A war is brewing and it’s one that’s even more ridiculous than the World War III memes from earlier this year. As we learned yesterday, the two sides in this engagement are Universal Pictures and AMC Theatres. The former kicked off this fracas when it gave Trolls: World Tour a simultaneous theatrical and VOD release in light of COVID-19 cinema lockdown restrictions. And much to everybody’s surprise, the animated sequel has earned around $100 million from digital sales. This unprecedented success led to Universal proclaiming it would explore day-and-date digital release for more films in the future.
This didn’t sit well with AMC Theatres, the world’s largest cinema chain, who believed that studios should not breach the traditional three-month theatrical exclusivity window. They believed it so strongly that they’ve now banned all Universal movies from their thousands of venues going forward. And now AMC just got some backup in this feud. First, NATO (that’s the National Association of Theatre Owners, not the other NATO) admonished Universal for having “a destructive tendency to both announce decisions affecting their exhibitor partners without actually consulting with those partners”. More importantly though, not long thereafter, Regal Cinemas, the second-largest cinema chain in the world, stepped into the fray as well.
In a statement issued via Deadline, Regal Cinemas owner Cineworld declared Universal’s plans to break from the traditional release window as “completely inappropriate.”
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 continued by saying that the traditional policy of timed theatrical release exclusivity “is clear, well known in the industry and is part of our commercial deal with our movie suppliers,” and as such, henceforth Regal Cinemas has decided to throw down the gauntlet to any studio that breaks from that policy.
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. We have full confidence in the industry’s current business model. No one should forget that the theatrical side of this industry generated an all-time record income of $42 billion last year and the movie distributors’ share of this was about $20 billion.
Oof. Now it has to be pointed out that Regal Cinemas is being a bit more sensible here than AMC. The latter’s decision to ban ALL Universal Pictures productions going forward is just plain stupid. AMC is currently suffering massive and potentially crippling financial losses due to the COVID-19 lockdown and cannot afford to shut out the second most lucrative film studio in the world, effectively chasing paying customers to competitors. You think when Fast and Furious 9 releases next year, AMC will really choose their honour over refilling their rapidly emptying coffers with that Vin Diesel star power? It’s just a silly bit of self-damaging chest-thumping right now!
What Regal Cinemas is doing though, by effectively only banning those specific movies that get simultaneous digital and theatrical releases, is a lot more tenable. Especially since major Hollywood studios like Universal are probably not going to give their tentpole blockbuster franchises like Fast & Furious early VOD releases anyway. The entire point of a tentpole blockbuster is to earn so massively at the box office that its success can prop up smaller, not quite as profitable productions. Bolstering the numbers of the latter through VOD release makes a lot more sense though… but that only works when you also have theatrical sales in the mix.
At this point, no other major studio has really weighed into this messy engagement yet. If any of them would be able to backup Universal’s play here though, it would be Disney. Not only is the 1000 pound rodent in the room the largest studio in the world by a huge margin, owning the biggest film franchises of all time (and hence a studio the cinemas chains can’t afford to not do business with), but they already have their very own VOD release framework in place in the form of Disney+. We’ve already seen them yank the upcoming Artemis Fowl movie from cinemas to stick on their streaming service instead, and there’s nothing stopping them from doing that again with more small or mid-sized releases. If that happens, then this war will go fully nuclear and probably leave the world – at the least the movie business side of it – in a very different place.
Last Updated: July 29, 2020