People watch the Trolls movie from their cars, separated from other cars by a 10-foot orange fence in an effort to respect social distancing amid the new coronavirus pandemic, at Ocala’s drive-in cinema in Ocala, Florida. , on April 25, 2020.
Vic Micolucci | AFP | fake pictures
Universal may have struck a deal with the largest theater chain in the US, but you may disagree with the second-largest theater chain if it appears to deviate from the traditional movie theater launch model.
“At Cineworld / Regal, we are not changing our policy regarding showing only movies that respect the theatrical window,” Mooky Greidinger, CEO of Cineworld, told CNBC.
Global exhibitor Cineworld owns the United States-based Regal Theater chain, which operates 7,100 screens. For comparison, AMC currently operates around 8,000 displays.
Cinemark, the third-largest cinema chain, did not immediately respond to CNBC’s request for comment.
The landmark deal between AMC and Universal, which was revealed Tuesday, stipulates that Universal and its subsidiary Focus Features must play movies in theaters for at least three weekends, or 17 days, before seeking a premium video-on-demand release. . Previously, the theater chain would have the exclusive rights to the films for about 90 days.
As part of the deal, AMC will share the revenue sources, although both companies declined to disclose the full terms of the financial deal.
A deal like this could help AMC get some sales from premium video-on-demand releases, as a way to offset some of the loss of not sticking to a traditionally longer theatrical window. However, without knowing the terms of the deal, it is unclear what benefit AMC could see from this strategy.
For Universal, it’s more of a clear win-win situation, if a movie works well at the box office, it stays at the box office. If it’s underperforming at the box office, the company would now have the option of taking the film to other platforms sooner to try to reach a market that didn’t appear in theaters.
But Greidinger is skeptical. “We don’t see any business sense in this model,” he said.
“While we don’t know all the details, we always look at any new business decisions within the industry,” he said. “People should be aware that Universal’s first great movie will not be released in six months, so there is no pressure here; however, we clearly see this as a wrong move at the wrong time.”
Earlier this year, Universal carried the majority of its releases from 2020 to 2021. However, it still has a handful of movies that will be released in theaters this year, including “Candyman” and “The Croods 2”. Universal has the global distribution rights to the latest James Bond movie “No Time to Die”, but not the national distribution rights.
AMC theaters have been closed since mid-March due to the coronavirus outbreak, and the company is seeking to recoup lost revenue. Not to mention, once the theater chain can reopen, its attendance levels will be limited to prevent the future spread of Covid-19, which will weigh on sales.
AMC’s shares have dropped nearly 43% since January as it has struggled to avoid bankruptcy. Recently, the company was able to close a debt deal to become solvent until 2021.
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