The deal follows an unexpected arrangement that Universal struck months ago with AMC Theatres, the world’s largest movie theater chain. That pact gave Universal the option to put new movies on digital rental services after 17 days of theatrical release — a decision that sent shockwaves throughout Hollywood because it dramatically shortened the timeframe (typically 75 to 90 days) that films play exclusively on the big screen. In exchange, Universal would share in the digital profits with AMC.
Cinemark has agreed to slightly different conditions. Under their terms, any movie that earns more than $50 million in opening weekend ticket sales has to stay in theaters for at least 31 days, or five weekends. All other titles can be made available to rent on digital platforms after just 17 days.
According to insiders, those new terms will also extend to AMC.
Universal likely wouldn’t opt to shorten the theatrical window — industry parlance for the amount of time a movie plays exclusively in theaters — for commercial hits, or the kind of movie that would gross more than $50 million in a single weekend, anyway.
Neither agreement says that new releases will definitively move to premium video-on-demand after three weekends. However, it gives Universal the opportunity to recoup potential losses should a movie underperform in theaters. But blockbuster hopefuls, hailing from franchises like “Jurassic Park” or “Fast & Furious,” are expected to still have lengthy theatrical runs. Anything shorter could cannibalize ticket sales.
Universal movies that debut early on-demand won’t be promptly yanked from theaters. Cinema operators will still be able to play them on the big screen, should they want to.
The full financial terms of Universal and Cinemark’s deal have not been disclosed.
“Universal’s century-long partnership with exhibition is rooted in the theatrical experience, and we are more committed than ever for audiences to experience our movies on the big screen,” said Universal Filmed Entertainment Group Chairman Donna Langley, who also orchestrated the studio’s historic deal with AMC. “Mark Zoradi and the team at Cinemark have been outstanding partners, and Peter Levinsohn [Vice Chairman & Chief Distribution Officer, UFEG] has done a remarkable job on the studio’s behalf in making deals that give us the confidence to release our movies in the marketplace, keep the content pipeline moving, and provide consumers with the optionality that they are looking for.”
The expedited timeline comes amid the coronavirus pandemic, a heath crisis that’s been devastating to those in the business of showing movies on the big screen. Rival chain Regal, the second-largest circuit in the country, chose to close down all U.S. locations, citing the lack of new movies and weak ticket sales. AMC, on the other hand, said its deal with Universal is the reason why they are able to stay open. (The company has not disclosed any details about the revenue-share.)
Universal, compared to other major studios, has been active in debuting movies during the pandemic because of the flexible premium video-on-demand agreement. In the last few weeks, Universal and its specialty label Focus Features have released the slasher film “Freaky,” “Come Play” and “Let Him Go.” Universal’s recent and upcoming releases have been admittedly smaller in scale (read: less financially risky). The studio plans to save its most anticipated titles, such as “Fast & Furious” sequel “F9” and “Jurassic World: Dominion,” for when moviegoing returns to a stronger degree. Before 2020 ends, Universal is opening family film “The Croods: A New Age” on Nov. 25, comedic drama “Half Brothers” and romantic tear-jerker “All My Life” on Nov. 4, and “News of the World” with Tom Hanks and the Focus Features revenge thriller “Promising Young Woman” on Christmas Day.
In a statement, Cinemark CEO Mark Zoradi said the company believes in “a more dynamic theatrical window.”
“We are extremely pleased to further enhance our strong partnership with Universal as we evolve the exclusive theatrical window,” Zoradi said. “We believe a more dynamic theatrical window, whereby movie theaters continue to provide an event-sized launching platform for films that maximize box office and bolsters the success of subsequent distribution channels, is in the shared best interests of studios, exhibitors and, most importantly, moviegoers.”
Universal is currently the only major studio to reach this kind of agreement with movie theater owners. Yet the arrangement with AMC and Cinemark means that two of the biggest movie theater chains in the country have conceded that the film distribution landscape will look very different when the world emerges from the pandemic.
Not all theater chains are ready to surrender to a future that puts a bigger emphasis on digital.
Mooky Greidinger, the CEO of Regal’s parent company Cineworld, has been vocally opposed to such drastic changes to the theatrical window. In a recent interview with Variety before Cinemark’s deal was announced, Greidinger said he wouldn’t entirely rule out a similar agreement, but attested that 17 days is “too aggressive and too short.”