Universal Studios made waves after announcing they will now be releasing new films On-Demand the same day they release them to theaters. This Premium Video on Demand (PVOD) business model proved very successful when Universal released Trolls: World Tour during the COVID-19 pandemic. According to IndieWire, the movie was rented 5 million times and grossed $100 million over three weeks. Compare that to the original Trolls movie that made the same amount over five months. Even more impactful is the portion of sales that went back to Universal. With PVOD, Universal gets an 80% split and with the theater system, they receive a 50% portion. This amount of revenue and control won’t be ignored by studio executives.
AMC was the first to lash out at Universal’s attempt to break the Theatrical Window. Typically a film is shown in theaters exclusively for three months before the home audience. AMC announced it is banning all Universal films from its theaters worldwide. AMC is the largest theater chain and is being joined by Regal Crown and the National Association of Theater Owners (NATO). AMC CEO Adam Aron started with a respectful letter to Universal Studios Chairman Donna Langley. In the letter, Aron expresses his understanding of the changes during the pandemic and reminds Langley of their long AMC partnership. He also speaks of the benefits of theatrical releases as a way to increase excitement through exclusivity. As the letter continues, Aron explains that “Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms”. And Universal is only considering themselves in their recent decision to continue the direct-to-home business model and that AMC will not “meekly” stand by.
Universal Studios released a statement the following day explaining that their goal has always been to bring their movies to as many as possible, and the numbers behind Trolls: World Tour were unexpected but telling. They also state that they are not abandoning the theater system and plan to release titles to both simultaneously.
On April 29th, Regal Crown and NATO joined AMC stating to Deadline “Today we make it clear again that we will not be showing movies that fail to respect the windows as it does not make any economic sense for us.”
This is a pivotal moment for the film industry with merit on both sides. Universal owns its films and an aging distribution system should not limit how they bring their products to the consumer. On the other hand, theaters are about an experience; one that can not be captured at home. We will discuss this as the story develops.