Universal’s Theatrical Releases Will Quickly Be Available in Homes


AMC declared war on Universal in April when the studio, following the pandemic-related closure of theaters, publicly vowed to make movies available without any exclusive theatrical run. Universal began releasing movies like “Trolls World Tour” and Judd Apatow’s “The King of Staten Island” on demand, charging $20 for a 48-hour rentals. The results were strong. Over its first three weeks of availability in North America, “Trolls World Tour” generated $100 million in rental fees through online stores like iTunes and Amazon Prime Video and on cable systems like Comcast, Universal’s parent company.

Studios typically keep 80 percent of premium on-demand revenue. Ticket sales for theatrical releases are split roughly 50-50 between studios and theater companies.

At the time, Adam Aron, AMC’s chief executive, called Universal’s on-demand plans “categorically unacceptable” and said AMC would boycott Universal and any other studio “contemplating a wholesale change to the status quo.”

But the longer the pandemic went on, the more Universal and AMC came under pressure to come up with a new paradigm. The companies began negotiating, with AMC agreeing to limit exclusivity and the studio offering a major concession: For the first time, it agreed to share a portion of all premium on-demand rental revenue with AMC, significantly reducing the risk of earlier home availability for the chain. Neither Universal nor AMC would say how much AMC will be getting, but Mr. Aron appeared to be pleased with his cut.

“AMC enthusiastically embraces this new industry model,” he said in a statement on Tuesday, calling the deal “historic” and saying that his company was “participating in the entirety of the economics of the new structure.” At the same time, he said that clearing a path for Universal to improve its own profitability could benefit AMC by leading to the greenlighting of more theatrical movies, including comedies and dramas, which Universal and other studios have cut back on in recent years.

Mr. Aron added, “Just as restaurants have thrived even though every home has a kitchen, AMC is highly confident that moviegoers will come to our theaters in huge numbers in a post-pandemic world.” He predicted that people will be especially eager to get out of their homes — and visit theaters, which plan to reopen with numerous safety protocols — after hunkering down for months.

Since the coronavirus shut down theaters in mid-March, quite a few studios have opted to sell off smaller films — which are often riskier in terms of drawing a theatrical audience — to streaming services rather than waiting out the uncertain return of theaters. The move has kept money flowing to studios, but analysts say that it has undercut theaters by training consumers to expect new films to be instantly available in their homes.



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