Movies to go to home video faster, under AMC, Universal deal

A deal between Universal and AMC to cut short the ‘theatrical window’ up-ends the way Hollywood has long done business.

The deal between the world’s largest theatre chain and a top studio is set to put pressure on rivals to follow suit. Picture: Getty Images

Movies will play in theatres for much less time before moving to home video under a new agreement between theatre chain AMC Entertainment Holdings and Universal Pictures, up-ending the way Hollywood has done business for decades.

Under the deal, the “theatrical window” will shorten to 17 days, from the current 75, at least when it comes to movies made by Comcast Corp’s Universal that play at AMC theatres, the world’s biggest movie theatre chain. That means that instead of waiting two and a half months to watch a new movie at home, viewers will be able to see at least some titles just two and a half weeks after they premiere in theatres.

The deal settles a public spat between the two companies over how soon new films should be allowed to appear on digital platforms; AMC said it wouldn’t play any Universal releases after the studio said it would continue experimenting with putting movies online while they were still in theatres.

The argument was essentially academic since most theatres have been closed since mid-March due to the coronavirus pandemic. Amid those closures, Universal made Trolls World Tour available as a $US20 online rental on April 10, the day it had been scheduled to open in theatres.

Such a seismic shift in the dealings between the world’s largest theatre chain and one of Hollywood’s leading studios is likely to put pressure on rivals of both companies to follow suit.

Movie theatres have long considered it essential for their businesses to be able to play movies exclusively before consumers can watch them other ways. Studios have long pushed to shorten that exclusive period because it would allow them to avoid mounting two costly marketing campaigns months apart for the same movie, and to expand the potential audience for new releases by luring viewers who can’t or don’t want to leave home.

After Universal’s online release of the Trolls sequel racked up nearly $US100 million digital revenue in three weeks, the studio said it planned to continue experimenting with releasing some new films directly to digital platforms such as Apple’s iTunes and Amazon.com.

Even though movies traditionally generate the bulk of their box office revenues in the first few weeks of playing in theatres, exhibitors have staunchly defended their exclusive windows, fearing that if films are made available online prematurely, customers would have little incentive to see new movies in theatres. The tension dates back at least to the DVD era.

Watching a movie at home.

Studios have gradually chipped away at the exclusive theatrical window, but attempts to eliminate it altogether have rarely gained traction, other than for some relatively low-profile releases from small studios, typically playing in cinemas that aren’t part of the biggest chains.

In a written statement, AMC chief executive Adam Aron said the company “enthusiastically embraces this new industry model,” while pointing out that the theatre chain would have an opportunity to generate additional revenue by offering new Universal releases on its own streaming platform, AMC Theatres On Demand. Newer Universal movies will also be available for digital rental on other platforms like Apple TV and Amazon’s website.

Most movie theatres have endured a monthslong shutdown as governments around the world seek to curb the spread of the novel coronavirus by limiting public gatherings. Hollywood’s major studios, in turn, have been forced to adapt.

Studios have repeatedly delayed some releases. Walt Disney Co. recently said it was delaying its live-action Mulan remake for the third time -- this time indefinitely.

AT&T Inc’s Warner Bros. moved the US debut of Tenet to early September, in a limited number of locations, after postponing the release three times. Other films have moved directly to premium-video-on-demand, or PVOD, or other online platforms. Warner Bros. released the family film Scoob! online rather than wait for theatres to reopen, while Universal also recently debuted the R-rated comedy The King of Staten Island on digital rental platforms.

Disney went a step further with Artemis Fowl, skipping not only theatres but even online rental platforms, instead rushing it straight to its new subscription streaming service, Disney+.

The about-face by AMC highlights the way the COVID-19 pandemic has put pressure on all kinds of businesses to adjust their strategies.

With reopening dates for US theatres pushing further and further back on the calendar, movie studios and exhibitors are looking for ways to eke out revenue from homebound consumers.

AMC currently plans to reopen its domestic theatres in mid- to late August.

Movies Universal releases early online will be available only as premium-priced rentals, the same approach it took with Trolls World Tour. The company said that it is not changing the amount of time consumers will need to wait for those titles to appear as standard-priced online sales or rentals.

Mr Aron, AMC’s CEO, also pointed out in his statement that the 17-day theatrical window means Universal titles will play exclusively in theatres for three full weekends -- the period most movies make the bulk of their ticket sales -- before moving online.

AMC and Universal will also be discussing international distribution strategy for regions like Europe and the Middle East, the companies said.

Wall Street Journal