Update: Universal released the following statement in response to AMC’s letter.
“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. 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.”
Earlier: Universal Pictures’ PVOD experiment in “Trolls World Tour” turned out to be so lucrative, that the studio announced Tuesday it would begin releasing first-run movies on demand as well as in theaters. AMC Theatres took that as the first shot in a war: The country’s largest theater chain will no longer play any Universal films in its 1,000 cinemas worldwide — if studios wants to break the longstanding theatrical window system, AMC is demanding a seat at the table, CEO Adam Aron wrote in a letter.
“This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment,” he wrote in the letter to Universal chairman Donna Langley.
This comes after Universal released the “Trolls” sequel, originally planned for a traditional theatrical run, on PVOD for $19.99 after theaters closed their doors. NBCUniversal CEO Jeff Shell in an interview published by the Wall Street Journal Tuesday said the movie has been rented 5 million times and has grossed $100 million in sales, netting Universal more revenue in three weeks than the original “Trolls” movie scored over five months at the domestic box office.
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Universal gets to keep 80 percent of that revenue — compared to the 50-50 split it enjoys with theaters — meaning the $77 million in revenue it earned from “Trolls World Tour” translates into the same profit the studio earned for the original “Trolls,” which grossed just under $154 million.
The numbers will surely be tempting to bottom-line minded studio execs, who who have long wanted to tinker with longstanding rules that traditionally give movie theaters a 90-day exclusive on new releases before they hit home video. But for Aron, the only changes that will happen with that system will be ones agreed to by AMC and studios.
“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,” he wrote.
No other studio has announced plans to abandon the theatrical window after theater reopen. Warner Bros. last week followed in Universal’s footsteps after it announced it would release Scooby-Doo installment “SCOOB!” on PVOD May 15, but has not indicated the move is anything but an exception in the current theater-less environment.
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