Yesterday, AMC Theatres banned all upcoming Universal Pictures movies from being shown at their venues across the country. This came after Universal found great success in premiering their new animated sequel Trolls World Tour on PVOD. After AMC's eye-opening ban of Uni titles was announced, a Universal rep issued a statement.

"Our goal in releasing Trolls: World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theatres and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move."
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The rep's statement went on to say more about the AMC Theatres ban.

"In fact, given the choice of not releasing Trolls: World Tour, which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear. Our desire has always been to efficiently deliver entertainment to as wide an audience as possible."
"We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense. We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions."

Universal's statement was issued to spin the news they made earlier Tuesday afternoon when, through The Wall Street Journal, NBCUniversal CEO Jeff Shell trumpeted their success releasing Trolls World Tour direct to streaming during the pandemic shutdown, stating "The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD," going further to say that when theaters re-open, Universal expects "to release movies on both formats."

Upon hearing Shell's statements, AMC Theatres CEO, Adam Aaron lashed out in a heated letter to Universal Filmed Entertainment Group (UFEG) head, Donna Langley, stating that the change in Uni's policy is 'unacceptable'. Aaron went on to say that, "It is disappointing to us, but Jeff's comments as to Universal's unilateral actions and intentions have left us no choice. Therefore, effective immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East."

Aaron's statement went on to say, "AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies. It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal's part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us."

As readers of Aaron's letter may expect, the world's largest exhibitor is pushing Uni to negotiate. While it's strongly worded, the letter also states, "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," he said. "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."

The National Association of Theater Owners (NATO), the primary trade association for cinema operators, had also released a statement Tuesday evening stating, "Earlier today NATO issued a statement regarding Universal Studios' public comments in The Wall Street Journal regarding that studios' evaluation of the results of releasing the movie Trolls World Tour directly to the home without a theatrical release, and specifically that Universal would release future movies both theatrically and to the home. Also today, according to various public press reports, AMC released a letter that company sent to Universal stating AMC's individual company reaction to Universal's public statement earlier in the day in the Wall Street Journal.

NATO and AMC did not coordinate those statements in any way. Indeed, AMC had no comment on NATO's draft statement when sent to NATO's Board of Directors, nor did AMC participate in the Board deliberations regarding that statement. Regarding AMC's reported letter to Universal, NATO had no involvement with nor knowledge of that letter before reading about it in the press. Without any knowledge of the facts, or the common courtesy to inquire about those facts, Universal nonetheless made the reckless charge this evening that the company is "disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions."

Unfortunately Universal has a destructive tendency to both announce decisions affecting their exhibitor partners without actually consulting with those partners, and now of making unfounded accusations without consulting with their partners."

In the weeks since U.S. cinemas shut down, the NATO had opined that the direct PVOD release of Trolls World Tour reflected extreme and unique circumstances and called on studios to continue to support a vigorous exhibition industry by holding their big titles for theatrical release, while acknowledging that some smaller titles may have to move to VOD, in the meantime.

Tonight, NATO, through their CEO, John Fithian, also said that "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."

  • Certainly, these are unprecedented times, with other titles moving directly to video, including:
  • My Spy, sold by STX to Amazon to run on Prime
  • Artemis Fowl moving straight to Disney+ on June 12
  • Scoob! dropping to video May 15
  • Downhill
  • The Lovebirds headed to Netflix, date TBD

AMC simply cannot tolerate this type of move from a major studio. The chain has been teetering on the verge of bankruptcy for the last 2 months and was forced into a punitive secured $500 million debt raise that has pushed them further into uncertainty. It is clear that, despite efforts for various states to reopen, AMC screens will remain dark for the foreseeable future, until enough states permit them (and other chains) to open that major studios are willing to release their big titles in the hopes of filling seats.

While most major theatrical releases have enjoyed, of late, at least a 90-day window before heading to digital, the matter of simultaneous releases, or even a shorter window, has been a hotly contested matter in the industry, between exhibitors and studios, for several years. The Covid induced shutdown surely provided the cover that studios needed to pilot this, something they've long wanted to do.

Now that they've tasted, though, will they want to feast on those fat video margins, or have they been convinced that the most successful path to completely filled coffers will be aided by legit box office runs? Filmmakers, including Nolan, Scorsese, Abrams and others have been ardent supporters of solid theatrical release, and one can only imagine that Cameron would only want his Avatar sequels to be appreciated on the big screen.

The battle, it would seem, is far from over and - of course - as continued uncertainty bred by the pandemic weighs on exhibition, more studios will be carefully weighing their options. You can be sure, though, that those other studio heads are glad that Uni moved first and they'll be watching keenly to see how this all plays out, and whether the other chains jump in with AMC and shut the door for Uni titles.

With Universal's move, it would seem, they've stirred a giant that was previously otherwise distracted. Thinking they could take advantage of this time to make a change to the fundamental business model of movies, followed by their emboldened statements, Uni may have supremely miscalculated. There could be no stronger statement than for the world's second largest exhibitor, Cineworld (owner of Regal in the U.S.), Cinemark, Marcus and other chains to join AMC and put a full year boycott on all Universal titles.

Such a move would leave Universal out in the cold and would send a strong message to all the studios that the exhibitors will not be pushed around. Leaving not only F9, but Jurassic World III, Minions: The Rise of Gru and the rest of Uni's 2020 and 2021 slate without a theatrical home in the major auditoriums around the world would show that exhibitors mean business.

This tug-of-war could definitely impact theatrical releasing over the next 12 months with major Uni titles possibly getting shelved at cinemas for other studio pics. This news was originally reported by The Wrap.

Justin Case