September 20, 2021

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Film Business Debate AMC / Universal Early VOD Deal

8 min read

Films for AMC Theaters and Universal Pictures ’movies are sounding like a thunderbolt across the film business to dramatically reduce the amount of time they spend on the big screen completely exclusively.

The alliance, once considered impossible, is challenging long-term prejudices, while retaining executive and creative talents to navigate the topography. Whether the partnership between ATMC and Universal is a bold and necessary step for an indefinite period or a reckless drama born of despair has already sparked intense debate.

What everyone agrees on is that it is historic.

The deal has been unveiled despite frequent controversy between studios and exhibitors, who have been debating the window – the term industry for years before movies are available on demand, but coronavirus shutdowns have pushed the discussion back on track, much to the surprise of many. Was.

“I can’t underscore how big it is and the monument,” said Rich Greenfield, a media analyst at Lightshed Partners. “I think so [NBC’s CEO] Jeff Shell will be remembered for what everyone thought was impossible. ”

The epidemic dramatically shifts energy dynamics between studios and exhibitions, further encouraging content makers to debate how films are made, marketed and distributed. Since movie theaters closed in March, Cine found a winning model for capturing an audience sitting at home with Universal “Trolls World Tour”, Jude Apatore’s comedy “The King of Staten Island” and other titles on demand.

Eric Gordon, an associate professor at the University of Michigan, said, “Pre-coronavirus, we were moving towards smaller windows. “Covid has changed the balance of power so now we’re running towards smaller windows.”

The ceasefire between AMC and Universal came as a surprise because for a long time, exhibitors argued that shortening the window could minimize their business. They believe it will encourage customers to avoid their theaters, no matter how much a new release is forced, to wait a few weeks for it to flow into their home. The AMC, however, bargained that it had a risk to take and insiders said it would be compensated for its willingness to sink. The theater chain can earn 10% from any film that puts Universal Premium Video on-demand. In return, Universal ATM has the option of making a film that distributes rent three weeks after its debut in theaters. There is a minimum charge of 19 19.99 to rent a studio, which lasts up to 48 hours.

In a short time, AMC’s competitors are moving forward cautiously. The theater chain has reached out to other large studios that Universal has agreed to offer slightly different terms, but has yet to find a receiver. It is believed that Universal is getting more liberal terms because it made the first deal. Under the proposal to other studios, AMC will collect 20% of the total revenue from the rent. It has to pay 2% less for each film distributed from a particular studio. This means that if the theater chain and any studio return to the box office, AMC acceptance will be 52%, accumulating millions of dollars in top titles. Instead of releasing their previously unsolicited films, the studios will have to contribute an additional 2 2 million annually to marketing.

Universal and AMC declined to comment for this article.

The pitch is still a bit skeptical. Disney specifically rejects the idea, as it fears small windows will jeopardize the profitability of family-friendly titles. Theoretically, parents would save a lot of money on tickets and discounts by avoiding theaters to rent animated hits instead of shelling out individual tickets and paying 20 tickets. And in recent years, Disney’s dominance at the box office has been unparalleled. The studio accounts for about 40% of the domestic market – its closest rivals are Warner Bros. and Disney. Thanks to an arsenal of intellectual property ranging from Star Wars and Marvel superheroes to Simba, Woody and Buzz Lightair, the studio has been able to consistently squeeze the juice out of ticket sales.

Of course, just a few months ago, no one expected AMC and Universal to be the first to make a deal of this kind. Prior to their joint announcement, the two were involved with the public, which became inactive after AMC chief executive Adam Aaron banned studio movies in its theaters as it debuted the “Trolls World Tour”.

Even industry experts are shocked at how badly the window was slashed. Less than 12 months ago, AMC refused to show Martin Scorsese’s splashing criminal drama “The Irishman” because Netflix, its distributor, would not play the movie exclusively in theaters for more than 30 days. Now, Universal AMC has the option to debut movies on premium video-on-demand after 17 days on the screen. The argument, at least for Hollywood studios, is that movies make the most of the first three weekends in theaters. But if listeners believe that digital rental services save more money to wait for a film, the damage to theaters could be incalculable.

“We expected the 30-day window and were surprised to see AMC agree in just 17 days, which increases the risk. Many customers will wait a few weekends to watch movies at home without going to the theater,” said Andre C. Rosenblatt, an analyst at Credit Suisse on Wednesday morning. Investors said in a note.

This does not mean that the sequels “Jurassic World,” “Desperate Me” or “Fast and Furious” – Universal’s three successful franchises – will reach people’s homes in less than a month. Ticket sales to these blockbusters are likely to generate millions, and shortening the deadline could cost both parties money. However, if there are short dramas and jokes, the kind of movies that aren’t the gold gems of the late box office, don’t perform as firmly as the studio expects, may try to earn other audiences through universal digital rental services. This gives the studios a chance to take a chance without leaving too much in line. And with Jordy Peel’s “Us” and Jamie Lee Curtis starring “Halloween,” as Universal has become a breakout hit, the company may have to wait until the lawsuit is settled.

“If the system is designed to have higher studio gains or lower studio risk, we can get more theatrical releases (and more diverse slates of film) that could prove positive for theater over time,” Rosenblatt wrote.

As with other movie disciplines, it is unclear whether they will follow suit. It is possible that other movie theater circuits will see a new definition of a theatrical window of the Universal and refuse to play studio movies. However, it confirms that the studio will have hundreds of locations as AMC is the largest theater chain in the country. AMC’s main rival, Reigal’s owner Cinemaward, was adamant that it would not sign a similar agreement with the studios.

Mookie Gridinger, CEO of CinemaWorld, said in a statement: “We do not see any business concept in this model,” adding: “At CinemaWorld / Regal, we are not changing our policy on showing movies that only respect the theater window. . “

Meanwhile, rival exhibitors in other parts of the world have expressed similar frustrations. Universal unveiled its plan to select the global exhibition just hours before the announcement of its contract with AMC on Tuesday – a last-minute gesture that some senior exhibition executives bent out of most sizes. A European exhibitor who spoke Diversity He said on condition of anonymity, “I have never seen such a level of global animosity.

“I don’t think they took care of them, but they left people seriously in the last 24 hours and everyone feels the same way,” the person said.

Although its impact has waned, North America continues to be the largest single market for almost all Hollywood movies. However, the owners of international theaters are confused about the parameters of the plan. Although Universal has confirmed that the deal will not apply to tents like “Die Time to Die”, where the studio is only conducting international distribution (MGM will roll the film in North America) exactly how much film will fall into the deal is still unknown.

“The only thing guaranteed for AMC is that it doesn’t drive more people to their cinema halls; It will drive more people [premium video on-demand]. I don’t see them making much money on these, ”the source said.

There are concerns about whether the Universal and AMC models can work across different international markets, each with a different number of economies.

In France, Jocelyn Boyassi, managing director of CGR Cinemas, France’s second-largest multiplex operator, called the windowing discussion in the United States a “gentleman’s deal,” while in France, a rigid windowing system is the “basis of film financing.”

“It simply came to our notice then [between AMC Theatres and Universal], But I hope it doesn’t give the wrong signal because our situation is already catastrophic – we hear bad news every day. “Studios will run the risk of deciding to give up dramatic releases of films if they don’t perform well enough during their introduction to streaming services.”

The owners of the Spanish theaters first heard it read Diversity, To an exhibition there on Wednesday, to the best of his knowledge, no Spanish exhibitor was contacted by Universal. But before the studios tried the small window, it just seemed a matter of time: “Like AMC, they need cash.”

He noted that any move to shorten the drama window would be a “fight to the death” by Mexico Cinopolis, owner of Gelmo Signs, one of Spain’s largest movie chains. Another exhibition circuit, owned by ATMC theaters, Sinasa could be even more powerful.

Then there is the issue of AMC and its meaning. The company is heavy, some would say dangerously, has also made a profit, ending 2019 with 2019 4.75 billion in terms of 2019 acquisitions. Although it has reconsidered its debt and improved its liquidity, there is considerable conservation about its ability to remain solvent (concerns were raised in the public filing by the AMC itself). If the company is forced into Chapter 11, will its contract with Universal or other studios last?

The bears at the movie theater believe that the show industry was booming even before the epidemic – rising ticket prices have boosted revenue, but attendance has been relatively flat. They question whether people will return to the movies once they become accustomed to the benefits of streaming services like Netflix and Disney Plus. For them, the deal between Universal and AMC could be around the point. Consumer behavior was changing pre-Kavid, it has probably turned into an irresistible epidemic.

“It’s too little, too late,” said Schweiler Moore, a partner at Greenberg Glasscar, who has brokered many entertainment industry businesses. “It’s irrelevant. The window is closed. AMC really had no choice. The question is why did Universal even bother?”

Moore may prove right but others are less fired. For those whose lives and careers depend on film, the decision to move to C-Suites in Universal City and Kansas City, where the AMC is headquartered, really feels very consequential. তারা যে প্রেক্ষাগৃহগুলি চালায় এবং তাদের নির্মিত ফিল্মগুলির ভবিষ্যত এই 17 দিনের উইন্ডোতে আবদ্ধ হতে পারে। বুধবার, হলিউড এবং এর বিভিন্ন ফাঁড়ির চারপাশে বিতর্ক ছিল যে এটি নাট্যর অভিজ্ঞতা সংরক্ষণ করবে বা তার মৃত্যু ত্বরান্বিত করবে কিনা।

এলসা ক্যাস্ল্যাসি, প্যাট্রিক ফ্রেটার এবং জন হোপওয়েল এই প্রতিবেদনে অবদান রেখেছেন।

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