Universal recently struck a landmark deal with AMC Theatres that will make it possible for newly-released movies to arrive on premium VOD as soon as 17 days after their initial release. This has proved to be a controversial move within the industry. But it is one that NBCUniversal CEO Jeff Shell thinks will ultimately help get movies back in theaters faster.

Movie theaters have been closed in the U.S. since mid-March, with the hope being that they can open up by mid-to-late August in time for Tenet and other movies coming down the pipeline. During a recent quarterly earnings call, Jeff Shell addressed the AMC deal, explaining that the ability to release movies on premium VOD as well as in theaters may create enough financial incentive to get them in theaters. Here's what he had to say about it.

"We currently are stuck in a kind of chicken-and-the-egg situation in the theatrical business. Movie studios like ours don't want to release movies into theaters when there are only a smattering of theaters open. We need a pretty robust amount of theaters open to justify our spend. But the flip side is, exhibitors can't open a bunch of theaters if they don't have any new movies to put in them. Old library movies are not going to drive people to movie theaters. So we think this model will actually allow movies to come back to theaters, when it's safe, a lot more quickly than they would have in the current environment."

Tenet, as well as Disney's Mulan, have been delayed multiple times as a result of this chicken/egg situation that Jeff Shell laid out. The potential to collect box office for a few weeks, then glide ride into premium VOD earnings, with those titles going for around $20 per rental, could generate enough revenue. Trolls World Tour, for example, had a lot of success earlier this year. A massive $200 million blockbuster may not be able to make this model work, but certainly a mid-budget movie could. This was hinted at by Shell during the call.

"I fully anticipate some movies will stay in theaters exclusively a lot longer than 17 days if we're having a good theatrical run."

It has been largely expected that Universal's upcoming blockbusters, such as Fast & Furious 9 or Jurassic World: Dominion, will maintain a longer, exclusive theatrical window. Typically, theaters will have new releases for close to three months before they can be made available to rent online. Lastly, Jeff Shell addressed the changes in consumer habits and why this recent deal makes sense for them.

"We've always believed that there's a...growing segment of the population out there that just doesn't go to movie theaters. This structure with AMC allows us to take advantage of people who do go to movie theaters, 17 day of exclusivity, at minimum, for theaters, but very soon after, in the same marketing window, we can tap into that very large audience that doesn't go to movie theaters and instead is just going to SVOD to watch movies."

For now, it seems other theater chains and studios are not as eager to jump on board. Cineworld, the parent company of Regal, recently shared some not-so-subtle thoughts that made it clear they won't be making a similar deal with Universal. Meanwhile, other studios appear to be leaning towards sticking to a hope that the box office will return to normal, or at least closer to normal, next year. This news was previously reported by The Wrap.

Ryan Scott at Movieweb
Ryan Scott