The Report,” a political drama it bought at Sundance for $17 million, will debut on Prime two weeks after it opens in theaters. Amazon believes the shorter theatrical window will create more buzz around Prime, but there are risks. It could alienate exhibitors and awards voters who are critical of streaming services, regarding them as undermining the financial health of the theater business.

“Late Night” may lose millions during its theatrical run, but a source close to the company stressed that Amazon derives value from its movies in other ways. The company believes that the more time people spend streaming films, the more likely they are to buy household goods, clothes, and other products hawked on the e-retailer. They argue that the publicity generated by “Late Night’s” release will create excitement for Prime and drive subscribers to the platform, making the cost associated with its distribution analogous to a marketing expense.

Salke and Berney may not have meshed, but a source close to Amazon said that the entertainment chief has confidence in her other deputies, a group that includes Ted Hope, Julie Rapaport, and Newman. The source also stressed that the company is in the film business for the long run.

That may be, but replacing Berney could be a challenge. There’s a perception that Amazon is feeling burned about its movie business experience. In that environment, top marketing and distribution chiefs may not want to take the job unless they know that Amazon is committed to the film business. That commitment could waver if upcoming films such as “The Report” and “Brittany Runs a Marathon” follow in “Late Night’s” footsteps and fail to resonate with audiences.

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