29 JUL 2020

AMC AND UNIVERSAL TO DISRUPT FILM DISTRIBUTION BUSINESS

The deal is currently only in effect in the United States, but discussions and international distribution agreements will take place for Europe and the Middle East in upcoming weeks. The financial terms of the deal were not disclosed.

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AMC Theaters and Universal announced an agreement granting theatrical exclusivity for films that the studio would like to release early as premium video-on-demand (PVOD) titles, detangling a disagreement that unfolded after the studio moved “Trolls World Tour” from theatrical to home release amind the Covid-19 pandemic. The financial terms of the deal were not disclosed. “This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated,” AMC CEO, Adam Aron wrote in a statement.

Then Universal, which is a division of Comcast Corp. can make its movies available on premium videos on demand, including through AMC Theatres On Demand. In exchange, AMC, which is owned by China's Wanda Group, will get a cut of the PVOD revenues. “AMC will also share in these new revenue streams that will come to the movie ecosystem from premium video on demand,” Aron said.

The pact is limited to AMC sites in the United States, though discussions and international distribution agreements  will take place for Europe and the Middle East in upcoming weeks. It's unclear whether other exhibitors such as Regal and Cinemark will strike similar deals with Universal, or whether other distributors such as Disney, Paramount, Sony and Warner Bros. will make like pacts with AMC. "The theatrical experience continues to be the cornerstone of our business," said Universal Chairperson Donna Langley in a statement. "The partnership we've forged with AMC is driven by our collective desire to ensure a thriving future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality."

Under the new deal, AMC will be guaranteed theatrical exclusivity for all Universal and Focus Features films through the first 17 days of release, after which Universal will have the option to make those films available on PVOD, including through AMC’s on-demand service. The two companies will continue to negotiate terms for international distribution in European and Middle-Eastern countries that are a part of AMC’s circuit. “AMC enthusiastically embraces this new industry model both because we are participating in the entirety of the economics of the new structure, and because premium video on demand creates the added potential for increased movie studio profitability, which should, in turn, lead to the green-lighting of more theatrical movies,” Aron wrote.

Universal has consistently maintained that it is committed to theatrical releases and that PVOD is only being considered as a possible option for certain titles like “King of Staten Island,” which also moved to PVOD this summer as theaters remained closed. Pricing for Universal’s PVOD films has varied based on demand, but most titles, including “Trolls World Tour,” have been released with an initial price of USD 19.99 for a 48-hour rental. The vast majority of Universal films, including blockbusters like “F9,” will still get a theatrical release in 2021.

This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated.” Adam Aron CEO, AMC