AMC And Universal Strike Historic Deal To Shrink Theatrical Window (FILM NEWS)

The theatrical window for exclusive first-run movies just got dramatically shorter.

Kind of.

And despite my philosophical reservations about it, this is actually a great deal.

In a major move that marks the first step in dramatically redefining the movie theater business model and its entire industry, AMC Theatres and Universal Studios announced an agreement that allows Universal to make their movies available on at-home Premium Video On Demand (PVOD) after just 17 days of theatrical play. The previous minimum period of theatrical exclusivity had hovered at around 90 days.

This comes after a major falling out between AMC (the nation’s largest theater chain) and Universal this past spring. When the studio took in a reported $100 million on the opening PVOD weekend for Trolls World Tour, they announced that they would do more straight-to-PVOD releases in the future.

That decision angered AMC (rightfully so) as it was a breach of trust in the business relationship between a studio and all theatrical exhibitors. As a result, AMC immediately announced that they would no longer screen any films distributed by Universal until the studio reversed course on its new PVOD plans.

Three months later, this happened.

At first blush, one might assume that Universal “won” and that AMC blinked. But when you look at the details of the deal, it’s a brilliant win-win for both sides that, more broadly, lays out a perfect mutually-beneficial blueprint for all theaters and studios to follow.

Here are the two main aspects of the deal:

  • After 17 days of theatrical play, Universal can make their films available at home for a two-day PVOD rental price point of $19.99 or higher. That 17 day period includes a film’s first three weekends, traditionally the time frame in which a movie makes most of its money (blockbusters especially). AMC can also continue to screen the films simultaneously.
  • AMC will receive a percentage of Universal’s PVOD revenues.

Here’s why this is a great deal.

Until yesterday, the assumption was that the tensions between studios and theaters over shrinking the theatrical window would only increase and get ugly because the two sides (to some degree) had polar opposite priorities that couldn’t be reconciled.

Miraculously, this deal reconciles them.

The most obvious reason that theaters were against shrinking the theatrical window is because of lost revenue. Now that Universal has agreed to share PVOD revenue with AMC, that problem is essentially solved. Better yet, AMC doesn’t even have to do anything; they’ll just collect checks.

More importantly, this deal is great because it is a contractual agreement made by both sides.

The act of doing that not only heals the rift between the two entities; it actually maintains and strengthens the necessary relationship between them rather than Universal going rogue and damaging that relationship, a move that served as a destructive industry precedent. This deal, however, is exactly the kind of partnership that studios and theaters need to nurture as the movie industry continues to evolve.

Also — and this is vitally important — if a movie is still doing well theatrically after 17 days, Universal will likely continue to milk that for as long as they can. They won’t automatically put a movie on PVOD after 17 days with every movie. Box office will inevitably determine that, and will most often be applied to movies that are under-performing theatrically. Having that flexibility is why, in the open of this piece, I initially qualified the newly shortened window as a “kind of” decision.

It will likely only be a matter of time before AMC strikes the same or similar deals with the other major studios. Other theater chains will most certainly do the same. In short, over the next few months this is likely to become industry standard between all theater chains and all movie studios.

And again, given that this is being done in mutually-beneficial partnership rather than in warring tensions means everything for the viability of the theatrical industry moving forward (so long as it can survive the COVID pandemic).

Honestly, this is exactly the kind of win-win compromise that we can only dream of now in the world of politics. This is great leadership.

Theaters need to survive — globally — or studio blockbusters and franchises aren’t possible. If that weren’t true, studios would’ve thrown all of their major content straight to PVOD the moment the pandemic set in.

Nevertheless, we were already in a changing theatrical ecosystem as it relates to theatrical vs. VOD/streaming, and the pandemic has only accelerated that evolution. AMC and Universal — newly bitter enemies — actually came together to cast a vision for the future. That’s amazing.

Another positive possibility: studios may start to take more risks and expand their artistic portfolios. Over the past decade-plus, studios have all-but-abandoned risky mid-range titles, the kind they used to invest in regularly. They’ve left that kind of adult-driven awards season fare to indie producers and distributors. But now with this new business model, studios may be willing to put money behind those kind of risks (and those kind of filmmakers) again.

The big question that remains: what about independent theaters? Not just indie art houses but also the smaller regional chains and local personally-owned multiplexes that showcase studio tentpoles. There is a danger that they’ll be left in the lurch, not enjoying any PVOD revenues once a title hits that platform.

If a solution to that exists, it may need to be done in a mass civil partnership between those theaters and each studio, perhaps facilitated by the National Association of Theater Owners.

As far as indie movies and indie art houses, we may see similar deals struck individually between those theaters and indie distributors, but that will likely come a bit later in the future once the major studios and chains have laid the groundwork. In the near-term (or even for the foreseeable future), little will likely change on the indie side of the industry.

The best possible world for movies — both artistically and financially — is one where there is a strong partnership between theatrical and VOD/streaming. Both must thrive together. If one side or the other “wins”, it’s actually a loss for everyone — and for movies. With this historic deal, the industry and the art have both been strengthened.

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