It just got ugly up in here. AMC Theatres has just announced that they will no longer be showing any more movies from Universal Pictures. This comes after a dispute over the studio premiering Trolls World Tour on Digital streaming, bypassing a theatrical release in the wake of theaters shutting down around the country.
NBCUniversal CEO Jeff Shell had previously promised that he'd be releasing top tier titles on streaming and in theaters at the same time. And AMC Theatres is having none of that. Universal made the first move, releasing the Trolls sequel on the PVOD format this past April 10. The movie was a huge streaming success, and has reportedly pulled in over $100 million in rentals. Since the theater is out of the equation, the profits earned from releasing the movie on PVOD proved to be higher than the entire theatrical release of the first movie.
Theaters in Georgia and Texas are already in the process of reopening. But most major chains won't open anywhere in the United States until at least mid-summer. This includes AMC Theatres, Cinemark, Regal and Alamo Drafthouse. NBCUniversal CEO Jeff Shell had this to say about the success of Trolls World Tour.
"The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD. As soon as theaters reopen, we expect to release movies on both formats."
In most cases, Studios were required to wait at least 90 days from a movie's theatrical release before they could bring it to home video. AMC Theaters chairman-CEO Adam Aron is strongly against changing this rule, and has sent a strongly worded letter to Universal Filmed Entertainment Group chairman Donna Langley. He believes any changes to the VOD release window is 'unacceptable.'
"It is disappointing to us, but Jeff's comments as to Universal's unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat."
"Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response."
Adam Aron continued to rail against Universal Pictures and their new change of practice regarding movie releases. He went onto say this.
"Universal's unilateral pronouncements on this issue are unpalatable to us, as has always been the case, AMC is willing to sit down with Universal to discuss different windows strategies and different economic models between your company and ours. However, in the absence of such discussions, and an acceptable conclusion thereto, our decades of incredibly successful business activity together has sadly come to an end."
Nato, The National Association of Theatre Owners, believes that the recent success of Trolls World Tour on VOD is simply the result of unique circumstances. They had this to say about the matter.
"This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preference. It is not surprising that people under shelter-in-home ordinances for weeks on end with increasingly limited entertainment options would take advantage of the movie's direct-to-VOD move to keep children entertained, even at a premium price. Further, Universal heavily marketed the title as a theatrical release, in theaters and elsewhere, for weeks on end. That is unlikely to recur in normal times, and those costs haven't been disclosed."
"Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases.Theaters provide a beloved immersive, shared experience that cannot be replicated - an experience that many of the VOD viewers of this film would have participated in had the world not been sequestered at home, desperate for something new to watch with their families. We are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release."
Nato went onto claim that home video transactions are on a steady decline. They state that sales and rentals of singular titles racked in $24.9 billion in 2004. That number shrunk to $9.3 billion in 2019. AMC Theaters has been in dire straights since the world went under lockdown. AMC Entertainment revealed their attempt to raise $500 million in new debt, using the funds to stay afloat through this crisis. That money must be paid back by 2025. But it should be enough to keep AMC going until mid-summer when things are expected to be back to normal. There have also been plenty of rumors that the chain is preparing to file for bankruptcy, according to Variety.