The agreement between Universal and AMC Theatres is a watershed moment that accelerates the collapse of the theatrical window and does nothing to alleviate the ailing condition of the exhibition sector, according to insiders.
The deal, announced on Tuesday (July 27), allows Universal Filmed Entertainment Group (UFEG) to put Universal and Focus Features films that screen at AMC’s US venues on PVoD after a minimum of 17 days.
AMC gets a share of the revenue – unconfirmed estimates have put it at 10% – and will be allowed to play the films on its own streaming site.
What has stunned observers is the drastic cut to the theatrical window – an acceleration, brought on by the pandemic, of a long process that has seen exhibition fight off wave after wave of existential threats from TV to VHS to DVD and streaming.
“Seventy-five days to 17 is a watershed moment for this industry,” notes analyst Rich Greenfield, co-founder of LightShed Partners.
“We all would have understood 30 or 45 days, that is what we expected at some point. But 17?” says Randy Greenberg, executive producer of The Meg and entertainment strategy consultant at The Greenberg Group.
“That must be an analyst number, one discussed and negotiated based on data and the percentage of total box office realised on average by the major blockbusters at 17 days post-theatrical opening, with the equivalent uptick in PVoD transactions estimated equal to or greater than the need to keep the film on screen longer.”
It is believed the rental price will be in the region of $19.99. Once the deal kicks in – and Screen understands the parties have not set a date, although Universal’s next release is Candyman on October 16 – the industry will learn how consumers react.
The prevailing opinion is that the studio’s biggest tentpole franchises like Fast & Furious, Minions and Jurassic World (the latest instalments from each franchise are set to open theatrically in 2021) will play in theatres for longer than 17 days. Universal and parent company NBCUniversal will not want to leave money on the table and these behemoths generate huge amounts at the box office.
But what about smaller titles? Rom-coms and dramas and biopics – the kind of fare that make up so much of the inventory on Netflix – and other releases that don’t sell tickets in their first one or two weekends are likely to end up on PVoD as fast as Universal can take them there. That could also mean studios make fewer of them.
“Once consumers realise movies are coming directly into their home without having to wait for movie theatres, it makes it that much more difficult to get people into movie theatres unless the movies are amazing,” notes Greenfield.
Another notable element of the agreement is that AMC and Universal buried the hatchet months after an acrimonious and very public dispute. Faced with cinema closures, Universal moved The Hunt, The Invisible Man and Emma on to PVoD.
What was beyond the pale for exhibitors, and AMC in particular, was when Universal cancelled exclusive theatrical plans for Trolls World Tour and switched the release to a day-and-date PVoD-theatrical model, which only included a handful of cinemas that remained opened in the US and internationally at the time. In response, AMC said it would boycott Universal releases.
Yet on Tuesday CEO Adam Aron was saying how the world’s largest exhibitor “enthusiastically embraces this new industry model”, adding that “premium video on demand creates the added potential for increased movie studio profitability, which should in turn lead to the green-lighting of more theatrical movies.”
Some question the last point. They say that at a time when streamers are flooding the market and Netflix has reported booming subscriber levels, studio film executives are being encouraged by their corporate paymasters to work closely with their TV counterparts and take a broader view of what format would best suit a piece of IP.
Ultimately it all feeds into the corporate parent’s media machine. The US majors are small cogs within giant content creation factories. According to one former studio executive who asked to remain anonymous, Comcast wants to get content, especially anything made by its Universal division, in front of its tens of millions of stay-at-home US subscribers as quickly as possible.
Disney, which has enjoyed dominant theatrical box office market share with its Marvel Studios, Star Wars and Pixar stables, is understood to be dead against any drastic shortening of theatrical windows.
But the other studios?
“I don’t know why everyone wouldn’t be looking [at a similar deal],” says Greenfield. “The ability to monetise inside the home 17 days after release versus waiting 75-plus days seems like a no-brainer for every studio.”
Universal has always been the most aggressive US major in terms of shrinking the theatrical window. In 2011 it backed off a plan to put the Ben Stiller-Eddie Murphy comedy Tower Heist on PVoD three weeks after theatrical release after exhibitors threatened not to carry the film.
Now all that has changed.
NBCUniversal head Jeff Shell has been making bullish statements about PVoD during the pandemic and insiders say this is Comcast’s moment to force the hand of exhibitors. The balance of power has swung towards content creators as cinemas have been forced to close during the global health crisis.
By necessity, other studios besides Universal have been exploiting direct-to-consumer platforms: Paramount moving films to Netflix and CBS All Access, Disney releasing content on Disney+, and Warner Bros on HBO Max.
Saddled with debt and the subject of ongoing bankruptcy speculation, AMC’s Aron may not have had much choice.
“They’d rather have some content rather than no content,” says Greenfield. “If everyone starts going direct to consumer you’re going to have no content.”
Cineworld head Mooky Greidinger declared on Wednesday that he saw no business sense in the 17-day model and Cineworld and Regal will continue to stick to its plan of showing only films that respect the theatrical window.
However observers say exhibitors will have to consider new models if consumers, which could include former cinema patrons who feel uncomfortable returning to the cinema, flock to PVoD releases. The numbers for Trolls World Tour were nothing to sniff at – close to $100m in rentals in the first three weekends according to a story in The Wall Street Journal.
As for international, Universal and AMC are yet to have those discussions. The overall view of Universal is hardly sky-high among the exhibition community and it remains to be seen whether the 17-day model has legs outside the US.