The threat came in response to comments from NBCUniversal CEO Jeff Shell about what success on demand for the family movie means for the future.
AMC Theaters delivered a blistering message to Universal Pictures on Tuesday, saying that the world’s largest movie channel will no longer be playing any of the studio’s films following comments by NBCUniversal CEO Jeff Shell regarding on-demand success. Trolls World Tour and what it means for the future of the cinematographic post-coronavirus pandemic.
Earlier, Universal revealed that Trolls World Tour According to the conglomerate, about $ 100 million in premium VOD rentals were accumulated during its first three weeks of playing in North America, more than enough to put the film on the path to profitability. It’s not far behind the $ 116 million Trolls in its first three weeks at the 2016 national box office, on track to exceed $ 153.7 million in the United States and Canada and close to $ 347 million worldwide, not adjusted for inflation.
Universal sent the family movie directly to PVOD amid the ongoing coronavirus pandemic and widespread theater closings.
“The results for Trolls World Tour exceeded our expectations and demonstrated the sustainability of PVOD, “said Shell to Wall Street newspaper, which first released the figures. “As soon as the cinemas reopen, we plan to release films in both formats. “
In a heavily written letter to Universal Filmed Entertainment Group president Donna Langley, sent later on Tuesday, AMC Theaters president and CEO Adam Aron said Shell’s comments were unacceptable. AMC is the largest circuit in the world.
“It’s disappointing for us, but Jeff’s comments about Universal’s unilateral actions and intentions left us no choice. As a result, AMC will no longer immediately release Universal films in any of our cinemas in the United States, Europe or the Middle East. Is, “said Aron in the letter.
“This policy affects all Universal films per se, goes into effect today and the reopening of our cinemas, and is not a hollow or thoughtless threat. By the way, this policy isn’t just for Universal out of pity or to be punitive. anyway, this also extends to any filmmaker who unilaterally abandons current windowing practices in the absence of good faith negotiations between us, so that they, as a distributor and us as an exhibitor, benefit from and are not harmed by such changes. Universal is the only studio to consider a radical change from the status quo. Hence this immediate communication in response. “
Continuing, Aron said, “Unilateral statements from Universal on this issue are unpleasant to us, as it has always been, AMC is ready to sit down with Universal to discuss different window strategies and business models between your business and ours. However, in the absence of such discussions and an acceptable conclusion thereon, our decades of incredibly successful business activity have unfortunately come to an end. “
Universal did not immediately respond to a request for comment.
Aron’s letter closed a day of great drama over Shell’s remarks. The National Association of Theater Owners also spoke, saying that while Universal may be happy with the PVOD results from Trolls World Tour, this result should not be interpreted as a sign of a “new normal” for Hollywood.
“Universal has no reason to use unusual circumstances in an unprecedented environment as a springboard to circumvent real theatrical releases,” said NATO President and CEO John Fithian. “The theaters offer a beloved, immersive and shared experience that cannot be duplicated – an experience that many VOD viewers of this film would have participated in if the world had not been confined to their homes, desperately looking for something back to watching with their family. We are confident that when cinemas reopen, studios will continue to benefit from the global box office, followed by the traditional home release. “
For the most part, Universal – like the other major Hollywood studios – has delayed the opening of their event films so that they can have a theatrical release. Trolls 2, with Warner Bros. ‘ Scoob! and Disney Artemis Fowl, are exceptions. Cinema owners said they understand why some films may need to go straight to home entertainment, but Shell’s comments struck a nerve.
The current hope is that theaters will be open by July 17 in time for Christopher Nolan’s Tenet, followed by Mulan July 24.
Read Aron’s full letter to Langley below.
In this time of national emergency and coronavirus ravaging the whole world, I hope you and your loved ones are healthy and safe. I am concerned – and I wish the best for – the health of all of our industry colleagues. Never in our lifetime has there been a more difficult period.
In the midst of a global pandemic as a backdrop, I hope we are spared from also having to address a different issue that arises from the universal actions currently underway.
For 100 years, AMC Theaters has served as a strategic and highly profitable distribution platform for filmmakers, and during that time, the exclusivity of theatrical release has been fundamental. When a film is “only in theaters”, consumers perceive it as better quality entertainment. Countless filmmakers and film buffs believe that their creative work is better appreciated by consumers on the big screen. And we all know that these theatrical releases indeed increase publicity, positive word of mouth, critical acclaim and downstream revenues.
For much of the past four and a half years, I have been in direct dialogue with Universal’s Jeff Shell and Peter Levinsohn on the importance of a robust theatrical window for the viability of the film exhibition industry cinematographic. Throughout this period, AMC expressed its willingness to consider alternatives to the current windowing strategy common in our industry, where the objective of these alternatives is to improve both the profitability of studios and that of operators theatre.
Universal said it was only looking for a live home entertainment outing for “Trolls World Tour” because the theaters were closed and Universal had entered into a lucrative toy license agreement. We had doubts that these were the motivations of Universal, because Universal had long wanted to go home day and date. Nevertheless, we have accepted this action as an exception to our long-standing business practices in these unprecedented times.
In today’s Wall Street Journal, Jeff Shell reportedly stated that:
“The results of the” Trolls World Tour “exceeded our expectations and demonstrated the sustainability of the PVOD,” said Mr. Shell. “As soon as the cinemas reopen, we plan to release films in both formats. “
This radical change by Universal to the business model that currently exists between our two companies is nothing less than a disadvantage for us and is categorically unacceptable for AMC Entertainment, the largest collection of cinemas in the world.
In the future, AMC will not license Universal films in any of our 1,000 theaters worldwide under these conditions.
Therefore, we want to be absolutely clear, so that there is no ambiguity of any kind. AMC believes that with this proposed action to go simultaneously to the home and the cinema, Universal breaks the business model and the relations between our two companies. It assumes that we will gently accept a reshaped vision of how studios and exhibitors should interact, without any concern on the part of Universal about how its actions affect us. It also assumes that Universal can actually have their cake and eat it too, that the Universal film can be shown at home and in theaters at the same time, without changing the current economic arrangements between us.
It’s disappointing for us, but Jeff’s comments about Universal’s unilateral actions and intentions left us no choice. As a result, AMC will no longer broadcast Universal films in any of our cinemas in the United States, Europe or the Middle East. This policy affects all Universal films per se, takes effect today and the reopening of our cinemas, and is not a hollow or thoughtless threat. By the way, this policy is not just aimed at Universal by spades or being punitive in any way, it also extends to any filmmaker who unilaterally abandons current windowing practices in the absence of negotiations in good faith between us, so that they as a distributor and we as an exhibitor both benefit from it and neither suffer from these changes. Currently, with comments from today’s press, Universal is the only studio considering a radical change from the status quo. Hence this immediate communication in response.
AMC has invested a lot of time and energy with the leaders of Universal over the past few years trying to find a new window model that would benefit both your studio and our theater operations. While we are unpleasant with Universal’s unilateral statements on this issue, as it has always been, AMC is willing to sit down with Universal to discuss different window strategies and business models between your company and ours. . However, in the absence of such discussions and an acceptable conclusion, our decades of incredibly successful business activity have unfortunately come to an end.
CEO and President