AMC Theatres just took a stand.
They went out on a limb to do it, too, completely on their own. Now, others are following.
Even in the face of possible bankruptcy due to the Coronavirus shutdown, AMC Theatres released a statement saying that they would no longer screen any movies distributed by Universal Studios.
What would cause them to take such a drastic measure, one that would be punitive to their already-endangered business?
Trolls World Tour.
Not the movie, but the success of it on Premium VOD.
Released exclusively April 10 on that at-home platform, the animated sequel has hauled in $100 million dollars in its first three weeks. It is currently being rented out at a rate of $19.99 for a 48-hour viewing window through most VOD providers. World Tour’s $100 million is nearly equal to the amount of the gross that the original Trolls earned over the same time frame.
As a result, Universal Studios (the distributor of Trolls World Tour) announced that they would increase their straight-to-Premium VOD distribution plans for first-run movies. NBCUniversal CEO Jeff Shell told the Wall Street Journal, “The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD. As soon as theaters reopen, we expect to release movies on both formats.”
Well, AMC wasn’t having any of that.
In response, AMC’s chairman/CEO Adam Aron announced that the national theater chain would no longer distribute Universal films. This lengthy quote is only part of Aron’s full statement, but it’s worth reading:
- “We want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies. It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us. It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat. Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”
Considering what AMC is giving up by making this decision – including tentpole franchises like Jurassic World, Fast & Furious, Despicable Me/Minions, plus various Blumhouse horror series like the rebooted Halloween– some would argue that it’s a knee-jerk overreach that they’ll come to regret.
The candor of Aron’s statement shows that this was not a decision they came to lightly. They know the cost. They know how much money they’ll be sacrificing. They also know the cost of ignoring Universal’s provocative move would be even more severe.
A healthy movie industry requires both a strong theatrical model and strong streaming model. A balance must be struck between both. Universal just tipped that balance, and AMC is tipping it back.
AMC Theatres is, after all, the biggest theater chain in the world. Now, Universal has something big to lose, too.
To prove that point, other theater entities around the world quickly joined AMC in solidarity.
The National Association of Theatre Owners (NATO) was the first. In a statement, NATO emphasized the unique circumstances of our currently quarantined market.
- “This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preference. It is not surprising that people under shelter-in-home ordinances for weeks on end with increasingly limited entertainment options would take advantage of the movie’s direct-to-VOD move to keep children entertained, even at a premium price. Further, Universal heavily marketed the title as a theatrical release, in theaters and elsewhere, for weeks on end. That is unlikely to recurin normal times, and those costs haven’t been disclosed.”
NATO President and CEO John Fithian added the following:
- “Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases. Theaters provide a beloved immersive, shared experience that cannot be replicated…we are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release.”
Cineworld, owner of Regal Theaters (the nation’s 2nd largest theater chain), was also swift to join AMC in its ban on Universal titles. In addition, the International Union of Cinemas (Europe’s version of NATO) also released a firm statement comparable to NATO’s.
If anyone comes to regret Universal’s decision, it will be Universal. They can’t survive as a PVOD studio alone. No studio making billion-dollar blockbusters can.
But with a unified front from theatrical distributors, that’s exactly what Universal will have to become if they don’t rescind their recent announcement to embrace PVOD for first-run titles.
Which means they will.
I’d imagine that every other studio is grateful they weren’t the first to make such an ill-advised move.