AMC, Universal Reach Deal for Films to Stream On-Demand 17 Days After Hitting Theaters

Unprecedented deal resolves dispute between studio and America’s largest theater chain after multiple films were moved to PVOD following COVID-19 cinema closures

Last Updated: July 28, 2020 @ 4:01 PM

AMC Theaters and Universal announced on Tuesday that they have reached a new deal regarding theatrical exclusivity for films that the studio wishes to release early as premium video on-demand (PVOD) titles, ending a dispute that unfolded after the studio moved “Trolls World Tour” from theatrical to home release in the wake of the COVID-19 pandemic.

In the new deal, AMC will be guaranteed theatrical exclusivity for all Universal and Focus Features films through the first 17 days of release, after which Universal will have the option to make those films available on PVOD, including through AMC’s own on-demand service. The two companies will continue to negotiate terms for international distribution in European and Middle-Eastern countries that are a part of AMC’s circuit.

“AMC enthusiastically embraces this new industry model both because we are participating in the entirety of the economics of the new structure, and because premium video on demand creates the added potential for increased movie studio profitability, which should in turn lead to the green-lighting of more theatrical movies,” said AMC CEO Adam Aron in a statement. “This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated.  AMC will also share in these new revenue streams that will come to the movie ecosystem from premium video on demand.”

“Universal’s commitment to innovation in how we deliver content to audiences is what our artists, partners and shareholders all expect of us, and we are excited about the opportunity this new structure presents to grow our business,” said Universal Filmed Entertainment Group Vice Chairman Peter Levinsohn, who led negotiations for the studio. “We are grateful to AMC for their partnership and the leadership they have shown in working with us to reach this historic deal.”

The deal comes three months after NBCUniversal CEO Jeff Shell said in a Wall Street Journal interview that the success of “Trolls World Tour” on PVOD had exceeded the company’s expectations, and that “as soon as theaters reopen, we expect to release movies on both formats.” While Universal has not disclosed the total gross the DreamWorks Animation film has made on PVOD, Fandango reports that the film is still its bestselling title on its VOD service more than three months after its release.

But Shell’s comments prompted Aron to send an open letter to Universal chairman Donna Langley telling her that AMC would no longer screen any Universal films at its theaters unless a new deal was made between the two sides concerning PVOD.

“AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies,” Aron wrote. “It assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on Universal’s part as to how its actions affect us. It also presumes that Universal in fact can have its cake and eat it too, that Universal film product can be released to the home and theatres at the same time, without modification to the current economic arrangements between us.”

Universal has consistently maintained that it is committed to theatrical releases and that PVOD is only being considered as a possible option for certain titles like “King of Staten Island,” which also moved to PVOD this summer as theaters remained closed. Pricing for Universal’s PVOD films has varied based on demand, but most titles, including “Trolls World Tour,” have been released with an initial price of $19.99 for a 48-hour rental. The vast majority of Universal films, including blockbusters like “F9,” will still get theatrical release in 2021.

“The theatrical experience continues to be the cornerstone of our business,” Langley said in a statement. “The partnership we’ve forged with AMC is driven by our collective desire to ensure a thriving future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality.”

The deal also comes as AMC faces great uncertainty as rising infections in most of the United States make it unlikely that domestic theaters will be able to reopen for many more months. AMC has moved its reopening schedule to late August, though it is unclear how many states will allow theaters to reopen by then.

Focusing on the long-term health of our industry, we would note that just as restaurants have thrived even though every home has a kitchen, AMC is highly confident that moviegoers will come to our theatres in huge numbers in a post-pandemic world,” Aron said in his statement. “As people enjoy getting out of their homes, we believe the mystical escape and magical communal experience offered at our theatres will always be a compelling draw, including as it does our big screens, big sound and big seats not to mention the alluring aroma of our perfectly prepared popcorn.  Universal and AMC have partnered in bringing stellar movies to moviegoers for a full century.  With this historic industry-changing agreement, together we will continue to do so and in a way that should drive success for us both.”