Universal Pictures and AMC Theaters have distanced themselves from the threat of hostility and signed a multi-year deal that will allow the studio’s films to premiere on-demand premiere videos within three weeks of their theatrical debut.
The pact, which certainly sends shockwaves throughout the exhibition industry, has the potential to redesign the way films are sold and distributed. Modern studios are likely to start insisting on exhibitors to give them more flexibility when it comes to determining when and how their theatrical releases can make their way to home entertainment venues.
The financial terms of the agreement are not disclosed. However, in a statement, AMC CEO Adam Aron said the company would “share in these new revenue streams”;, meaning it would receive a reduction in any money made on these digital leases. The station wagon only has the ability to exhibit its films on demand, that is, rent, which costs about $ 20 per pop. He can’t sell movies or rent them for a lower fee on demand in the range of $ 3 to $ 6 until three months after his theatrical debut.
Even though Universal may, under this new agreement, theoretically make its debut for the next installment of the Jurassic World or the Fast and Furious on-Demand Surcharge 17 days after its debut, they are likely to have longer exclusive draws. in cinemas. Instead, the studio has the opportunity to take advantage of its new freedom at the expense of the average budget, comedies and horror films, which may not have reliable cycles in cinemas. But if smaller movies perform better than expected on the big screens, Universal may wait to rent out digital services. Universal also has “Minions: The Rise of Gru”, “Halloween Kills” with Jamie Lee Curtis and the spy thriller “355” with Jessica Chastin, Penelope Cruz and Lupita Nyon’o on its upcoming slide.
The deal ended with a period of hostilities between the studio and the world’s largest network of theaters, a cold relationship that began after AMC promised to stop showing Universal films after the studio decided last spring to launch the “World Trolls World Tour” on digital platforms and in several theaters still open during the coronavirus pandemic.
On Tuesday, both sides agreed, and Universal praised the viability of the big screen, and AMC welcomed the decision as a sign of its readiness to innovate.
“The theatrical experience continues to be the cornerstone of our business,” said Donna Langley, chairman of Universal Filmed Entertainment Group. “The partnership we have established with AMC is driven by our collective desire to secure 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 note that just as restaurants have prospered, although every home has a kitchen, AMC is very confident that moviegoers will come to our theaters in large numbers in the post-pandemic world. . Because people like to leave the house, we believe that the mystical escape and magical shared experience offered in our theaters will always be a compelling picture, including, like our big screens, big sound and big seats, not to mention tempting the aroma of our perfectly cooked popcorn.
Universal and other studios have for many years pushed for a reduction in the “window” of industry communication between the theatrical release of the film and its debut of home entertainment. Traditionally, this 90-day exclusivity framework, supported by theater owners, is extremely important in order to prevent customers from skipping cinemas and waiting for the film to appear in their homes. But studios have found that these deadlines are burdensome. They claim that films make the most of their box office revenue during the first weeks of release, and the three months when films debut on demand and on other platforms require them to spend more money on their advertising and re-introduction to the public.
However, COVID-19 has changed the dynamics of power in the relationship between studios and theaters. The bulk of movie theaters in the United States remain closed due to the virus, and plans for a large-scale national opening are being postponed again and again as cases splash on the South and West Coasts. Theaters do not have the leverage they once did and are looking for ways to make money at a time when it is not clear whether customers feel safe in cinemas.
At the same time, Universal has found continued financial success, developing its strategy of bypassing theaters at a time when most of the country is still at home. During the pandemic, custom platforms rose, and Universal estimated that five million people rented the Trolls World Tour in the first few weeks, generating about $ 100 million in sales. With this figure, he also debuted Judd Apatov’s comedy “King of the State Island” at a premium on demand this summer and directed films such as “Emma”, an adaptation of Jane Austen from the indie label “Focus” on demand after their releases were reduced by coronavirus closures.
In the past, Universal has perhaps been the most aggressive in pushing the boundaries of theatrical release and has tried to find ways to offer its films to home entertainment consumers earlier, running into the exhibition community with its interrupted plans to offer Ben Comedy Stiller and Eddie Murphy on “Heist Heist” after debuting in 2011. In this case, Universal retreated after theaters threatened to stop showing their films.
In the coming weeks, the two companies will begin discussions on international distribution agreements in Europe and the Middle East, which are serviced by AMC.
As cinemas across the country try to reopen, AMC is concerned about its liquidity. Even before the pandemic led to the closure of its locations for four months, the company was heavily in debt due to costly renovations and acquisitions of competitors such as the Odeon and Karmike cinemas. AMC once considered filing for bankruptcy, but recently negotiated the terms of its debt, which helped clear the balance sheet.