Universal Studios Gets Banned After CEO Considers Shredding Theater Exclusivity
Who would’ve thought that the video-on-demand release of “Trolls World Tour” was going to ignite a war between big-time players in the film industry?
Jeff Shell, CEO of Universal Studios’ parent company NBC Universal, cited the movie’s success as a reason to start distributing films both to theaters and directly to homes simultaneously via premium video-on-demand release.
“The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD,” Shell told The Wall Street Journal last week.
“As soon as theaters reopen, we expect to release movies on both formats.”
Shell’s comments came after “Trolls World Tour,” a Universal production, made almost $100 million in rental sales within the first three weeks of its release. That figure exceeds the revenue the original “Trolls” film brought in during its five-month run in theaters, a person familiar with the matter told the outlet.
Unsurprisingly, some heavy hitters in the theater industry were not thrilled with the idea of exclusive theatrical windows being killed, including massive theater chains AMC Entertainment and Regal Cinemas.
Universal even drew the ire of NATO, though probably not the one you’re thinking about. The National Association of Theatre Owners, which aims to “protect the motion picture exhibition industry,” excoriated the film studio.
After The Wall Street Journal published its story, NATO president and CEO John Fithian ripped into Universal over its new business plan.
“Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases,” Fithian said, according to Deadline.
Meanwhile, AMC Entertainment president and CEO Adam Aron sent the studio a strongly worded letter informing them that his company will be putting a halt to Universal showings unless Universal changes course.
“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, the world’s largest collection of movie theatres,” Aron said in the open letter. “Going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms.”
“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.”
Regal Cinemas announced a similar decision.
“Universal’s move is completely inappropriate and certainly has nothing to do with good faith business practice, partnership and transparency,” Cineworld, Regal Cinemas’ parent company, said in a statement to Deadline.
“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.”
Regal is not boycotting Universal nor any other studio. We will continue our normal policy and play movies that respect the theatrical window, allowing movies to be released first in theatres prior to streaming or VOD platforms. pic.twitter.com/xQBX4uUHfG
— Regal (@RegalMovies) April 30, 2020
Universal, meanwhile, quickly fired back at AMC and NATO, making it clear they intended to follow through with their proposed plan.
“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,” Universal said in response to Aron’s letter.
Universal also said it’s open to negotiating with theater companies in the coming weeks.
“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,” Universal said.
If Universal isn’t able to find common ground with the theater industry, it could impact some huge movie franchises. Universal’s stable of films includes highly anticipated movies like “F9,” “Jurassic World: Dominion” and “Minions: The Rise of Gru,” all of which are scheduled to be released in 2021.
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