AMC Theatres has hit hard at Universal Pictures, announcing it will no longer play any of the studio’s films in the wake of NBCUniversal CEO Jeff Shell’s promise to open titles on premium and in theaters at the same time.
Universal used the PVOD format to release “Trolls World Tour” on April 10 amid the ongoing coronavirus pandemic and widespread theater closures rather than wait for theaters to reopen — which is unlikely to occur until mid-summer. The studio revealed Tuesday that “Trolls World Tour” took in $100 million in premium VOD rentals in its first three weeks of play in North America, a result that will push the film toward profitability.
“The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD,” Shell told the Wall Street Journal. “As soon as theaters reopen, we expect to release movies on both formats.”
“Trolls World Tour” went on sale as a 48-hour rental for $19.99. Prior to the pandemic, studios typically waited 90 days after a theatrical opening to release films digitally.
AMC Theaters chairman-CEO Adam Aron attacked the notion of breaking that 90-day window in a strongly worded letter to Universal Filmed Entertainment Group chairman Donna Langley, saying the change in releasing policy is unacceptable.
“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice,” Aron said in the letter. “Therefore, 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,” Aron said. “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.”
“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,” he said. “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.”
If AMC sticks to its guns, it will forego showing a number of potential Universal hits such as “F9,” the latest iteration in the “Fast & Furious” franchise, due out April 2, 2021; “Minions: The Rise of Gru,” due on July 2, 2021; and“Sing 2,” due on Dec. 22, 2021; and “Jurassic World: Dominion,” currently scheduled for a June 2021 launch.
A Universal Pictures spokesperson responded to AMC’s decision by defending itself: “Our goal in releasing ‘Trolls: World Tour’ on PVOD was to deliver entertainment to people who are sheltering at home, while movie theatres and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move. In fact, given the choice of not releasing ‘Trolls: World Tour,’ which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear.”
The spokesperson also said Universal was “disappointed” by AMC’s move and by statements by the National Association of Theatre Owners.
“Our desire has always been to efficiently deliver entertainment to as wide an audience as possible,” Universal said. “We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense. We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions.”
Shell’s comments came a day after Universal decided to opt out of a theatrical release for “The King of Staten Island” — a semi-autobiographical comedy starring Pete Davidson and directed by Judd Apatow — and go to video on demand. “The King of Staten Island” will premiere on home entertainment June 12, a week before it was scheduled to debut on the big screen.
Rival studios have also been experimenting with PVOD recently with Warner Bros. releasing “Scoob,” a cartoon based on Scooby-Doo characters, directly on digital rental services next month, while Disney announced “Artemis Fowl” would launch exclusively on Disney Plus in June. Paramount opted take “Lovebirds” to Netflix and STX’s “My Spy” went to Amazon Prime.
NATO weighed in Tuesday on Shell’s disclosure on “Trolls World Tour,” asserting that the PVOD performance of the animated family comedy reflected unique circumstances rather than a shift in consumer attitudes.
“This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preference,” the trade group said. “It is not surprising that people under shelter-in-home ordinances for weeks on end with increasingly limited entertainment options would take advantage of the movie’s direct-to-VOD move to keep children entertained, even at a premium price. Further, Universal heavily marketed the title as a theatrical release, in theaters and elsewhere, for weeks on end. That is unlikely to recur in normal times, and those costs haven’t been disclosed.”
“Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases,” said NATO president and CEO John Fithian. “Theaters provide a beloved immersive, shared experience that cannot be replicated – an experience that many of the VOD viewers of this film would have participated in had the world not been sequestered at home, desperate for something new to watch with their families. We are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release.”
NATO also said that transactional video is in secular decline, asserting that sales and rentals of individual titles to the home were $24.9 billion in 2004 and shrank 62 percent to $9.3 billion in 2019.
NATO issued another statement on Tuesday night disputing Universal’s assertion that AMC and NATO had coordinated their statements: “NATO and AMC did not coordinate those statements in any way. Indeed, AMC had no comment on NATO’s draft statement when sent to NATO’s Board of Directors, nor did AMC participate in the Board deliberations regarding that statement. Regarding AMC’s reported letter to Universal, NATO had no involvement with nor knowledge of that letter before reading about it in the press.”
“Without any knowledge of the facts, or the common courtesy to inquire about those facts, Universal nonetheless made the reckless charge this evening that the company is “disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions.” Unfortunately Universal has a destructive tendency to both announce decisions affecting their exhibitor partners without actually consulting with those partners, and now of making unfounded accusations without consulting with their partners,” NATO added.
AMC’s fight with Universal comes with the chain already embattled. Facing the prospect of staying shut for several more months due to the pandemic, parent AMC Entertainment unveiled plans on April 16 to raise $500 million in new debt to improve its balance sheet. The funds from the senior notes offering, which will have to be repaid in 2025, should be enough to keep the company going until the middle of the summer, AMC said in a filing.
Wall Street analysts have been speculating this month that the chain may also be on the brink of filing for bankruptcy. The likelihood of a bankruptcy reorganization doesn’t mean that AMC’s 634 locations in the U.S. and Canada — and more than 1,000 venues worldwide — will be closing their doors for good.