The film industry cannot afford the AMC fight just chosen


The feeling is understandable. The cinemas have helped the film studios to become the successes they are today, and it would be nice if the studios worked to maintain the symbiotic relationship.

however, AMC Entertainment Holdings (NYSE: AMC) – the name behind AMC Theaters – you may want to think twice about the tactic he uses to maintain these friendly partnerships. Neither he nor rival cinemas like Cinemark Holdings are able to leverage as places of distribution as the little leverage they still have continues to deteriorate. The strong approach can only worsen the industry’s struggle.

What they said

Like most industries at the moment, filmmaking has been severely affected by the global coronavirus epidemic. Theaters have been closed for weeks as part of an effort to limit contagion, including the aforementioned AMC and Cinemark. This prompted studios to postpone the release dates of most films completed in time for this summer.

Comcast (NASDAQ: CMCSA) I wanted to try something different, however. Perhaps more of an experience than a must, his arm Universal Studios chose to sell his animated film Trolls 2: World Tour directly to consumers in the form of streaming video, leaving rooms closed out of the loop. The studio also did the same Hunting, the invisible man and Emma.

A small boxer fighting a much larger boxing glove

Image source: Getty Images.

Trolls was a particularly happy success, however – enough success for NBCUniversal CEO Jeff Shell Wall Street newspaper earlier this month: “Trolls World Tour results exceeded our expectations and demonstrated the sustainability of PVOD [premium video on demand]. “At $ 19.99 for two days of access, the film grossed about $ 100 million, breaking records in the process. Shell has hinted that more direct consumer films may be coming because, why not? It seems to be working.

AMC CEO Adam Aron officially replied on Tuesday, explaining in a press release: “Indeed, immediately AMC will no longer be showing Universal movies in any of our cinemas in the United States, Europe or the Middle East. Then, just to answer the question before anyone else has to ask, Aron added:

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 is harmed by such changes.

It’s enough. And for the record, parent of Regal Theaters Cineworld made the same decision on Wednesday.

There is however a problem: neither Cineworld nor AMC is able to play hardball, and in particular not with Comcast Universal.

The theater industry is dying

It’s a little hard to see at a glance, as the industry figures seem to be holding up. Last year’s box office revenue of $ 11.3 billion decreased slightly from the total of $ 11.9 billion in 2018, according to data from Box Office Mojo. But 2018 was a hell of a record year.

A closer look at the data, however, reveals a curious detail. In other words, the growth of the industry is almost entirely the result of more theater seats and higher ticket prices. The average figure for total ticket sales per film and location has been declining for years.

Ditto for the total number of tickets sold, which is even more alarming. The Numbers – which tracks data from the film industry – reports that the total of 1.24 billion individual movie tickets sold in the United States last year was the second lowest number of years, continuing a broad trend down which took shape in 2001.

Presumably, international cinema faces the same headwind.

It’s hard to attribute a specific cause-and-effect relationship to the 2001 tipping point, but it was around that time. Netflix was gaining ground as a DVD delivery name. It was also at that time that broadband began to become commonplace, bringing a world of digital entertainment to people’s computers in an instant.

Whatever the reason, it’s the theaters that are ultimately on the defensive here. The six largest studios, including Universal, Walt disney, AT&TWarnerMedia and others make more money while making fewer movies thanks to the countless ways to monetize this content outside theaters. Netflix is ​​one of them, of course, but not the only one. Thanks to the relative success of Trolls 2: World Tour, studios can be even more convinced that bypassing cinemas and going directly to consumers with the product is a viable strategy.

And of all the studios that a theater chain might want to get tangled in, Universal is the last to provoke. In the past four years, he has made more films than any other big name.


Don’t take the theme to the extreme. Theaters will be present in the future, even if there are fewer. There is just something to watch movies on a giant screen that can’t always be played at home. Shell has even backed down a little on its enthusiasm for the potential of PVOD, declaring during the call for the results of the first quarter of Comcast Thursday, “There is no doubt that the theater will one day be a central element of our business and our cinema – it’s the way people make their films and how they expect their films to be seen. “

Despite this, Shell insisted on qualifying its offer of peace by adding: “I expect consumers to return to theaters and we will be part of it. And I also expect PVOD to be part of it in some way. … [T]The flip side is that the majority of our films, whether we like it or not, are consumed at home. It is unrealistic to assume that we are not going to change. “

There is no need to read exactly between these lines.

This is why the protests from Cineworld and AMC are more likely to be rooted in fear than in both cases. The management teams of both companies see the same trends as noted above and realize that the same thing is not a good thing; nothing less than exclusive first-run access to all new films may simply not be enough. The two channels can also send a subtle message to Walt Disney and Warner to prevent such confrontations in the future. The first decided to broadcast Artemis Fowl via Disney + rather than in theaters, and the latter offered its animation Scoob! like a digital video. AMC did not cry, perhaps hoping to avoid too much public conflict and to snub several studios at the same time.

The problem remains, however: theaters need studios more and more, while studios need theaters less and less. The parties on both sides of the table are starting to see this more clearly now.


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