This report has been updated with Universal’s response below.
AMC Theaters says it will no longer show Universal Pictures releases when their cinemas finally reopen due to the studio’s decision to release some their movies early to VOD rather than wait to show them in theaters.
The major theater chain blasted Universal following a report touting how well Trolls World Tour had done on VOD and the studio saying it sees this as a roadmap for other possible releases. With movie theaters shut down due to the coronavirus pandemic — including AMC, which closed down in mid-March — Universal opted to release their Trolls sequel digitally this month rather than wait to release it in cinemas later in the year or next year. It was a big gamble for Universal, as theater owners fumed over the studio’s decision to ditch cinemas, but it reportedly paid off big time for the studio.
What makes digital releases even more appealing to studios is that they retain 80 percent of the profits from a VOD release, which is significantly higher than the 50 percent of profits they take home from box office receipts with theatrical releases. As it turned out, Universal made more revenue from Trolls World Tour after three weeks in digital release than they did from five months of the original Trolls in theaters. While Universal isn’t expected to employ this digital model for huge franchise releases such as a Fast & Furious title because of how much money those movies do typically rake in theatrically, the studio is already embracing it for smaller movies, such as Judd Apatow’s comedy The King of Staten Island, which is now going straight to VOD.
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In a letter sent Tuesday from AMC Theatres chair-CEO Adam Aron to Universal Filmed Entertainment Group chairman Donna Langley, AMC said “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.”
The theater chain may be playing a game of chicken with Universal seeing as how the coronavirus is being mulled by many observers as a possible death knell for the theatrical experience. AMC is flirting with bankruptcy, while a new Reuters poll indicates that only 40 percent of Americans are open to attending movies, concerts, amusement parks, or sporting events until a vaccine can be found. Universal, like Disney, is heavily dependent on both movies and amusement parks for business so they are pivoting to streaming options for revenue during this time of crisis.
AMC’s letter, obtained by The Hollywood Reporter, went on to state:
“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.”
The reference to “any movie maker who unilaterally abandons current windowing practices” seems a not so thinly veiled dig at Warner Bros. for pivoting to release Scoob! to premium VOD instead of theatrically.
AMC did go on to say in the letter that they are “willing to sit down with Universal to discuss different windows strategies and different economic models between your company and ours,” but ultimately they found “Universal’s unilateral pronouncements on this issue (to be) unpalatable to us.”
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Universal issued the following statement in response to AMC’s letter:
“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. 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 recently rescheduled Fast & Furious 9, Jurassic World: Dominion, and Minions: The Rise of Gru — all major franchises for the studio — for theatrical releases in 2021. The studio’s next 2020 titles include Candyman (Sept. 25), Bios (Oct. 2), and Halloween Kills (Oct. 16).