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AMC claims they will no longer screen Universal movies

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RAAAAAAAAAAGE

Like a character from Telltale's The Walking Dead, AMC decided to act today on the recent success of Trolls: World Tour going straight to VOD by declaring that all future Universal movies will no longer be screened at AMC Theaters effective immediately. Granted, that threat will have to wait until the AMC reopens its theaters, which will hopefully be in June or July, but the fact remains that AMC is pissed. Like, biblical rage pissed. But let's back up for a bit. 

Earlier in the day, Universal announced that Trolls: World Tour had made approximately $100 million in North America thanks to its exclusive VOD release after only being out for three weeks. For reference's sake, the original Trolls made around $115 million in its first three weeks back in 2016. It's also important to note that of the money made domestically, Universal is able to keep a larger share of the money made from VOD releases compared to releasing movies theatrically. So while both movies made somewhat the same amount of money, Universal was able to keep more of it, which led to NBCUniversal CEO Jeff Shell saying, "as soon as theaters reopen, we expect to release movies on both formats [theatrically and digitally].”

And that was the straw that broke the camels back for AMC. 

AMC released a downright scathing letter not just directed at Universal, but to any other major Hollywood studio that would attempt to abandon AMC and move to simultaneous digital and theatrical releases. To quote AMC's Chair-CEO Adam Aron: 

"Effectively immediately AMC will no longer play any Universal movies in any of our theaters 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 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."

When Aron is referring to "windowing practices," what he's talking about specifically is the time frame between when a movie releases in theaters to when it releases digitally. If you wonder why movies take a couple of months to release on digital or home video, there you go. What Aron and AMC are so furious about is if Universal, or any other major studio, decides to ignore that process, then what's the point in even going to a movie theater? Not only that, but logically studios make more of a profit from digital releases since they don't have to go through AMC, meaning that it would just make sense for Universal to cut them out altogether and reap more profits. 

This move, if followed through, is going to be cataclysmic for the film industry. Like it or not, AMC is the number one theater chain in the United States, so if AMC says they're not going to screen Universal movies, that is a gargantuan loss for Universal. It could cost Universal hundreds of millions, if not billions, in lost revenue if AMC follows through with it. To put things into perspective, here is just a small smattering of upcoming Universal movies that would effectively be banned from AMC theaters in the US: Candyman, Halloween Kills, No Time To Die, The Croods 2, F9, Jurassic Park: Dominion, and Minions: Rise of Gru. All of those are heavy hitters and Universal can't afford to derail all of those releases. 

Of course, there is always the possibility that AMC is all bark with no bite since this is a two way street. If AMC doesn't screen those highly anticipated movies, it loses out on all of that revenue as well. It's no secret that AMC is barely holding it together right now with several analysts predicting that they're going to have to file for bankruptcy sooner rather than later. AMC is slowly imploding on itself and is trying to do whatever it can to keep things afloat, even resulting to scare tactics. 

Will this decision stand? Probably not. Look, while the Trolls: World Tour experiment may have worked out in the short term for Universal, there's no guarantee that it'll work once we get back to a sense of normalcy after the coronavirus pandemic subsides. Like I've said before, a $19.99 price tag may be an appealing cost for family movies, but more niche movies are going to struggle if they're straight to VOD. Plus once social distancing relaxes, what's to stop a group of a dozen people renting a movie for $19.99, costing Universal way more money thanks to their straight to VOD approach? Their unique strategy works for the current unnatural situation, but the likelihood of it sustaining itself outside of the pandemic is shaky at best. 

As for AMC, they decided to also tout that any other studio foolish enough to try and circumvent them will see the same fate as Universal and be banned from their theaters. So are they going to ban Warner Bros. when Scoob! releases in a little less than three weeks? Will they forsake Disney because Artemis Fowl is going straight to Disney+? It's certainly a powerful threat, but I don't think AMC can back it up. They can't afford to back it up. Hell, they probably can't even afford to keep their doors open! If they start laying down the ban hammer at any company who defies them, then there won't be any movies left to screen. 

What we have here is a classic game of chicken. NBCUniversal have started to walk back somewhat saying that SOME movies will go straight to VOD (most likely on their upcoming Peacock service but that hasn't been confirmed nor denied), and AMC have also said that their open to discussions on release windows moving forward, but until then we have a game of which company will blink first. Who will concede and play ball on the other's term? If I was a betting man, I think the company that isn't at risk of bankruptcy is probably going to win out. 

"AMC Theatres Refuse To Play Universal Films In Wake Of 'Trolls: World Tour'" - [THR]

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    Filed under... #AMC #coronavirus #Top Stories #Universal #VOD

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