AMC and Universal strike deal to shorten days a movie must hit theaters before going digital

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The feud between AMC Theaters and Universal Pictures, which began with the on-demand video release of “Trolls: World Tour” in March, has ended.On Tuesday, the two companies announced a deal that would allow AMC to show Universal films again on the big screen and give Universal a smaller cinema window so that it can make its titles available on demand sooner.

As part of the deal, Universal and Focus Features are required to screen films in theaters for at least three weekends, or 17 days, before releasing those films on premium video-on-demand platforms. Previously, theaters held the exclusive rights to films for 90 days.

“AMC will also share these new revenue streams that will come to the film ecosystem from premium video on demand,” Adam Aron, CEO of AMC, said in a statement.

Neither company disclosed the full terms of the deal, saying it was confidential.

“The theatrical experience continues to be the cornerstone of our business,” said Donna Langley, President of Universal Filmed Entertainment Group Tuesday. “The partnership we have forged with AMC is driven by our collective desire to ensure a prosperous future for the film distribution ecosystem and to meet consumer demand with flexibility and discretion. ”

The feud between AMC and Universal began in March. Due to growing concerns about the coronavirus pandemic, Universal released “Trolls: World Tour” in theaters and on demand on the same day.

On April 10, “Trolls World Tour” became available for digital rental for $ 19.99. With the majority of theaters closed, with the exception of some drive-ins, the film was mostly watched on demand.

Three weeks later, NBCUniversal CEO Jeff Shell touted the digital success of the film, which had racked up nearly $ 100 million in rentals, and suggested the company would make more simultaneous releases in the future.

While this figure is lower than the $ 153.7 million the debut movie “Trolls” raised at the domestic box office, the revenue Universal earned was roughly the same for both films, as digital sales take less than a percentage of studio revenues.

Theater owners will typically take about half of a movie’s gross amount, while 80% of the digital rental fee goes straight to the studio.

Exhibitors were already feeling upset by the initial simultaneous release of “Trolls”, which led to AMC announcing that it would no longer feature Universal’s film list at its more than 1,000 sites.

After prolonged theater closures in the United States, the result of increasing cases of coronavirus and the constant surge of Hollywood blockbusters in the release schedule, AMC’s stance softened and was able to strike a deal with Universal. .

“AMC is enthusiastically embracing this new industrial model both because we participate in the entire economy of the new structure, and because high-end video on demand creates additional potential for increased studio profitability. of cinema, which in turn should lead to green lighting. more theatrical films, ”said Aron.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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