Universal Pictures and AMC Theaters sidelined a bitter dispute and signed a multi-year deal that will allow the studio’s films to premiere in premium video on demand within three weeks of their movie debut.
The pact, which is sure to send shockwaves to the entire exhibition industry, has the potential to change the way films are marketed and distributed. Rival studios are likely to start lobbying for exhibitors to give them more flexibility in determining when and how their theatrical releases can reach home entertainment platforms.
The finanacial terms of the contract were not disclosed. However, in a statement, AMC CEO Adam Aron said the company “will share these new sources of revenue,” meaning that it will get a share of any money made from these digital rentals. Universal only has the ability to put your movies on demand, meaning rentals that cost approximately $ 20 per pop. You cannot sell or rent movies for lower on-demand rates, in the $ 3 to $ 6 range, until three months after your movie debut.
Despite the fact that Universal, under this new deal, could theoretically debut upcoming installments of “Jurassic World” or “Fast & Furious” on Premium Order with 17 days to go, they are likely to have more exclusive careers in theaters. . Instead, the studio has the option to capitalize on its new freedom with half-budget rates, comedies, and horror movies that might not have such solid careers in theaters. But if smaller movies work better than expected on the big screen, Universal can wait to put it on digital rental services. On their next list, Universal also has “Minions: The Rise of Gru,” “Halloween Kills” with Jamie Lee Curtis, and the spy thriller “355” with Jessica Chastain, Penelope Cruz, and Lupita Nyong’o.
The deal culminates a period of hostilities between the studio and the world’s largest theater chain, a shiver in relations that began after AMC promised to stop showing Universal’s movies after the studio decided last spring to present ” Trolls World Tour “simultaneously on digital platforms and in the few theaters are still open during the coronavirus pandemic.
On Tuesday, both sides behaved well, with Universal praising the viability of the big screen and AMC praising the decision as a sign of their willingness to innovate.
“The theater experience continues to be the cornerstone of our business,” said Donna Langley, president of Universal Filmed Entertainment Group. “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.”
For his part, Aron said: “Focusing on the long-term health of our industry, we would note that just as restaurants have thrived despite every home having a kitchen, AMC is confident that viewers will come to our theaters in large numbers. . in a post pandemic world. As people enjoy getting out of their homes, we believe that the mystical escape and magical community experience offered in our theaters will always be a compelling attraction, even as it does with our big screens, big sound, and big seats, without mention the alluring aroma of our perfectly cooked popcorn. “
For years, Universal and other studios have lobbied to shrink the window, the language of the industry for the period between the theatrical release of a movie and its debut in home entertainment. Traditionally, that framework of exclusivity has lasted 90 days, which theater owners have maintained is critical to prevent customers from choosing to skip theaters and wait until a movie is available in their homes. But studies have complained that those terms are onerous. They contend that the films make the bulk of their box office revenue in the first weeks of release and wait three months to release movies on demand and on other platforms requires them to spend more money to advertise them and re-familiarize the public.
However, COVID-19 has altered the power dynamic in the relationship between studios and theaters. Most cinemas in the United States remain closed due to the virus, and plans for a large-scale national reopening have been delayed over and over again as cases in the south and west coast increase. Theaters are not as influential as they once were and are looking for ways to make money at a time when it is unclear if customers feel safe going to theaters.
At the same time, Universal has found continued financial success with its strategy of avoiding theaters at a time when most of the country is still staying home. On-demand platforms have been booming during the pandemic, and Universal estimated that five million people rented “Trolls World Tour” in its first few weeks, generating approximately $ 100 million in sales. Powered by those figures, he also premiered the Judd Apatow comedy “King of Staten Island” on premium order this summer and has put on films like “Emma,” a Jane Austen adaptation of his independent label Focus, on demand after his releases were truncated by coronavirus closures.
In the past, Universal has perhaps been the most aggressive in pushing the limits of the theatrical release window and has tried to find ways to offer its movies to home entertainment consumers before, clashing with the display community with its aborted plans to offer the Stiller and Eddie Murphy comedy Ben “Tower Heist”, on demand, a few weeks after their 2011 debut. In that case, Universal backed down after theaters threatened to stop showing their movies.
In the coming weeks, the two companies will begin discussions on international distribution agreements in the countries of Europe and the Middle East that AMC serves.
As theaters across the country have struggled to reopen, AMC has been concerned about its liquidity. Even before the pandemic caused its locations to close for four months, the company was heavily in debt due to costly renovations of its premises and agreements to acquire rivals such as Odeon and Carmike Cinemas. At one point, AMC was about to file for bankruptcy, but recently renegotiated the terms of its debt that helped clean up its balance sheet.
