Universal Pictures was one of the movie studios that quickly responded to the COVID-19 pandemic, advancing its movies to premium VOD and landing in hot water with AMC Theaters, the world’s largest theater chain. But after a month-long public dispute, the two companies have reached a multi-year agreement that should keep both sides happy, and that indicates a seismic shift in the way the movies are distributed.
The conflict started in March, before we had an idea of how long public places such as movie theaters would be closed, when Universal released Trolls World Tour on premium VOD platforms at the same time it was scheduled to hit theaters.
AMC took this shortening of the traditional theatrical “window”, the period during which films are played exclusively in theaters, as a direct affront, and announced in retaliation that it would no longer show any Universal film. (This has turned out to be a rather irrelevant threat, as theaters in the United States have been closed since March.)
On Tuesday, the two companies announced that they had agreed on a new theatrical window of just 17 days, or three weekends, before a Universal movie can be sold on premium VOD. This is a significant shortening of the previous window, which was closer to 90 days for physical home video releases and approximately 75 days for digital releases.
This is what this means in practice: the next Jurassic Park movie, Jurassic World: Dominion, is slated to debut in theaters on June 11, 2021. Assuming theaters are open by then, you can head over to your local multiplex to see the conclusion of the Jurassic World trilogy, or simply wait until June 28 and Watch on your TV at home for rent for $ 19.99.
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Despite these shortened theatrical tours, Universal’s business model still depends heavily on movie theaters. 2015’s Jurassic world grossed over $ 1.67 billion at the global box office. And it also demonstrates the importance of the three weekend window. During its first three launch weekends, Jurassic world grossed $ 500 million at the national box office, more than 76% of his final account of $ 652 million, after his theatrical career ended five months later.
“Theatrical experience remains the cornerstone of our business,” said Donna Langley, president of Universal Pictures, in a press release. “The partnership we have forged with AMC is driven by our collective desire to ensure a prosperous future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality.”
While this new window may seem catastrophically shorter for AMC Theaters, it is likely to be positive in the long run. The old theater window, which was approaching six months in the mid-2000s, was created around the arrival of the home video market in the 1980s, to prevent studios from releasing copies of a VHS movie, DVD etc. , while still playing in theaters.
But that was also based on the idea that movies have long queues at the box office and still make money two to three months after their theatrical release. These days, the box office performance of movies is heavily loaded on its first few release weekends. They are quickly replaced by other films, often from the same studios that produced the previous hit.
With this new fast pace, the 70-90 day exclusivity window really doesn’t make sense to anyone. Most movies would fall into a dead zone during which they would no longer be in theaters and could not be released on VOD or Blu-ray. In other words, no one made money from them for almost two months. This new agreement should help solve that problem.
Under its agreement with AMC Theaters, Universal can release a movie on premium video-on-demand (PVOD) platforms, charging more than $ 19.99 to rent it, once you’ve spent three weekends (minimum 17 days) playing exclusively on the cinemas. AMC will also get a cut of these PVOD sales, which is revenue it could desperately use, and the theatrical reopening remains a huge question mark in the United States.
“AMC will also share these new revenue streams that will reach the movie ecosystem from premium video on demand,” said AMC Theaters CEO Adam Aron. “So in total Universal and AMC believe this will expand the market and benefit all of us.”
Exactly how AMC will share in the PVOD market is not known, other than through its own AMC Theaters On Demand app, which will be one of many digital homes for Universal movies. For now, no other film studio has reached an agreement to adjust theatrical windows with AMC, and Universal has not announced a partnership with any other major theater chain, such as Regal Cinemas. However, with the fall of this first domino, other announcements may come in the near future.
