AMC are not happy with NBCUniversal / Universal Studios. The massive theater chain which owns and operates over 1,000 movie theaters across North America and overseas have officially barred Universal movies from screening in their theaters! The radical decision was made in retaliation to NBC's decision to release new films simultaneously in theaters and online via On-Demand rental.
The issue here is that movie theater chains usually are entitled to an exclusive 90-day period for which they are the only medium new films get released to. Only after this grace period do new film releases enter the digital realm for moviegoers who wish to watch the latest movies from the comfort of their own home.
Universal CEO Jeff Shell just recently announced that NBCUniversal would be doing away with this 90-day grace period after seeing higher-than-expected return on their latest animated children's film Trolls World Tour. As the Wall Street Journal outlines, the latest installment in the Trolls franchise netted Universal nearly $100 million in just 3 weeks. By comparison, Universal only banked about $77 million off the last Trolls movie (it made $157 million in 5 months at the theatrical box office, but after theater fees and other costs were factored in, Universal only came out with $77 million).
Given that a sequel, which rarely outperforms its predecessor, made Universal nearly $23 million more in a fraction of the time span, we can see why the decision to move future releases to an instant, on-demand offering is so appealing. However, this will only sour relationships with theater operators, who rely on these large box office releases to make a profit themselves.
As a result, AMC shared an open letter addressed to Universal Studios Chairman Donna Langley. The letter stated as follows:
"This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment, the worlds largest collection of movie theatres.
Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms.
Accordingly, we want to be absolutely clear, so that there is no ambiguity of any kind. 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.
It is disappointing to us, but Jeff’s comments as to 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 theatres in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theatres 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.
AMC has invested significant time and energy with Universal executives over the past few years trying to figure out a new windows model that would be beneficial both for your studio and for our theatre operations. While 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. 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."
Times are no doubt tough right now and Hollywood continues to bleed money with the Coronavirus having affected all active productions and delayed most theatrical releases during this pandemic. However, the decision by AMC to ban Universal films from its lineup may have severe implications once this pandemic is over and operations resume.
Universal have some significant tentpole blockbusters in the pipeline, one of them being the highly anticipated Jurassic World 3, officially titled Jurassic World Dominion. If AMC reject screenings of JW3 and other major Universal titles, there will be major losses felt on both sides. Moreover, it's possible other theater chains could follow suit. This could very well be the tipping point where we begin to see the movie industry move away from theater experiences and into the living room. As an avid moviegoer, this a rather disappointing prospect, but a very real possibility.
Currently AMC have seen a decline in share prices of nearly 40% since the onset of the Coronavirus outbreak. This financial hit has also forced the theater chain to consider filing for chapter 11 bankruptcy. If things continue to decline any further, this could be the final nail in the coffin for one of North America's largest movie theater chains.
What do you think of Universal's decision to offer new releases on demand as well as in theaters? Are you an advocate for the big theater experience? Or do you prefer the idea of renting movies privately out of your own home? Let us know your thoughts in the comments section!
