The film industry was rocked this week when a deal was struck between Universal Pictures and AMC Theatres that sliced the theatrical exhibition window from three months to three weeks. As we wait to see exactly what type of ripple effects this decision will have, NBCUniversal CEO Jeff Shell spoke about why he thinks the AMC Universal deal will attract the “very large audience who doesn’t go to movie theaters.”
Plus, find out what kind of cut AMC Theatres will reportedly be taking from the revenue of the premium video on demand rentals.
On NBCUniversal’s quarterly earnings call today (via Deadline), CEO Jeff Shell spoke about the AMC Universal deal and explained how it will allow the studio to make more money from PVOD without launching expensive new marketing campaigns.
“Movies are our lifeblood,” he said. “Over the last couple of years, it’s become more increasingly difficult to generate the same returns over the first couple of windows. We believe the new model in the U.S. will restore some of those economics, probably not make more movies, but keep production levels the same as in the past.
“Long-term we’ve always believed that there’s a growing segment of the population out there who doesn’t go to movie theaters. This structure with AMC allows us to take advantage of people who do go to the movie theaters, 17 days of exclusivity at minimum for theaters, but very soon after in the same marketing window, we can tap into that very large audience who doesn’t go to movie theaters, but is just going to SVOD to watch movies. And that’s within the marketing window of the giant marketing we spend that goes to theatrical.”
So when Universal knows in advance that it will only release a film theatrically for three weeks before it goes to premium video on demand platforms (AKA approximately $20 rentals), the studio can factor that information into its initial marketing campaign instead of doing it the old way, which involved launching an expensive separate campaign months later. That will save Universal money in the short term, but it doesn’t seem like an ideal way to give movies a chance to catch fire and build word of mouth before shuffling them off to Streamingville. It seemed as if one of the benefits of this deal for Universal was that they could be nimble and carve out a movie’s path on a film-by-film basis; but if it promises something ahead of timing in early marketing, it seems like it’s locking itself into following through on that promise.
[Example: If Universal decides in advance that the upcoming Candyman remake will be available on PVOD three weeks after it debuts in theaters, but then the film does exceptionally well at the box office, it seems like the studio has shot itself in the foot, because instead of holding the film up as an exclusive theatrical release for as long as possible, now it has to follow through on its early marketing promise.]
Also, a quick note: I’ve been talking about this from the studio perspective in this article, but if this deal sparks more of its kind from other studios and theater chains, there could be catastrophic consequences for small independent theaters across the country. We acknowledge those concerns and are incredibly sympathetic to them, and will try to address them as this story continues to evolve.
Meanwhile, Shell also said that “we think this model will actually allow movies to come back to theaters a lot more quickly then they would have in the current environment,” although it’s unclear to me exactly why he thinks that would be the case. While theaters are certainly in dire need of new movies to show, there are also plenty of other factors – chief among them, the restrictions of an ongoing global pandemic – that I suspect have more to do with that timing than this deal between (so far) a single studio and a single theater chain.
And finally, for anyone who was curious about what benefits AMC is going to get from this deal, Deadline reports that the revenue share that’s been agreed upon between Universal and AMC for the premium video on demand rentals is “north of 20% of PVOD for a title, with a further 2% theatrical rental on the chain’s side.” Is that enough of a cut to let AMC sleep at night after potentially wiping out independent theaters with this deal? I guess we’ll see!
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