AMC Theatres, Cineworld's Regal Theatres, and NATO Threaten to Ban Universal Movies Over Digital Release Tussle
AMC Theatres, the world's largest theatre company, is locked in a tussle with Universal Studios, Hollywood's largest movie production house, over the latter's apparent proposal to shift to a business model where it will release its movies simultaneously in theatres and on digital, even after theatres reopen.
When the COVID-19 outbreak caused theatre footfalls to take a nosedive, Universal decided to forego theatrical release for its big-ticket movie 'Trolls World Tour' and release it on VOD. The decision was taken even before the lockdown was implemented.
Its decision was vindicated, as per recently-released Wall Street Journal reports that said that the Trolls sequel had been more profitable for Universal than the original because of its on-demand release. When released in a theatre, studios conventionally pay theatres 50% of the box office collection. Universal did not have to pay that which meant more ROI.
Encouraged by the response to the VOD release, NBCUniversal’s CEO Jeff Shell suggested on Tuesday that Universal might start to simultaneously release some movies in theatres and on-demand, even after the pandemic subsides.
“As soon as theatres reopen, we expect to release movies on both formats,” said Shell, to the Wall Street Journal.
Whether it is a confirmed decision or whether it is an idle rumination on his part, but AMC Theatres was not taking the proclamation lying down, and declared that it would no longer play Universal movies in its theatres.
AMC Theatres' outburst prompted Universal Studios to put out a statement regarding the entire matter. The statement reads, “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. 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.”
The North Association of Theatre Owners (NATO) rallied behind AMC Theatres, by adding their two bits to the whole rigmarole.
Attributing the success of Trolls World Tour on VOD to "hundreds of millions of people being isolated in their homes and seeking entertainment, not a shift in consumer viewing preferences."
Said NATO president and CEO John Fithian in a statement to the media, “Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases. Theatres 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.”
"While Universal may be pleased with the PVOD results of 'Trolls World Tour,' this outcome should not be interpreted as a sign of a 'new normal' for Hollywood," added NATO.
Regal Entertainment owner Cineworld Group threw its weight behind AMC Theatres by declaring that it will not be showing movies that fail to respect the windows. It released a statement regarding its position on the matter, which said,
"There is no argument that the big screen is the best way to watch a movie. Universal unilaterally chose to break our understanding and did so at the height of the Covid-19 crisis when our business is closed, more than 35,000 employees are at home and when we do not yet have a clear date for the reopening of our cinemas. Universal’s move is completely inappropriate and certainly has nothing to do with good faith business practice, partnership and transparency."
"Cineworld’s roots go back 90 years in the industry and it was always open to showing any movie as long as the rules were kept and not changed by one-sided moves. Today we make it clear again that we will not be showing movies that fail to respect the windows as it does not make any economic sense for us," added Cineworld.
A similar scenario played out in the Tamil film industry with Suriya's 2D Entertainment being banned by Tamil Nadu Theatre Owners Association over his decision to release his Jyothika-starrer Ponmagal Vandhal on OTT, bypassing a theatrical release.