AMC Have Hastened Their Sprint to the Grave
It was a blowup that was bound to happen sooner or later.
After over a hundred years of supporting and financing the movie studios, cinemas are beginning to feel underappreciated.
They can feel the world moving on without them, and they’re angry that their closest partners are happy to see them left behind, forgotten to future generations.
The incident to which I’m referring is the recent blowup between AMC theatres and Universal Pictures over the online release of Trolls World Tour.
What Went Down
Universal CEO Jeff Shell was understandably thrilled that after being forced to release the film online because of coronavirus restrictions, the Trolls sequel made $100 million in its first three weeks on streaming platforms such as Apple TV+.
While this figure is less than the $116 million that was made by the original Trolls film after being in cinemas the same amount of time, Universal is able to keep 80% of its streaming revenue, as opposed to the approximate 50/50 split generally shared with cinemas that screen their films the conventional way.
Revenue share with cinemas can vary wildly, with reports claiming that Disney expects higher cuts and give lots of rules to the cinemas that show their films, while indie studios receive very small percentages of revenue.
Box office deals are necessary for cinemas to negotiate because they don’t have a business at all without film studios sharing their products with them.
While I consider cinemas to be candy stores that also screen movies, no-one is driving to a cinema just so that they can pay 10x for a packet of Skittles.
But while cinemas are dependant on studios, studios have never in history been less dependant on cinemas than they are now.
In addition to Netflix, seemingly every studio now has its own streaming service on which they can share their films and TV series.
The statement that created the backlash from AMC the other day was from Universal CEO Jeff Shell who told The Wall Street Journal -
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD, as soon as theatres reopen, we expect to release movies on both formats.
AMC Chairperson and CEO Adam Aron wrote a reply that was printed by The Hollywood Reporter -
“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theatres in the United States, Europe or the Middle East.
This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat. Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”
For a CEO, this is an uncharacteristically straightforward statement that doesn’t mince words at all. There’s no room for interpretation or watering down; he is literally saying that no AMC theatre will ever again play a Universal film.
Universal swiftly made a reply that read:
“We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theaters, as well as on PVOD when that distribution outlet makes sense. We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions.
Our goal in releasing Trolls World Tour on PVOD was to deliver entertainment to people who are sheltering at home, while movie theatres and other forms of outside entertainment are unavailable. Based on the enthusiastic response to the film, we believe we made the right move,”
You’ll notice that this response was the furthest thing possible from an apology.
The Ongoing Conversation
I’ve been reading a lot of reports that have been freaking out on Universal’s behalf, wondering how the studio will ever succeed now that they’re unable to utilise the biggest cinema chain in the US to screen their films.
But to this feeling I say … huh?
Universal still has the ability to partner up with any of the other thousands of cinemas around the country who will still take them, and fans of their franchises will still seek them out.
Will fans of the upcoming 9th entry in the Fast and Furious franchise really not see the film because it’s not being shown in their nearest AMC multiplex? In my mind, it’s AMC that are the ones who will come out bruised and bloody because of this decision.
Universal has just proven that releasing a movie directly onto a streaming platform works financially, so they must be feeling on top of the world right now. One movie just single handedly proved out their multi-billion dollar streaming service proof of concept.
UniversalNBC streaming service Peacock is in soft launch phase right now, but very soon it will be fully up and running. Between Peacock and the rest of the cinema companies around the US, Universal will be more than covered in ensuring their audience has access to their films.
But where does this leave AMC? Well, let’s take a look at the state of studios left in America today.
We have Universal who has been partnered with Warner Bros for the last ten years. Disney who owns Fox outright. Sony, who owns Columbia Pictures, and ViacomCBS who owns Paramount.
Sony and Viacom are relatively small potatoes when it comes to frequent blockbuster money-makers, so it’s really just Disney left.
Can AMC really afford to run a business that only plays Disney movies? Especially when we consider the hell Disney puts a cinema through before a big release, and the enormous percentage of the box office Disney keeps for themselves. When you do the math, it doesn’t look good.
Personally, I think it’s AMC who will come off the losers in this fight, and Universal seems to know it. If they were feeling scared we’d have heard an apology by now, but an apology is never coming.
They know that it’s a new world now, a world that doesn’t need cinemas anymore; least of all cinemas that step out of line.