AMC Theatres announced Tuesday that it will no longer screen any of Universal Pictures’ movies, in the wake of comments by NBCUniversal CEO Jeff Shell regarding the success of Trolls World Tour on VOD.
On Tuesday, the Wall Street Journal reported that the DreamWorks film, distributed by Universal, had earned $100 million from premium on-demand rentals in its first three weeks of availability. (To put that in perspective, the first Trolls earned about $116 million in its first three weeks of theatrical release.) In the article, Shell indicated that Universal plans to release future films in theaters and on demand simultaneously, as soon as it is once again feasible to do so.
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” Shell told the Journal. “As soon as theaters reopen, we expect to release movies on both formats.”
AMC, which is the largest theater chain in the world, responded with a strongly worded letter from CEO Adam Aron. Addressed to Universal Filmed Entertainment Group chairman Donna Langley, the letter calls Shell’s comments “categorically unacceptable” and mandates that AMC will refuse to screen Universal’s films going forward.
“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice,” Aron wrote. “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.”
Movie theaters usually require a 90-day window for films to play on their screens before heading to VOD and digital platforms. As the coronavirus pandemic has forced theaters worldwide to close, however, studios have been releasing select movies directly to these platforms, skipping theatrical runs altogether.
“AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies,” Aron wrote in the letter. “It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us.
“AMC has invested significant time and energy with Universal executives over the past few years trying to figure out a new windows model that would be beneficial both for your studio and for our theatre operations,” Aron continued. “While 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. 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.”
The National Association of Theatre Owners also responded to Shell’s remarks, issuing a statement that said Trolls World Tour’s VOD success “should not be interpreted as a sign of a ‘new normal’ for Hollywood.”
“This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preferences,” the statement added. “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.”
A Universal spokesperson said in a statement provided to EW, “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. 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.”
It is worth noting that despite pivoting to VOD in several cases, studios have chosen to reschedule the theatrical releases for the majority of their high-profile films. Universal, for instance, pushed the release of the upcoming Fast & Furious film F9 almost a full year, from May 22, 2020, to April 2, 2021.
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