Universal, AMC sign historic deal to release theatrical films on VOD early

The war between Universal Pictures and AMC Theatres is finally over. Who won? Surprisingly, all of us. When the COVID-19 pandemic scrapped cinema release plans for studios, Universal took the bold step of eschewing traditional theatrical release exclusivity and gave some of their film’s a simultaneous Video-on-Demand release. The gamble paid off as the likes of Trolls World Tour went on to become the biggest streaming release of all time – still not matching the numbers of a theatrical release, but when the alternative was nothing at all, this was a big win for the studio.

It was also a big loss for traditional cinemas though like AMC Theatres, the biggest cinema chain in the world, who didn’t take kindly to losing their usual exclusivity. This prompted a ridiculous feud with AMC (soon joined by second-biggest cinema chain Regal Cinemas) vowing to not screen any Universal releases in the future. With the studio being responsibly for some of the biggest franchises of all time like Fast & Furious and Jurassic World, we all knew that holdout would never last. And it hasn’t, as Variety reports that Universal and AMC have now come to a historic agreement on how to proceed with VOD releases.

According to the report, this multi-year agreement between Universal and AMC will allow the studio to debut its movies on premium VOD platforms within 17 days of their theatrical debuts. Historically, that window has always been 90 days or more, so this is a huge change that is undoubtedly going to affect the entire industry going forward as more studios will surely follow suit. What’s more, while the actual fine print hasn’t been revealed, this new deal will see Universal and AMC “share in these new revenue streams” from the VOD release. Yes, the cinemas will get a cut and still make some money. I’m going to assume that they will probably be sweetening their deal for theatrical releases with Universal as well. Hollywood studios are not in the habit of giving money away for free.

There is a caveat though. As mentioned above, Universal will only be releasing on PREMIUM on-demand services. This means that consumers can probably expect to pay in the region of $20 for a rental, as opposed to the cheaper $3 to $6 offerings found on some smaller services. Universal will also more than likely keep their blockbuster tentpole releases firmly in theatre for the traditional three-month window, using this early VOD release opportunity more for “mid-budget fare, comedies, and horror movies that might not have as robust runs in cinemas”. There is some flexibility in the deal though, which means that if these smaller offerings are actually making good money in cinemas, Universal can keep them there past the 17-day mark if they want.

Without a doubt, this is a landmark moment for the movie business. The battle for the earlier home release of movies is one that has raged for years. Outside of a few major hits, most movies make the vast majority of their money inside the first two or three weeks. After that, revenue usually slows to a trickle. Keeping a movie in cinema past that point actually doesn’t benefit the studios much, but it does help cinemas to keep interested patrons showing up to buy confectionaries – which is where these chains actually make their money. With the flexibility of this deal, Universal can make their money and get out… and then make their money again as those consumers who aren’t fans of the cinema experience can get to see a film while it’s still generating buzz instead of waiting until months after all the hype has died down.

At the moment this deal is just between Universal and AMC – and currently only in the US, but talks about international distribution is happening in the coming weeks – but it’s probably only a matter of time before the other major players get involved as well. Disney is already primed for this thanks to having its own VOD platform in Disney+, although how it would cut theatre chains into that revenue stream, if it even wants to, may be a sticking point. But certainly, the likes of Warner Bros, Paramount, Sony, Lionsgate, A24, etc. will not let Universal get a leg up on them and will start making their own deals. And no matter who wins or loses in this new race, this will be the dawn of a new age of Hollywood movie releases in which the consumers have more choice. And that sound pretty good to me.

Last Updated: July 29, 2020