AMC Theaters Goes After Universal in Public Spat
Movie theaters are closed because of the COVID-19 global pandemic, and that has thrown the entire movie industry into a tailspin, as the big brands try to find an alternative that puts their content in front of fans while protecting their business investment. That process has put a lot of old assumed truisms to the test.
One of these assumptions is that streaming media can’t be as profitable as theater releases. In many cases, that presumption has proven to stand on somewhat solid ground, but one movie release challenged that perspective. Universal’s “Troll’s World Tour” has earned nearly $100 million in rental fees since debuting for streaming in mid-April. That massive success raised more than a few eyebrows, and it caused Universal executives to, justifiably, celebrate.
Speaking to the Wall Street Journal about the success of the movie, NBCUniversal CEO Jeff Shell, said: “(The film) exceeded our expectations and demonstrated the viability of on-demand video… As soon as theaters reopen, we expect to release movies on both formats.”
It was those three words – “on both formats” – that sent executives at AMC over the edge. AMC CEO Adam Aron announced that AMC Theaters will “no longer screen films made by Universal Pictures” which is, by many accounts, a “serious escalation” of a tough negotiation that might have remained behind closed doors.
The question people are wondering now, is, “What next?” If Shell was considering a shift of the “theatrical window,” the time during which a production company has a movie in theaters before releasing it for consumers to own, it’s likely that other movie company executives are having similar conversations. So, how will they respond to AMC’s line in the sand? Will they go to other theaters, skip theatrical releases altogether, see how big they can get streaming to go?
All these questions are likely to be answered in a very public way over the next few fiscal quarters. At present, movie theaters are still closed in many places across the country, so production companies have no choice but to distribute directly to consumers. Theater companies have to know this, so it stands to reason that they would be working on ways to bring them back soon.
However, it looks like AMC, and perhaps others, will take a stronger stance, at least publicly. This communicates a willingness to leverage the money movie studios can make through theatrical releases against the threat of losing them altogether. AMC says the streaming release of “Trolls” was an “exception” based on extreme times, adding that the banishment of Universal content in AMC theaters was “not some hollow threat…”
It will be interesting to see how this public conflict evolves in the coming months, as well as how both brands take their argument directly to consumers.
