Back in March, as cinemas around the world were being hastily shut down in response to the COVID-19 pandemic forcing major film releases to be delayed massively, one big Hollywood player decided to try something else. Universal Pictures would become the first major studio to not only push certain already released movies such as The Invisible Man and The Hunt to digital video-on-demand release early, but they would take the unprecedented step of announcing that the upcoming Trolls: World Tour would get a simultaneous digital and theatrical release.
The day-and-date digital release revolution had been attempted and failed many times in the past, and the reason was simple: You just don’t make enough money on home release. For small indie productions, it may be fine, but larger budgeted movies would never break even. Of course, that was before COVID-19 forced everybody out of cinemas and into their homes. Even then though, with a $20 price for 48-hour rental, most industry pundits assumed that the same thing would happen as had happened before. Some fans will purchase Trolls: World Tour, maybe to keep the kids entertained for a weekend, but the film will probably take a big financial hit. Except, that’s totally not what happened.
In the three weeks since its VOD release in the US, Trolls: World Tour has made over $95 million in digital rentals with another few million coming from digital soundtrack sales. In comparison, the film’s 2016 predecessor, Trolls, earned a total of $153.7 million for the entire five months of its domestic box office run. That’s incredible. When Universal announced this release strategy for Trolls: World Tour, it was more to minimise losses than anything else. Nobody thought this level of success was even possible, much less sustainable. And that’s what the studio is going to do, as NBCUniversal head Jeff Shell told the Wall Street Journal.
The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD. As soon as theaters reopen, we expect to release movies on both formats.
Yep, the paradigm shifting clarion call to Hollywood that so many consumers have been waiting for may have finally arrived in the form of tiny doll creatures with weird hair. But not everybody is happy about this development at all.
AMC Theatres, the largest cinema chain in the world, is currently taking a considerable hit due to the COVID-19 lockdown. While some states in the US will soon be allowing cinemas to re-open (yes, this despite the country hitting over 1 million infections this week), many owners have indicated that it’s going to be a while before they open their doors as consumers will probably end up avoiding large public spaces for quite a while still. When things do go back to normal though, AMC, like other theatre chains, are hoping that movie fans will pack out cinemas to make up for the lost revenue… but that won’t happen if half of them are at home watching Universal movies.
And in a rather stern open letter to Universal Filmed Entertainment Group chairman Donna Langley (via THR), AMC Theatres chair-CEO Adam Aron let the studio know that they are really not happy with its VOD plans. And as such, will be refusing to screen any Universal releases 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. 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 theaters 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. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.
This is massive. As I mentioned, AMC is the biggest dog on the block here, with over 900 cinemas in the US, Europe and the Middle East. But Universal is no slouch either – in terms of pure revenue, only Disney with its many owned properties actually manages to beat it. This is due to Universal owning top-earning franchises like Fast & Furious, Jurassic World, Despicable Me, the Bourne films, the Universal monsters, How To Train Your Dragon, the recently acquired LEGO movies, and more. And now none of those movies will screen in the biggest cinema chain in the world.
Universal has since released a response to AMC’s throwing down of the gauntlet, seemingly indicating that they won’t do VOD release for all their releases. This makes sense as there’s still no way something like the next Fast & Furious will be able to earn the type of money it does exclusively in cinemas. And as such, Universal is not abandoning that approach, but it now has other options available as well.
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 theaters, 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.
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.
Personally, I love the cinema experience and as comfy as my couch is at home, I really don’t want to give up the former completely. Experiences like the one Avengers: Endgame directors Joe and Anthony Russo posted this week just don’t happen in your lounge. But I also understand that for many families, going to the cinema is an incredibly expensive and logistically nightmarish scenario forcing them to often miss huge titles on release (and probably getting spoiled in the process). There needs to be an option for them as well (they weren’t going to make it to the cinema anyway so there’s no lost revenue). If that is all that Universal is proposing – options – then I’m all in favour of it and cinema chains like AMC need to realize that a post-COVID-19 world is going to be a very different place and they need to evolve with it.
Last Updated: April 29, 2020