Universal vs AMC Controversy Explained

Universal vs. AMC Controversy Explained

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The PVOD release of Trolls World Tour has triggered a feud between Universal Pictures and AMC. Here’s our guide to both sides of the controversy.

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The PVOD (Premium Video On Demand) release of Universal Pictures’ animated movie Trolls World Tour has triggered a feud between the studio and AMC, the largest owner of theater chains worldwide. In the span of a day the disagreement escalated from a single quote from NBCUniversal CEO Jeff Shell to AMC declaring that it will refuse to screen any major upcoming Universal movie releases. So, what exactly is the controversy about, and how did a band of musical animated troll dolls set it off?

First, some important context. With the rise of video streaming services and other entertainment options, movie theaters are facing an ongoing battle to continue attracting audiences. A crucial factor in that battle is exclusivity; when Avengers: Endgame was released in theaters, that was the only place the movie could be seen until its home video release a little over three months later. Theater chains are very protective of theatrical release windows, which are traditionally a minimum of 90 days. When Netflix attempted to negotiate a theatrical release window of just 45 days for Martin Scorsese’s The Irishman last year, AMC and Cineplex instead opted not to show the movie at all.

The current trouble between AMC and Universal comes at a tense time for AMC, during a month when the theater chain giant has been threatened with the prospect of bankruptcy. Here’s what happened so far in the feud between AMC and Universal, how it’s connected to Trolls World Tour, and what it could mean for future Universal releases.

Trolls World Tour’s PVOD Release

Universal vs AMC Controversy Explained

When the coronavirus pandemic led to global movie theater shutdowns starting in March 2020, the film industry had to figure out a way to respond to an unprecedented situation. Many major releases, like No Time To Die and F9, had their release dates pushed back by months. Movies that had only recently been released in theaters, like Bloodshot, Onward and The Invisible Man, were made available to stream. For Trolls World Tour, which had been very close to its originally planned release date of April 10 before the lockdowns, Universal decided to experiment with a PVOD release on the date that the movie would have released theatrically.

This wasn’t simply about making sure Trolls World Tour reached its young fans sooner rather than later; it was also an opportunity for Universal to test the efficacy of PVOD releases for major movies. Trolls World Tour was made available to rent (not buy) for $19.99 – roughly the cost of two people going to see the movie in a theater. Universal could then (in theory) expand this approach after theaters reopened, making releases available on PVOD on the same day and date as their theatrical release so that audiences have the option of seeing a brand new movie either in a theater or in the comfort of their own home.

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The Trolls World Tour experiment was a huge success, with the movie grossing almost $100 million in rentals within three weeks of its PVOD release, amounting to $77 million in revenue for Universal. This is because Universal retains 80% of rental fees for PVOD releases, in contrast to the roughly 50% take from traditional box office ticket sales. In response to the success, Jeff Shell told the Wall Street Journal: “The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD.” Where the trouble with AMC really began, however, was in the second half of his quote: “As soon as theaters reopen, we expect to release movies on both formats.”

AMC’s Response To Universal Pictures

Universal vs AMC Controversy Explained

In light of movie theaters’ protectiveness of release windows and the current strained situation for theater owners, Shell’s quote was understandably a bombshell. Day-and-date PVOD releases of movies would almost inevitably mean a hit to box office sales that would only harm movie theaters, while Universal enjoys a larger slice of the pie from rental fees. AMC swiftly responded to Shell’s comments with a letter from AMC Theatres chair-CEO Adam Aron, who described the suggested model as “unacceptable” and hit back hard:

“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. 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 theatres 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.”

This bold decision was met with skepticism from some, since it would mean AMC opting out of screening major releases like No Time To Die and Halloween Kills. From a consumer perspective it may seem like AMC is flying in defiance of evolving entertainment options, and that the theater chain lacks the negotiating power to make such a move. However, AMC is not without its own weight, operating more than 1,000 theater complexes worldwide and occupying key locations in the United States. Without AMC’s cooperation, Universal’s international distribution deal for No Time To Die could be exposed, and the studio could risk losing the movie altogether due to being unable to guarantee an adequate release. And beyond that release, trying to distribute movies without the cooperation of the biggest theater owner in the world would not be an easy task.

Universal’s Response To AMC

Universal vs AMC Controversy Explained

A spokesman for Universal responded to AMC’s move with a statement justifying the PVOD release of Trolls World Tour, given the current extraordinary circumstances, and (somewhat) clarifying the studio’s plans for future releases.

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“Our desire has always been to efficiently deliver entertainment to as wide an audience as possible. 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.”

Jeff Shell’s initial comment to WSJ was in all likelihood not intended as a concrete announcement of plans, and the follow-up statement suggests that Universal would pick and choose which movies to give a simultaneous theatrical and streaming release. While a PVOD release for Trolls World Tour made sense under the current circumstances, a day-and-date PVOD release for a movie like No Time To Die wouldn’t fit quite as well, given that the franchise is all about big-screen spectacle. A significant portion of the feud can probably be attributed to Shell’s lack of specificity in saying “we expect to release movies on both formats” without making it clear whether this expectation was for all Universal movies, or only some of them.

What Does This Mean For Future Universal Releases?

It’s very unlikely that AMC’s blanket decision not to release Universal movies will still be in effect by the time most theaters are reopened and major releases start arriving in theaters again. At the very least, movies like No Time To Die and F9 will almost certainly release in AMC theaters and will be unlikely to get a PVOD day-and-date release. It may be the case that AMC will refuse to exhibit smaller movies that Universal opts to release through both formats simultaneously, similar to the decision not to screen The Irishman. That being said, AMC has in the past screened Lionsgate movies that had a day-and-date VOD release, so there may be room for negotiation.

There’s a case to be made that Universal has read too much into the success of Trolls World Tour’s PVOD release, and that this level of success can’t be expected when movie theaters reopen. This is the position of the National Association of Theater Owners, who argued that “This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preferences.” When audiences are given a choice between paying $19.99 to rent a movie at home or paying the same price (or considerably less, if only buying one ticket) to see it on the big screen, it’s safe to assume that many will choose the latter option. The unique theatrical moviegoing experience is the one thing that the countless home entertainment options can’t offer.

That being said, the current feud between Universal and AMC is merely the latest battle in an ongoing tug-of-war between movie distributors and theater chains. The former will continue to push for shorter release windows, and the latter will continue to fight to maintain the traditional 90 days of box office. First, however, the film industry has to weather the storm of the coronavirus pandemic on all sides.

Link Source : https://screenrant.com/universal-vs-amc-controversy-trolls-world-tour-explained/

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