AMC Theatres Threatens to Drop Distribution of Universal Pictures Movies; Studio Responds

The world’s largest movie theater chain is fighting back against NBCUniversal’s plans to release at least some movies simultaneously to theaters and to homes.

On the heels of Universal Pictures’ animated feature film Trolls World Tour generating upwards of $100 million from premium video-on-demand and other digital channels in less than three weeks of release, NBCUniversal CEO Jeff Shell April 28 told The Wall Street Journal the studio would pursue a simultaneous theatrical/home entertainment release strategy going forward.

“The results for Trolls World Tour exceeded our expectations and demonstrated the viability of PVOD,” Shell said. “As soon as theaters reopen, we expect to release movies on both formats.”

AMC Theatres CEO Adam Aron promptly fired off a letter to the studio’s chairwoman, Donna Langley, saying it would no longer screen Universal movies if it turns a cold shoulder to the traditional 90-day theatrical window.

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“This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment,” Aron wrote in the letter. “Going forward, AMC will not license any Universal movies in any of our 1,000 theaters globally on these terms.”

AMC’s strategy mirrors exhibitor sentiment that has shunned Netflix original movies since the subscription streaming video behemoth releases its movies concurrently with any theatrical distribution.

Aron, along with 600 AMC executives, has been furloughed as the chain saw its business literally shuttered over night to help curb spread of the coronavirus. He said Shell’s comments suggest Universal is moving away from a long-term business model between AMC and Universal.

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Aron said the chain, which remains largely closed despite governors in select states authorizing the re-opening of theaters, would not distribute Universal — or any other studio’s content — globally if they stray away from the “theaters first” doctrine.

The executive said theatrical releases is a segue for future retail distribution, including boosting publicity, positive word-of-mouth, critical acclaim and downstream revenue. Aron said Universal wants to have its cake and eat it too by combining distribution channels.

“[Universal] assumes that we will meekly accept a reshaped view of how studios and exhibitors should interact, with zero concern on how its actions affect us,” Aron said.

He said AMC has invested significant time and energy with Universal executives over the past few years trying to figure out a new distribution models that would be beneficial both parties. Aron has previously mentioned helping studios distribute movies on its website and in theaters — the latter through packaged media.

“AMC is willing to sit down with Universal to discuss different windows strategies and different economic models between your company and ours,” Aron wrote. “However, in the absence of such discussions, and an acceptable conclusion thereto, our decades of incredibly successful business activity together has sadly come to an end.”

Universal Pictures, in a statement, called Aron’s letter disappointing. It said the decision to release Trolls World Tour on PVOD was done to offer consumers sheltering in home an alternative entertainment option.

“Based on the enthusiastic response to the film, we believe we made the right move,” Universal said. “In fact, given the choice of not releasing Trolls World Tour, which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear.”

The studio said it still believes in the theatrical business model and said it has made no comment to contrary. It said it always seeks to make its movies available to as wide an audience as possible.

“We look forward to having additional private conversations with our exhibition partners, but are disappointed by this seemingly coordinated attempt from AMC and [trade group National Association of Theatre Owners] to confuse our position and our actions,” Universal said.