Major Overhaul for Movie Releases

by Conan Simmons – July 29, 2020 – 8:05pm

Historic agreement threatens the future of theatrical exhibition. Universal Studios and AMC Theaters agree to 17 day release window before movies leave theaters.

Earlier this year AMC announced they would ban Universal from showing movies at their theaters. That announcement came when Universal released ‘Trolls: World Tour’ to PVOD bypassing the traditional theatrical release that it was scheduled for before Covid-19 shut the world down. ‘Trolls: World Tour’ went on to become the biggest hit release of the Covid-19 era to date making over $50 million on its opening weekend according to the Wall Street Journal eventually making over $100 million within its first three weeks. Naturally this encouraged Universal to potentially release more movies directly to PVOD. AMC was not happy about missing out on box office revenue that such a hit would have realized.

AMC, the most vocal critic of this release strategy among film exhibitors, has now reversed course amid lingering bankruptcy brought on by an unending health crises in the United States. This new historic agreement allows for Universal to show its movies at AMC theaters for a mere 17 days before premiering them directly to consumers at home. This is a boon for studios as it allows for maximum impact from marketing strategies by substantially lowering advertising costs. The agreement also allows for exhibitors like AMC to profit share in the revenue generated by PVOD. This historic moment leaves many lingering questions about the future of cinema.

Cinema is at a crossroads. Its is widely expected that more studios will enter into similar agreements with major theater chains but that potentially leaves smaller non-franchise theater owners out in the cold. There is also the risk for litigation surrounding studio-exhibitor profit sharing from PVOD. Will AMC, Cinemark and Regal all get an equal cut from studios and what about smaller theaters, will they get to participate in the profit sharing from PVOD?

Then there are the streamers Netflix and Amazon. With studios willing to cut the profit pie with theaters are the streaming giants going to follow suit? Optimists say that this historic agreement will encourage studios to greenlight lower to middle budget films at a higher rate than in recent years allowing for wider variety for audiences burned out on Marvel/Star Wars/Fast & Furious theme park films. That will increase competition for the streaming giants among at home viewers. The downside is theaters may become increasingly all about the franchise popcorn flicks.