Universal Pictures was one of the film studios that responded quickly to the COVID-19 pandemic. She pushed her films to first-class VOD and thus landed in hot water with AMC Theaters, the largest film theater chain in the world. However, after a two-month public meeting, the two companies agreed on a multi-year agreement that should keep both parties happy – and that signals a seismic change in the way films are distributed.
The conflict began in March, before we had any idea how long public places, such as cinemas, would be closed when Universal was released. Trolls World Tour on premium VOD platforms at the same time as it was scheduled to hit theaters.
AMC took this shortening of the traditional theatrical “window” – a period in which films are played exclusively in theaters – as direct insults and announced in retaliation that it would no longer show any universal films. (This has proven to be a rather irrelevant threat, as US theaters have been closed since March.)
On Tuesday, the two companies announced that they had agreed on a new theater window, which will last only 17 days or three weekends, and only then will the film Universal be sold on premium VOD. This is a significant shortening of the previous window, which was closer to 90 days for the physical release of the home video and approximately 75 days for the digital release.
In practice, this means: The following film Jurassic Park, Jurassic World: Dominion, is currently scheduled to debut in theaters on June 11, 2021. Assuming the theaters are open by then, you can head to the local multiplex and watch the conclusions of the jury’s trilogy, or you can just wait until June 28 and watch rent it on your home TV for $ 19.99.
Despite these shortened theatrical performances, Universal’s business model still relies heavily on cinemas. 2015 is Jurassic world they earned more than $ 1.67 billion in the global coffers. And this proves the importance of the three-week window. During the first three weekends of the release Jurassic world he withdrew $ 500 million at the domestic box office – more than 76% of his eventual $ 652 million, after his theatrical run, which ended five months later.
“Theatrical experience continues to be a cornerstone of our business,” said Donna Langley, president of Universal Pictures, in a press release. “The partnership we have with AMC is driven by our shared desire to secure a prosperous future for the film distribution ecosystem and to meet consumer demand with flexibility and choice.”
While this new window may seem catastrophically shorter for AMC theaters, it is likely to be positive in the long run. The old theater window, which was close to six months to the mid-1920s, was created around the 1980s with the advent of home video to prevent studies from releasing copies of the film on VHS, DVDs, etc. while it was still in theaters.
But it was also built on the idea of films that have long tails at the box office and still make money two or three months after their theatrical release. These days, the performance of the film box office is largely pre-established until the first few weekends of the release. They will be quickly replaced by other films, often from the same studios that produced the previous hit.
With this new accelerated pace, a 70- to 90-day window of exclusivity doesn’t make sense to anyone. Most movies would fall into a dead end, during which they were no longer in theaters and could not be released on VOD or Blu-ray. In other words, no one made money on them for almost two months. This new agreement should help solve this problem.
Under an agreement with AMC theaters, Universal can release a premium video-on-demand (PVOD) film – it can rent more than $ 19.99 for a fee – if it spends three weekends (minimum 17 days) playing exclusively in theaters. AMC will also receive a reduction in these PVOD sales, a revenue it could desperately use, with theatrical opening still a massive question mark in the United States.
“AMC will also contribute to these new revenue streams that will come into the film ecosystem from premium video on demand,” said Adam Aron, CEO of AMC Theater. “Overall, Universal and AMC believe that this will expand the market and bring benefits to us all.”
There is nothing more about how exactly AMC will share the PVOD market than through AMC’s own Theaters On Demand application, which will be one of many digital homes for Universal movies. So far, no other film studio has reached an agreement with the modified theater windows with AMC, and Universal has not announced a partnership with other major theater chains, such as Regal Cinemas. However, with this first decline in dominoes, it is possible that more announcements will appear in the near future.