AMC’s Blacklist Of Universal Is A Risky Bluff Or A Major Mistake
AMC cannot afford to not to blacklist the studio which will release the likes of Minions 2, No Time to Die, Jurassic World: Dominion and F9.
Spurred by NATO’s displeasure over Universal UHS’s decision to release Trolls: World Tour not in a conventional global theatrical release but on “premium VOD” ($20-per-rental) and then further irked by Universal CEO Jeff Shell’s comments implying that the relative success of Trolls: World Tour’s at-home release ($95 million in 19 days) would lead to eventual loosening of the “hard” 90-day theatrical window, AMC has officially declared that it will no longer play Universal theatrical features. Yes, this is arguably saber-rattling for the sake of some kind of brokered peace, but it is a bluff. It has to be, because, especially right now, no major theater chain can survive, let alone thrive, without the movies Universal has in its pipeline.
Due to coronavirus-related theater closures and release date delays, Universal doesn’t have a major feature (presuming The Forever Purge indeed gets delayed from July 10) arriving in theaters until Nia Da Costa and Jordan Peele's Candyman on September 24. So there’s plenty of time for Universal and AMC to lob metaphorical missiles at each other all summer. As understandably annoyed as theater chains might be, this is a short-sighted and suicidal play from the biggest theater chain, one which was struggling with $5 billion in debts even before the global theatrical marketplace shut down. There’s no way AMC (or any major theater chain) gets back on their feet without the likes of F9, Minions 2, No Time to Die (overseas) and Jurassic World: Dominion.
Universal made a miscalculation both by not preemptively informing theater chains about their decisions regarding Trolls: World Tour and by trying to have it both ways in terms of VOD and theaters. They should have just said “Theaters are about to close, we want to have something big to offer for those stuck at home, and Trolls: World Tour is big enough to make a splash but not big enough to kill our bottom line,” then this likely would have been better received. It would be little different than Universal’s many direct-to-DVD sequels to their theatrical hits that flooded Blockbuster in the 2000’s. Quality-wise, Trolls: World Tour > American Pie: The Naked Mile, The Scorpion King 4 and The Land Before Time XIII: The Wisdom of Friends.
Shell’s comments do seem to affirm an intent to play around with the theatrical window once movie theaters are back in business, so this likely wasn’t a misunderstanding. Universal has been flirting with this idea for nearly a decade, when they threatened to release Brett Ratner’s October 2011 crime caper Tower Heist onto “$60-per-rental” VOD after its third week in theaters. They also openly discussed the logic, in late 2015, of releasing instant bombs like Jem and the Holograms onto VOD and DVD much sooner than the 90-100-day window would have allowed. Even Disney DIS was the studio that shortened the window to 90 days with Alice in Wonderland, a film that still earned $334 million domestic and $1.125 billion global in early 2010.
When studios talk about shortening the theatrical window, they aren’t necessarily talking about removing theaters from the equation. They are arguing for the right to release a bomb, the kind that leaves theaters in 14-21 days, onto VOD (or streaming) much faster than the conventional window would allow. In terms of big hits, they are trying to have it both ways, with best-case-scenario theatrical box office then leading to a near-immediate debut on “priced to own” electronic sell-through. Since most hit movies make most of their money in the first six weeks, the question is whether there is value to the studios in releasing those films onto VOD either as soon as they leave theaters and/or while they are still winding down their theatrical run.
Save for exceptions like Scream, The Sixth Sense, Frozen, The Greatest Showman and My Big Fat Greek Wedding (and awards-season contenders), most movies, even famously leggy ones, are mostly finished by the end of their second month. Most leggy blockbusters that come to mind (Inception, Shrek 2, Guardians of the Galaxy, How to Train Your Dragon, The Dark Knight, The Avengers, Toy Story 3, Spider-Man, Star Wars: The Force Awakens, Wonder Woman, Black Panther, Frozen II, etc.) earned 88-94% of their domestic cumes by the end of weekend six. And yes, films like Black Panther already debut in post-theatrical while still hanging around in theaters. The Ryan Coogler/Joe Robert Cole flick earned an additional $6.58 million, pushing it past $700 million, after its VOD debut.
I imagine we will see more “theater-worthy” movies going straight to PVOD or to a respective studio’s streaming service in the future. As audiences are less and less willing to see a variety of films in theaters, and this has been a huge problem for studios and theaters for the last five years, then more and more movies that once would have been likely theatrical hits are now likely to end up going straight to “post-theatrical.” When audiences get 90% of their cinematic diet from seasonal tentpoles, then everything else is a commercial risk. If you don’t see Amazon AMZN’s Late Night and Brittany Runs a Marathon in theaters, then The Report ends up with just a brief/token theatrical release before ending up on Amazon Prime.
If Universal thought Judd Apatow’s The King of Staten Island could do Trainwreck-level box office ($140 million global in 2015), they would have held it instead of dropping it on PVOD. If Warner Bros. thought Melissa McCarthy’s Superintelligence could do even Tammy-level business ($100 million on a $20 million budget in 2014) when theaters re-opened, they wouldn’t have sent the film to HBO Max. Ditto Sony selling Seth Rogen’s An American Pickle to HBO Max, as the likes of Neighbors ($271 million in 2014) or even This Is The End ($126 million in 2013) was a lifetime ago in terms of commercial play-ability. Trolls: World Tour was disconcerting because it was the first “straight-to-VOD” offering that had a prayer of being a theatrical smash.
There’s a difference between Universal sending Trolls: World Tour to PVOD and dating Minions 2: The Rise of Gru for July 2021. Every studio has had to make some kind of “We still believe in movie theaters” statement over the last two months, and to a certain extent that’s true. $95 million in VOD earnings for Trolls: World Tour is not, even accounting for a much larger portion of that going to the studios versus the 50/50 theaters/studio split, a game-changer. Universal literally had a once-in-a-lifetime captive audience and they still barely topped the $93 million ten-day-cume of Trolls’ domestic theatrical release in 2016. It will be profitable, but it’s not like Disney will look at these numbers and send Mulan to PVOD.
There is still no reasonable expectation that a VOD release of a would-be tentpole title, think Wonder Woman 1984 or No Time to Die, will earn anywhere near enough in global VOD (in participating marketplaces) to make up for what otherwise would have been a $650 million-to-$1.1 billion global theatrical gross. And yes, AMC theaters (along with the theaters with which they are aligned overseas) is a big part of that, so it’s not like Universal can walk away from the table quite yet. That said, if AMC is going to avoid bankruptcy (and not incur the wrath of the Wanda Group), they can’t afford to ignore Universal’s theatrical offerings. Universal has the biggest potential hits of any studio over the next couple of years.
While studios still need a global theatrical release for $100 million-$250 million movies, theaters require such tentpoles to sell concessions. Most moviegoers now only see the tentpoles (or relative “event movies”) in theaters while ignoring everything else. The top ten movies last year, of which only Sony’s Jumanji: The Next Level was not a comic book and/or Disney flick, accounted for $4.631 billion (40.6%) out of $11.4 billion domestic cume. Yes, Disney threw everything at the wall while Universal, WB and Paramount let them have their fun. Nonetheless, the big tentpole movies are needed for any multiplex chain that wishes to survive. For the next few years, Universal will have many of the biggest (F9, Jurassic World 3, etc.), so AMC needs their movies to survive.
I’m sympathetic to AMC and the National Association of Theater Owners’ concerns about what Trolls: World Tour does or doesn’t mean for theatrical moviegoing. But this could have been handled on a movie-by-movie basis (as Regal has announced in terms of not playing Universal releases that break the theatrical window) rather than a blanket ban that only makes AMC look foolish in hindsight. Candyman opens just under five months from today, so I imagine this will be resolved before that film’s new opening day. I can sympathize with Universal wanting to experiment with the theatrical window when audiences are so reluctant to see non-tentpole flicks in theaters. Nonetheless, the studios and the theaters need each other, at least for a few more years. Let’s hope that Trolls: World Tour doesn’t become the Hollywood equivalent of Archduke Ferdinand.
AMC cannot afford to not to blacklist the studio which will release the likes of Minions 2, No Time to Die, Jurassic World: Dominion and F9.
Spurred by NATO’s displeasure over Universal UHS’s decision to release Trolls: World Tour not in a conventional global theatrical release but on “premium VOD” ($20-per-rental) and then further irked by Universal CEO Jeff Shell’s comments implying that the relative success of Trolls: World Tour’s at-home release ($95 million in 19 days) would lead to eventual loosening of the “hard” 90-day theatrical window, AMC has officially declared that it will no longer play Universal theatrical features. Yes, this is arguably saber-rattling for the sake of some kind of brokered peace, but it is a bluff. It has to be, because, especially right now, no major theater chain can survive, let alone thrive, without the movies Universal has in its pipeline.
Due to coronavirus-related theater closures and release date delays, Universal doesn’t have a major feature (presuming The Forever Purge indeed gets delayed from July 10) arriving in theaters until Nia Da Costa and Jordan Peele's Candyman on September 24. So there’s plenty of time for Universal and AMC to lob metaphorical missiles at each other all summer. As understandably annoyed as theater chains might be, this is a short-sighted and suicidal play from the biggest theater chain, one which was struggling with $5 billion in debts even before the global theatrical marketplace shut down. There’s no way AMC (or any major theater chain) gets back on their feet without the likes of F9, Minions 2, No Time to Die (overseas) and Jurassic World: Dominion.
Universal made a miscalculation both by not preemptively informing theater chains about their decisions regarding Trolls: World Tour and by trying to have it both ways in terms of VOD and theaters. They should have just said “Theaters are about to close, we want to have something big to offer for those stuck at home, and Trolls: World Tour is big enough to make a splash but not big enough to kill our bottom line,” then this likely would have been better received. It would be little different than Universal’s many direct-to-DVD sequels to their theatrical hits that flooded Blockbuster in the 2000’s. Quality-wise, Trolls: World Tour > American Pie: The Naked Mile, The Scorpion King 4 and The Land Before Time XIII: The Wisdom of Friends.
Shell’s comments do seem to affirm an intent to play around with the theatrical window once movie theaters are back in business, so this likely wasn’t a misunderstanding. Universal has been flirting with this idea for nearly a decade, when they threatened to release Brett Ratner’s October 2011 crime caper Tower Heist onto “$60-per-rental” VOD after its third week in theaters. They also openly discussed the logic, in late 2015, of releasing instant bombs like Jem and the Holograms onto VOD and DVD much sooner than the 90-100-day window would have allowed. Even Disney DIS was the studio that shortened the window to 90 days with Alice in Wonderland, a film that still earned $334 million domestic and $1.125 billion global in early 2010.
When studios talk about shortening the theatrical window, they aren’t necessarily talking about removing theaters from the equation. They are arguing for the right to release a bomb, the kind that leaves theaters in 14-21 days, onto VOD (or streaming) much faster than the conventional window would allow. In terms of big hits, they are trying to have it both ways, with best-case-scenario theatrical box office then leading to a near-immediate debut on “priced to own” electronic sell-through. Since most hit movies make most of their money in the first six weeks, the question is whether there is value to the studios in releasing those films onto VOD either as soon as they leave theaters and/or while they are still winding down their theatrical run.
Save for exceptions like Scream, The Sixth Sense, Frozen, The Greatest Showman and My Big Fat Greek Wedding (and awards-season contenders), most movies, even famously leggy ones, are mostly finished by the end of their second month. Most leggy blockbusters that come to mind (Inception, Shrek 2, Guardians of the Galaxy, How to Train Your Dragon, The Dark Knight, The Avengers, Toy Story 3, Spider-Man, Star Wars: The Force Awakens, Wonder Woman, Black Panther, Frozen II, etc.) earned 88-94% of their domestic cumes by the end of weekend six. And yes, films like Black Panther already debut in post-theatrical while still hanging around in theaters. The Ryan Coogler/Joe Robert Cole flick earned an additional $6.58 million, pushing it past $700 million, after its VOD debut.
I imagine we will see more “theater-worthy” movies going straight to PVOD or to a respective studio’s streaming service in the future. As audiences are less and less willing to see a variety of films in theaters, and this has been a huge problem for studios and theaters for the last five years, then more and more movies that once would have been likely theatrical hits are now likely to end up going straight to “post-theatrical.” When audiences get 90% of their cinematic diet from seasonal tentpoles, then everything else is a commercial risk. If you don’t see Amazon AMZN’s Late Night and Brittany Runs a Marathon in theaters, then The Report ends up with just a brief/token theatrical release before ending up on Amazon Prime.
If Universal thought Judd Apatow’s The King of Staten Island could do Trainwreck-level box office ($140 million global in 2015), they would have held it instead of dropping it on PVOD. If Warner Bros. thought Melissa McCarthy’s Superintelligence could do even Tammy-level business ($100 million on a $20 million budget in 2014) when theaters re-opened, they wouldn’t have sent the film to HBO Max. Ditto Sony selling Seth Rogen’s An American Pickle to HBO Max, as the likes of Neighbors ($271 million in 2014) or even This Is The End ($126 million in 2013) was a lifetime ago in terms of commercial play-ability. Trolls: World Tour was disconcerting because it was the first “straight-to-VOD” offering that had a prayer of being a theatrical smash.
There’s a difference between Universal sending Trolls: World Tour to PVOD and dating Minions 2: The Rise of Gru for July 2021. Every studio has had to make some kind of “We still believe in movie theaters” statement over the last two months, and to a certain extent that’s true. $95 million in VOD earnings for Trolls: World Tour is not, even accounting for a much larger portion of that going to the studios versus the 50/50 theaters/studio split, a game-changer. Universal literally had a once-in-a-lifetime captive audience and they still barely topped the $93 million ten-day-cume of Trolls’ domestic theatrical release in 2016. It will be profitable, but it’s not like Disney will look at these numbers and send Mulan to PVOD.
There is still no reasonable expectation that a VOD release of a would-be tentpole title, think Wonder Woman 1984 or No Time to Die, will earn anywhere near enough in global VOD (in participating marketplaces) to make up for what otherwise would have been a $650 million-to-$1.1 billion global theatrical gross. And yes, AMC theaters (along with the theaters with which they are aligned overseas) is a big part of that, so it’s not like Universal can walk away from the table quite yet. That said, if AMC is going to avoid bankruptcy (and not incur the wrath of the Wanda Group), they can’t afford to ignore Universal’s theatrical offerings. Universal has the biggest potential hits of any studio over the next couple of years.
While studios still need a global theatrical release for $100 million-$250 million movies, theaters require such tentpoles to sell concessions. Most moviegoers now only see the tentpoles (or relative “event movies”) in theaters while ignoring everything else. The top ten movies last year, of which only Sony’s Jumanji: The Next Level was not a comic book and/or Disney flick, accounted for $4.631 billion (40.6%) out of $11.4 billion domestic cume. Yes, Disney threw everything at the wall while Universal, WB and Paramount let them have their fun. Nonetheless, the big tentpole movies are needed for any multiplex chain that wishes to survive. For the next few years, Universal will have many of the biggest (F9, Jurassic World 3, etc.), so AMC needs their movies to survive.
I’m sympathetic to AMC and the National Association of Theater Owners’ concerns about what Trolls: World Tour does or doesn’t mean for theatrical moviegoing. But this could have been handled on a movie-by-movie basis (as Regal has announced in terms of not playing Universal releases that break the theatrical window) rather than a blanket ban that only makes AMC look foolish in hindsight. Candyman opens just under five months from today, so I imagine this will be resolved before that film’s new opening day. I can sympathize with Universal wanting to experiment with the theatrical window when audiences are so reluctant to see non-tentpole flicks in theaters. Nonetheless, the studios and the theaters need each other, at least for a few more years. Let’s hope that Trolls: World Tour doesn’t become the Hollywood equivalent of Archduke Ferdinand.
