NBCUniversal’s Jeff Shell: ‘Not Realistic’ to Ignore PVOD

After setting off an industry firestorm saying Universal Pictures would pursue a movie-release strategy combining theatrical and premium video-on-demand, NBCUniversal CEO Jeff Shell doubled down on his previous comments to The Wall Street Journal after Universal Pictures animated feature film, Trolls World Tour, generated $100 million in PVOD sales.

Speaking April 29 on the Comcast fiscal call, Shell said PVOD would continue as a “complementary offer” to consumers when theaters re-open to the public — and consumers attend.

He said the Trolls had been primed and marketed for a March 20 theatrical bow, and when the coronavirus shut down theaters, going direct-to-consumer on April 10 with a “desperately” needed children’s title during the pandemic was the only option.

“The majority of our movies, whether we like it or not, are being consumed at home,” Shell said. “It’s not realistic to assume that we’re not going to change, that this part of the business isn’t going to change like all parts of the business are going to change.”

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The executive said it remains to be seen what the distribution model will look like post-COVID-19. While he expects a gradual return to the cineplex, which he said Universal would be part of, he also expects PVOD to be a part of the business model.

“[PVOD is] not a replacement,” Shell said. “We’re just going to have to see how long [a return to theatrical] takes and where it takes us.”

AMC Theatres, trade group National Association of Theatre Owners and Regal Cinemas have blasted Universal for pledging to bypass the traditional 90-day theatrical window. Both exhibitors have said they would not distribute any Universal — or other studio — title earmarked for simultaneous in-home digital release.

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With the exception of Georgia and Texas, movie theaters in most states remain shuttered due to the coronavirus. The industry and studios are projected to lose billions in box office revenue to the shutdowns.

Comcast CFO Michael Cavanagh said future PVOD releases would be determined on a “title-by-title” basis.

Regal Owner Joins in Blasting Universal for Window Strategy

Regal theater chain owner Cineworld April 29 added its voice to criticism of Universal over its strategy to break traditional theatrical windows, boosted by the success of the studio’s premium VOD release of Trolls World Tour.

“We make it clear again that we will not be showing movies that fail to respect the windows as it does not make any economic sense for us,” read the Cineworld release.

In its criticism, Cineworld followed AMC Theatres, which April 28 vowed not to show Universal films because of the studio’s stance. On the heels of Trolls World Tour generating upwards of $100 million from its premium video-on-demand 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.”

Like AMC, Cineworld reasserted its support for a window and scolded Universal.

“Cineworld and Regal’s policy with respect to the window is clear, well known in the industry and is part of our commercial deal with our movie suppliers,” read the press release. “We invest heavily in our cinemas across the globe and this allows the movie studios to provide customers all around the world the opportunity to watch movies in the best experience. There is no argument that the big screen is the best way to watch a movie. Universal unilaterally chose to break our understanding and did so at the height of the COVID-19 crisis when our business is closed, more than 35,000 employees are at home and when we do not yet have a clear date for the reopening of our cinemas. Universal’s move is completely inappropriate and certainly has nothing to do with good faith business practice, partnership and transparency.”

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The press release noted that Cineworld CEO Mooky Greidinger approached Comcast chairman Brian Roberts on March 19, after the Trolls World Tour PVOD announcement, and told him: “Nice words from your team are worthless if we cannot trust you as a partner. The message that the media has portrayed is: ‘Hollywood breaks the window’ — well, this is not true! All our partners called us in a timely manner and told us that in the current situation they want to shorten the window for movies that were already released as cinemas are closing. Most importantly, they all reassured us that there will be no change to their window policy once the cinema business returned. Unfortunately I missed a similar message in Universal’s announcement… not only did Universal provide no commitment for the future window — but Universal was the ONLY studio that tried to take advantage of the current crisis and provide a ‘day-and-date’ release of a movie that was not yet released.”

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The release went on to say the company “was always open to showing any movie as long as the rules were kept and not changed by one-sided moves.”

“We have full confidence in the industry’s current business model,” the release read. “No one should forget that the theatrical side of this industry generated an all-time record income of $42 billion last year and the movie distributors’ share of this was about $20 billion.”

Universal: ‘Trolls World Tour’ Generated $100 Million in Digital Revenue

Universal Pictures reportedly has generated almost $100 million in revenue from the animated movie Trolls World Tour since its April 10 release on premium VOD for $19.99.

The Wall Street Journal, citing Universal’s corporate communications, said the studio generated another $60 million from the combined transactional VOD releases of The Invisible Man, The Hunt, Emma and Never Rarely Sometimes Always.

Universal Pictures sources later confirmed both figures to Media Play News — and noted that they are domestic (United States and Canada) only. The film will be released theatrically in most international markets in the fall.

“The results from Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” NBCUniversal CEO Jeff Shell told The Wall Street Journal. “As soon as theaters reopen, we expect to release movies on both formats.”

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Universal April 27 announced it is releasing previous Judd Apatow theatrical title The King of Staten Island, about and starring “Saturday Night Live” cast member Peter Davidson, on June 12 on PVOD.

Trolls World Tour, the sequel to Trolls, was originally intended to premiere in movie theaters April 10.

But with movie theaters shuttered in the wake of the March 11 declaration by the World Health Organization (WHO) of a global coronavirus pandemic, the film instead was released directly to premium VOD at a $19.99 rental price for 48 hours.

The film was also released to about 25 drive-in movie theaters on that same day, a Universal Pictures spokesperson told Media Play News — where it reportedly generated another $100,000 in total revenue.

The sequel, featuring the voices of Anna Kendrick, Justin Timberlake, Rachel Bloom, James Cordon and Kelly Clarkson, among others, was widely seen as a test case for PVOD.

Richard Greenfield, co-founder/analyst with Lightshed Partners, discussed the move to digital delivery on CNBC’s “Squawk Box” April 9, the day before the film’s release.

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“It’s a pretty monumental day in the film industry where a mainstream consumer movie in Trolls is going to skip the theaters,” he said. “I give [NBCUniversal CEO] Jeff Shell and the team at Universal Pictures a lot of credit for being willing to try this. It’s a unique circumstance. A lot of the marketing dollars had already been set in motion for Trolls, but you got kids stuck at home, families stuck at home — $20 for Trolls, direct-to-consumer … is really interesting. I’m certainly rooting for them to do well because I think this is an important model for the industry.”

Universal’s ‘The King of Staten Island’ Bowing on PVOD

Universal Pictures is sending another planned theatrical release straight to retail due to the ongoing coronavirus shutdown.

The King of Staten Island, a semi-autobiographical fictional movie about/starring “Saturday Night Live” cast member Peter Davidson from director Judd Apatow, is going to premium video-on-demand on June 12 — a week before the movie’s original theatrical release date.

Marisa Tomei, Bill Burr and Maude Apatow (the director’s oldest daughter and co-star with her mom, Leslie Mann, in TV commercials) co-star in the film.

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Davidson and Apatow joked about the release April 27 on social media.

“Dude, what is going on with our movie?” Davidson asked Apatow. “Am I still going to get an Oscar?”

Davidson, who has had his share of off-camera notoriety, lost his father — a firefighter — during the 9/11 World Trade Center attack.

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“He really is a sweetheart guy,” Apatow said about the 26-year-old comic in a media interview. “He’s so creative and smart. He’s been through things that no one on earth should ever have to go through.”

The movie marks Universal’s second PVOD release following Trolls World Tour on April 10, which the studio claims set digital retail records.

‘Trolls World Tour’ Again Tops FandangoNow Chart

Universal/DreamWorks Animation’s Trolls World Tour remained the top title on FandangoNow, the transactional video-on-demand service from Fandango, for the week ended April 19.

With its wide theatrical release scuttled by COVID-19, the animated sequel to Trolls instead debuted on premium VOD April 10 as a 48-hour rental at $19.99. During the week prior, its premiere week, the title was FandangoNow’s most preordered title of all time, best-selling film on its opening day and best-selling film during its first three days of digital release, according to the service.

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Sony Pictures’ Bad Boys for Life, the Will Smith-Martin Lawrence buddy film, made a another appearance at No. 2 on the FandangoNow chart for the week, while Paramount’s Sonic the Hedgehog repeated at No. 3. Sonic raced to digital release early March 31, also due to the coronavirus pandemic.

FandangoNow’s top 10 titles for the week ended April 19 were:

  1. Trolls World Tour
  2. Bad Boys for Life
  3. Sonic the Hedgehog
  4. The Invisible Man
  5. The Gentlemen
  6. Fantasy Island
  7. Underwater
  8. Birds of Prey
  9. The Way Back
  10. Dolittle

Analyst Says PVOD Likely to Persist After Stay-at-Home Orders Lifted

Premium VOD as a distribution concept may continue to stick around even after stay-at-home orders are lifted, wrote Colin Dixon, chief analyst and founder of nScreenMedia.

“People love the idea of an accelerated digital release for first-run movies,” he wrote. “Comcast/NBCU hopes the premium VOD (PVOD) approach will become permanent. With theaters likely to remain closed for longer than the industry would like, both groups may see PVOD persist for months to come.”

Citing data from Hub Entertainment Research, he wrote that 74% of respondents were very or somewhat interested in seeing new movies at home at the same price as viewing them in the theaters.

He also noted that attracting audiences back to theaters may be difficult.

“The idea that audiences will flock back to theaters once shelter-in-place orders are lifted is looking increasingly unlikely,” he wrote. “Movie theaters will be among the last to receive the green light to open their doors since they are non-essential and put people at increased risk of catching the virus. What’s more, it will take a while for audiences to feel comfortable sitting with a group of strangers for two hours.”

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‘Trolls World Tour’ Breaks Records at FandangoNow

DreamWorks Animation’s Trolls World Tour was the most popular film on FandangoNow, Fandango’s transactional video-on-demand service, for the week ended April 12.

The April 10 premium VOD debut of the Universal Pictures/DreamWorks film helped the service see its best weekend in its history, according to FandangoNow.

Trolls World Tour, available for digital rental at $19.99 for 48 hours, became the service’s most preordered title of all time, best-selling film on its opening day and best-selling film during its first three days of digital release.

With movie theaters closed, Trolls World Tour made an unprecedented premiere on digital for such a big blockbuster release.

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“Following weeks of anticipation for its home premiere, Trolls World Tour is now FandangoNow’s streaming debut champ, with the best preorders, first day and opening weekend sales we’ve ever seen,” said FandangoNow head Cameron Douglas. “We’re pleased that families looking for a much-needed entertainment break are enjoying DreamWorks Animation’s latest movie on our service.”

FandangoNow’s top 10 titles for the week ended April 12 were:

  1. Trolls World Tour
  2. Bad Boys for Life
  3. Sonic the Hedgehog
  4. Birds of Prey
  5. The Invisible Man
  6. Dolittle
  7. The Call of the Wild
  8. Like a Boss
  9. Bloodshot
  10. Jumanji: The Next Level

PVOD’s Brief Moment in the Sun

The novel coronavirus pandemic has given movie studios a taste of something they’ve always wanted: premium video-on-demand, or PVOD.

Long talked about as the antidote to shrinking film profits, PVOD allows consumers to watch big movies at home on the same day as their theatrical release — at a premium price, of course. Three years ago, a Morgan Stanley Research report looked at the viability of PVOD and found “significant upside for film studios,” according to the report’s lead author, Benjamin Swinburne. Swinburne and his team estimated that PVOD could boost studios revenues by as much as $2 billion a year, with hardly any extra costs.

PVOD talk died down a short time later when theater owners made it perfectly clear they were not on board.

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Then came the pandemic. All of a sudden, the country was effectively shut down. The big movie theater chains at first said they would remain open, but sell fewer seats to maintain social distancing. But within days, both AMC and Regal Cinemas, the No. 1 and No. 2 theater chains, went dark.

Productions were halted and, for films already in the can, premieres were canceled and theatrical openings delayed. On March 16, Universal Pictures announced its current theatrical slate would be available for home viewing at a premium rental rate of $19.99 — and that it would release DreamWorks Animation’s Trolls World Tour digitally on the same day as its scheduled theatrical debut, also at $19.99.

Other studios quickly followed suit, smashing the traditional 90-day theatrical window with a wide range of movies — including Disney’s Onward, which was released digitally on March 20, two weeks after its theatrical opening, and Sony Pictures’ Bloodshot, released to home audiences just 11 days after its box office debut.

But now that studios have gotten a taste of PVOD, they have been conspicuously silent about its success — and about its future.

That’s because studios need movie theaters as much as theaters need Hollywood movies. Simply put, one cannot survive without the other — which is why studios are treading carefully with PVOD. As the Morgan Stanley study found, there’s a significant upside to releasing movies early through digital channels. But $2 billion is a fraction of the estimated $22.5 billion studios earned globally from theatrical ticket sales.

Regardless of how well studios do with PVOD during the pandemic, once theaters reopen the genie will be put back into the bottle — with PVOD’s ultimate fate still dependent on theater owners, whose opposition to PVOD stems in large part to the fact that they derive 40% of their profits from concessions.

Studios, however, will have a little more leverage when the crisis is over. In a survey of 1,000 U.S. consumers, Performance Research found that 49% of respondents said it would take “a few months” to “possibly never” for them to return to movie theaters, while just 15% said they intend to frequent movie theaters more often after the pandemic is over. As Variety observed, “the net effect suggests an alarming erosion of theatrical returns that exhibitors and studios alike can ill afford.”

‘Trolls World Tour’ PVOD Release No. 1 on iTunes, Amazon Video

Universal Pictures/DreamWorks Animation’s groundbreaking PVOD release of Trolls World Tour topped digital charts, including No. 1 on iTunes, Amazon Video and Redbox On Demand, among others (through April 12), following its April 10 launch. Financial results have not been released.

The sequel to the 2016 original Trolls movie was released on PVOD for $19.99 on the same day it had been scheduled to debut in theaters prior to the coronavirus pandemic.

With movie theaters shuttered globally to reduce the spread of the virus, studios have either postponed launch dates for tentpole titles or expedited a movie’s retail distribution, including Universal’s The Invisible Man, Paramount Pictures’ Sonic the Hedgehog and Sony Pictures’ Bloodshot, among others.

Disney has said it would debut Artemis Fowl on its branded subscription streaming video platform — the first of several other undisclosed titles.

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“The measures being taken right now are because of the unforeseen circumstances,” Paul Dergarabedian, senior media analyst with Comscore, told Business Insider. “And consumers have an appetite for new content. We are literally stuck at home.”

Michael Pachter, media analyst with Wedbush Securities in Los Angeles, doubts PVOD has much of a long-term shelf life. He says studios cannot recoup production/marketing costs of big-budget movies for $20 to households.

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“One off and unsustainable,” Pachter said in an email. “We have been trained to wait for $5.99 digital rental. [Studios] will scrap the idea once the pandemic is behind us.”

‘Trolls World Tour’ a Test of Premium VOD

It’s a first for a big blockbuster release.

Trolls World Tour — the animated sequel to Trolls originally intended to premiere in movie theaters April 10 — instead heads directly and exclusively to premium VOD on the same day at a $19.99 rental price for 48 hours.

Well, almost exclusively — according to a Universal Pictures spokesperson, the film “will be playing at 25 drive-in theaters around the country, so clearly it’s not exclusive to on-demand.”

With movie theaters closing due to the COVID-19 crises, Universal Pictures and DreamWorks in mid-March elected to release the film simultaneously in theaters and on PVOD. Now, with theaters around the country closed, PVOD is getting the relatively exclusive premiere.

The sequel, featuring the voices of Anna Kendrick, Justin Timberlake, Rachel Bloom, James Cordon and Kelly Clarkson, among others, is a test case for PVOD.

Will the strategy pay off?

Richard Greenfield, co-founder/analyst with Lightshed Partners, discussed the move to digital delivery on CNBC’s “Squawk Box” April 9.

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“It’s a pretty monumental day in the film industry where a mainstream consumer movie in Trolls is going to skip the theaters,” he said. “I give [NBCUniversal CEO] Jeff Shell and the team at Universal Pictures a lot of credit for being willing to try this. It’s a unique circumstance. A lot of the marketing dollars had already been set in motion for Trolls, but you got kids stuck at home, families stuck at home — $20 for Trolls, direct to consumer tomorrow, is really interesting. I’m certainly rooting for them to do well because I think this is an important model for the industry.”

Digital retailers are making the most of the unprecedented opportunity.  FandangoNow, movie ticketing service Fandango’s digital retail site, is offering an “extended sneak peek” on Fandango.com and on the FandangoNow Extras YouTube Channel starting at 8 a.m. PT (11 a.m. ET).

Then, fans renting the film can participate in a 10 a.m. PT (1 p.m. ET) “Trolls World Tour Watch Party,” hosted by podcasters The McElroy Brothers (who provide troll voices in the movie),with commentary from the film’s director, Walter Dohrn, along with other talent and fellow fans on the official @Trolls Twitter page, using the hashtag #TrollsWatchParty.

FandangoNow is pulling out all the stops for Trolls World Tour, the first big movie to premier on PVOD.

“There’s so much excitement surrounding our first-ever Home Premiere pre-order that advance orders for Trolls World Tour are the strongest we’ve ever seen,” said FandangoNow head Cameron Douglas. “Families can’t wait to watch the reunion of the beloved ‘Trolls’ characters, while stocking up on DreamWorks Animation titles they can enjoy together at home.”

Vudu, too, has a “Trolls World Tour Watch Party” scheduled for 3 p.m. PDT (6 p.m. EDT), preceded by a half-hour “virtual red carpet pre-show,” accessed through Twitter, with movie trivia, influencer interviews and favorite character talk.

Analyst Greenfield questions whether consumers will return to theaters as stay-at-home orders lift.

“What happens when the theaters reopen, and people really don’t want to go to them?” he said. “Is there a model where your Peacock subscriber (or Disney+, HBO Max, etc.), do you try to market movies at a $20 or $30 premium? You could think of it like ‘NFL Sunday Ticket.’ You had to have DirecTV to get it. Or UFC. You can’t get UFC streaming unless you are an ESPN+ subscriber. It’s possible you move to that model; the PVOD model is certainly possible. But you are already limiting the person who can see it. Anyone can see it in a theater. If you limit the universe just to people who are just Disney+ subs, you do run the risk of just not being able to reach as many people as you otherwise would have reached. So, [PVOD] is an idea. All the studios are trying to figure it out.”

He noted that social distancing in a theater drops capacity significantly.

“Our core business of putting people in theaters for decades, it’s not clear when hundreds of people are going to feel comfortable again in a movie theater,” he said.

Subscription VOD is a beneficiary of the crisis as well, he said.

Vudu’s email to customers, promoting the Trolls World Tour “watch party”

“Consumers want to stream a lot of content, and the pandemic is just accelerating that trend,” he said. “Can you wait for movie theaters to do $1 billion for a movie like Mulan, or do you with a base of 50 million for Disney+ (maybe 70 million, 80 million by the end of the year), you say, ‘You know what. We have to change the model, use this Disney+ far more aggressively to get content out to the consumer.’

“It will be really interesting to see if [new Disney CEO Bob] Chapek has the guts and boldness to shift Disney’s business model. Or [say], ‘Hey, we got a lot more subs, and it’s still a small part of overall business model.'”

Certainly, movie theaters will put up a fight.

Interestingly, just about a year ago in February 2019, Cinemark CEO Mark Zoradi said Hollywood studios were no longer talking about creating a premium video-on-demand window for popular movies, according to a story from The Hollywood Reporter.

“PVOD isn’t even discussed anymore,” Zoradi told the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

Additional reporting by Erik Gruenwedel.

Redbox also is promoting the unprecedented PVOD debut of Trolls World Tour