AMC Theatres CEO Open to Concurrent Streaming Windows — Depending on Fiscal Terms

It’s not often the CEO of a company that lost $946 million in its most-recent fiscal quarter, and $4.6 billion for the fiscal year, is giddy with excitement. Nor is it common to hear the same executive say he’s not opposed to concurrent streaming/theatrical distribution.

But it was all there in virtual color on AMC Entertainment’s March 10 fiscal call spearheaded by CEO Adam Aron.

When asked about Disney, Warner Bros. and Universal Pictures’ efforts to shorten the theatrical window for specific titles and slates of movies, Aron said change and thinking outside the box has been part of AMC’s DNA for years. He recalled signing onto the 2016 concept, dubbed “Screening Room,” from Napster founder Sean Parker that would have made new-release movies available in consumer homes concurrently with their theatrical launches.

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“That never took off … but over the past several years, [we have] indicated in private conversations with every major studio that we were willing to be the most experimental movie circuit around with respect to windows strategies that were different than the traditional norm,” Aron said.

But with change and experimentation, the executive stressed there always had to be a positive for AMC and its shareholders; not just the studios.

“When we couldn’t strike deals with studios on shorter windows, we resisted them with all of our might,” Aron said. “This is an area I feel very good about.”

He recalled the exhibitor’s very public 90-day letter writing campaign with Universal Pictures that resulted in a landmark agreement enabling the studio to distribute theatrical titles directly into homes within 17 days of their box office debut, depending on ticket sales.

“It suggested there were alternate ways of distribution,” Aron said.

Fast-forward to Warner’s HBO Max announcement that the studio would release its entire 2021 theatrical slate simultaneously on WarnerMedia’s upstart subscription streaming video platform.

“We put out a very clear statement: That we were not willing to let Warner advantage its streaming service at AMC shareholder’s expense,” Aron said.

Yet, it doesn’t take a sleuth to notice that AMC is screening Warner Bros. movies such as Judas and the Black Messiah and Tom & Jerry — both of which are also streaming on Max.

“You should probably assume that if we’re playing Warner Bros. movies, we came to an agreement with the studio that benefits our shareholders,” Aron said without elaborating.

The executive said AMC is willing to engage with every major studio on the same topic, arguing that since the exhibitor has been business partners with all the major studios for decades, it can adjust business relationships.

“They can support their streaming services and theatrical leases, and do so not at our expense,” Aron said, adding that discussions with studios where the window policy has changed, “we think we have come out ahead and not behind.”

Separately, as of March 5, about 90% of AMC Theatres domestic screens were open. The exhibitor is slated to re-open screens in Alameda, Calif., which includes Oakland and East Bay on March 12, with a possible reboot in SoCal possibly by March 19.

To put the magnitude of a Los Angeles market re-opening into perspective, the “designated market area” is about double the size of the NY City market. Indeed, almost 33% of all AMC domestic movie viewing dollars is generated in just four states: California, New York, New Jersey and Connecticut. AMC permanently closed 60 underperforming theaters, including 48 domestically and 12 internationally in 2020.

“The New York re-opening is a harbinger of things to come,” Aron said. “We are like La Guardia Airport closed by a thunderstorm with tons of planes circling above, all waiting to land and all needing to land.”

The executive said the week will mark the 100th million vaccination in arm nationwide, with another 60 million to 90 million injections scheduled monthly.

“The real salvation of our company will be because of vaccinations,” Aron said, adding that in his eyes, the most important person in the entire movie business is Albert Bourla, CEO of Pfizer.

“He and his talented colleagues, and those of Moderna and Johnson & Johnson, are who have given us our new fortitude,” Aron said, adding he had the privilege of thanking Albert firsthand for saving AMC.

“And those sentiments of thanks were never more deserved,” he said.

 

Lionsgate Vice Chairman: Sony Distribution Deal Increases Margins; Says Theatrical Window Forever Changed

Lionsgate vice chairman Michael Burns says he expects to see increased consolidation of marketing and distribution efforts within the home entertainment market.

Speaking March 9 on the virtual Deutsche Bank confab, Burns was asked about last month’s decision to consolidate North American DVD/Blu-ray Disc distribution with Sony Pictures Home Entertainment.

Sony will handle distribution of Lionsgate’s packaged-media releases in the U.S. and Canada beginning in July. The studio’s North American distribution has been handled by the former 20th Century Fox Home Entertainment, which was acquired in 2019 by Disney.

“It will be good for us,” Burns said. “We’re all in the same [retail] business, which is to try to make as much money as possible. So, if you can consolidate operations and squeeze a little bit of margin here and there by having significant volume, which gives you that opportunity, I think you’re going to see more of that [in the industry].”

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When asked about ongoing efforts to rejigger the traditional theatrical window, Burns said he believes the windows will continue to change and have “changed forever in many ways.”

“That’s good for us,” he said. “I like the prospects for the motion picture business right now. You have limited supply and increased demand in that business.”

Lionsgate vice chairman Michael Burns

Lionsgate movies in the pipeline include back-to-back “John Wick” releases, among other action movies; Borderlands; a Monopoly-themed movie with Hasbro; and The Hunger Games prequel Snakes and Songbirds. 

The executive said changing windows with established major theatrical franchises such as “Hunger Games,” The Twilight Saga and “John Wick” diminish the titles’ upside in future retail channels. For the movies that don’t do well at the box office, shortening windows to 17 days (or three weekends), Burns said going straight to the consumer is “a really good thing” as opposed to waiting three months or longer before electronic sellthrough, VOD or DVD.

“There are a lot of advantages to having flexibility,” he said. “We’re not going to commit to one release pattern or another. The movie business is a mixture of art and science. And so we’re going to look at each movie individually and go where we can make the most money.”

 

AT&T CFO on Concurrent Theatrical, HBO Max Release: ‘It Was Something COVID Did to Us’

With retirement looming at the end of the month following a 28-year career at AT&T, CFO John Stephens has a lot to feel good about. Speaking March 8 on the virtual Deutsche Bank’s 29th Annual Media, Internet & Telecom Conference, Stephens said the rollout of the HBO Max subscription streaming service and concurrent access to Warner Bros. Pictures theatrical releases have left him feeling equally pleased.

The studio is releasing its entire theatrical slate simultaneously on Max. Titles released thus far include Wonder Woman 84, The Little Things, Judas and the Black Messiah and Tom & Jerry.

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“We announced we’d do it for a year, and we’re in that process now,” Stephens said. “What we’re seeing is not only good viewership of those movies on Max, but engagement that follows [on the platform] that’s been encouraging. So real success with it thus far.”

Stephens said Warner had no choice but to explore a more direct-to-consumer strategy, with theaters shuttered or operating with limited seating capacity due to the COVID-19 pandemic.

“I would suggest it was something COVID did to us,” he said. “We pivoted in that COVID environment.”

Stephens said that while theater re-openings will be gradual, holding back titles risks running to a backlog of theatrical titles at other studios.

“The flood of the theaters, even if they’re open, would change all the [distribution] economics anyway,” he said. “So we had a choice: I personally agree with that choice and it’s worked really well. And you’ve seen that in the quality of Max numbers.”

Going forward, the CFO said the studio and WarnerMedia would continue to learn from the strategy, gathering data on user metrics both domestically and abroad.

“We’re still just a few months into this process,” he said. “And we’re certainly uncertain as to when the economy is going to be fully open. I wouldn’t suggest this is anything more than a one year effort.”

Meanwhile, Stephens said the momentum at Max has exceeded expectations. Ad-supported AVOD Max launches later this year in Latin America.

“We think there’s an opportunity to expand the customer base by having thoughtful, careful AVOD product,” he said. “We had more customers last year than HBO had in the last decade. So feel good about that. Feel good about the quality of that product, the engagement, people’s use of that.”

Stephens said the Max launch would be catered different in each country, contending the HBO brand has “different flavors” depending upon which country you’re in. Stephens cited AT&T buying out the third-party minority stake in HBO Latin America in order to have complete ownership of the product when launching Max.

“You’ll see us do [Max] launches in different time frames and different manners respect to those contracts and existing relationships,” he said.

CEO: Sony Pictures Won’t Be in the ‘Day-and-Date Release Business’

With no proprietary streaming video platform to leverage, Tony Vinciquerra, CEO of Sony Pictures Entertainment, isn’t willing to join Hollywood studios writing the obit for the traditional theatrical window in exchange for expedited direct-to-consumer access in the home.

In an interview with CNBC’s Julia Boorstin, Vinciquerra said the economics surrounding big-budget motion pictures mandate an exclusive theatrical release. That thinking would appear at odds with Warner Bros., which is releasing its entire 2021 theatrical film slate concurrently with SVOD access on HBO Max, beginning with Wonder Woman 1984 on Christmas Day.

Sony Pictures CEO Tony Vinciquerra

“We think the [theatrical] window will become more flexible, which we think is a good thing for our films,” Vinciquerra said, adding that he believes 30 days is the best window to amortize the studio’s marketing over both theatrical and home entertainment windows. “Some films will do better with a shorter window, some will do better with a much longer window. We think that’s the way to go.”

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Indeed, the executive said that when action adventure sci-fi movie Venom was released theatrically on Oct. 3, 2018, the studio was quick to negotiate a shorter box office since it wanted the Tom Hardy-starrer into home entertainment channels by the winter holidays. The title, which generated $856 million at the global box office, was released on DVD and Blu-ray Disc Dec. 18 — generating $60 million in packaged-media revenue.

The reverse strategy was deployed in 2019 for the Jumanji: The Next Level, which Sony kept in theaters for more than four months following its Dec. 4 debut — generating $800 million in global box office ($45.5 million in disc sales).

“The first Jumanji went in theaters forever,” Vinciquerra said.  “We backed up the window. It depends on the film.”

When asked how much Sony theatrical movies would “suffer” in 2021 facing increased home entertainment competition from PVOD and transactional VOD via Warner Bros., Disney and Universal Pictures, among others, in the midst of a pandemic, the CEO wasn’t concerned.

“We don’t think we will suffer, once theaters are open and they have a significant number of their seats to sell. We think will be fine,” Vinciquerra said, adding that the studio had no plans to enter the “day-and-date release business”.

The executive contends that with the current backlog of theatrical titles, when released at the box office the onslaught of content — in addition to a vaccine — will jumpstart moviegoers.

Vinciquerra said its recent animation fantasy release, Demon Slayer the Movie: Mugen Train, is the top-performing box office title ever released in Japan. He said the Chinese box office has rebounded as well.

“Once people feel comfortable to go to theaters, the safety protocols appear to be strong, and the vaccine is in the marketplace, we think theaters will be back [in April or May 2021],” he said. “We’re pretty optimistic.”

Vinciquerra dismissed reports of Wonder Woman 1984‘s weak opening box office last weekend in China as more to do with reviews of the movie than the state of the exhibition business.

He said Warner’s decision to release movies through Max has made it easier for Sony to book theatrical dates in 2021 — and generate interest from actors, creators and directors eager for the box office experience and its impact financially and culturally.

“It’s been a bit of boon for us,” he said. “That actually worked very well for us.”

Parks: 25% of Broadband Homes Prefer Streaming to Theatrical New-Release Movies

With Hollywood studios increasingly opting to release new movies directly to consumers instead of the theater, new data from Parks Associates finds 25% of U.S. broadband households now prefer an over-the-top video subscription service to watch new movies, while 24% still prefer movie theaters to experience first-run movie titles.

The findings come as Parks hosts an online panel, “Future of Video,” discussing the value of content and technology innovations such as premium, transactional, and subscription-based VOD platforms delivering new-release movies directly to consumers rather than in the 90-day theatrical window.

Universal Pictures earlier this year, in response to the coronavirus pandemic, moved animated sequel Trolls World Tour from its theatrical slate to PVOD. The decision saw the movie generate $100 million in PVOD revenue, jumpstarting Hollywood’s renaissance with premium priced movies streaming into consumer homes.

“COVID-19 has upended the traditional content-windowing process, and consumer research shows this paradigm shift is impacting consumer attitudes,” research director Steve Nason said in a statement.

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Nason said streaming access in the home scores higher than movie theaters when consumers report their preferences for first-run movies. The analyst contends the shift might be temporary as nearly 30% of survey respondents had no preference for how to watch a new movie.

“[This] gives theaters a glimmer of hope they can eventually gain back some audience for first-run titles,” he said.

AMC Theatres Says It Will Be Out of Cash After January

AMC Entertainment, parent to the world’s largest theatrical chain, AMC Theatres, said it has received $100 million in stopgap funding to remain afloat financially. The deal with Mudrick Capital Management, disclosed in a Dec. 11 regulatory filing, pays the investment firm 15% in annual interest in exchange for 13.7 million AMC shares.

With coronavirus infections and deaths spiking across the country, movie theaters remain either shuttered (Regal Cinemas) or operating under limited capacity such as AMC and Cinemark. AMC said theatrical attendance has declined 92% since the previous-year period.

The chain said that in the absence of additional liquidity, it anticipates that its cash resources will be depleted in January 2021. To remain viable through next year, AMC estimates its needs approximately $750 million of additional liquidity to fund cash requirements, which include $400 million in deferred rent obligations. The chain is burning through $125 million monthly to maintain operations.

In addition to the pandemic, AMC blamed its fiscal situation and future on delayed studio releases and Warner Bros.’ decision to release all movies concurrently in theaters and on the HBO Max streaming service.

“[The] delays of major movie releases, or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theater exhibition, have led to theater closures, prevented the opening of theaters in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theater attendance levels and our business,” AMC said in the filing. “These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy.”

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As of Nov. 30, AMC was operating at 404 of its 594 U.S. theaters, with limited seating capacities and during limited opening hours. The company’s shuttered domestic screens include theaters in some of its major markets, such as New York City and in California. AMC is operating at 108 of its 359 leased and partnership international theaters, with limited seating capacities and during limited opening hours. Through Nov. 30, AMC said it has seen an 86% decline in international moviegoers compared to last year.

“Our current cash burn rates are not sustainable,” AMC said. We currently estimate that if our attendance levels do not significantly improve during … 2021, then we believe the liquidity shortfall would be greater than the estimated $750 million minimum shortfall, which if not addressed would prevent us from continuing as a going concern.”

Universal Inks Theatrical/PVOD Deal With Canada’s Cineplex Cinemas

Following landmark shortened theatrical window/PVOD distribution deals with AMC Theatres and Cinemark, Universal Pictures has ironed out a similar agreement with Canada’s largest exhibitor: Cineplex Cinemas.

Under the deal, Universal and subsidiary Focus Features have the right to offer consumers PVOD access to new release movies with less than $50 million in domestic opening weekend ticket sales after their box office debut. Movies with a higher box office can be released on PVOD 31 days after their theatrical bow. The studio and Cineplex will split PVOD revenue.

“The pandemic has given the industry and movie-lovers around the globe a new appreciation for the magic of the big screen experience,” Cineplex CEO Ellis Jacob said in a statement. “We are pleased to work alongside like-minded partners such as Universal, a studio that respects the theatrical window and is committed to the sustainable long-term health of the theatrical ecosystem.”

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Unlike other studios, Universal has a strong slate of titles through the end of the year, including The Croods: A New Age on Nov. 25; Half Brothers and All My Life on Dec. 4; and News of the World and Promising Young Woman on Dec. 25.

“With audience fragmentation accelerating due to the rise in digital, streaming and cord-cutting, as well as the unprecedented issues our industry is facing right now, our relationship with exhibition had to evolve and adapt to the changing distribution landscape,” said Donna Langley, chairman of Universal Filmed Entertainment Group. “Giving consumers the flexibility to view content on their terms is more important than ever to help expand moviegoing, and Ellis and our partners at Cineplex allow us to increase these opportunities for our Canadian audience.”

Universal, Cinemark Shrink Theatrical Window

Universal Pictures and Cinemark Entertainment have inked a deal that enables the studio to release its movies into the PVOD home entertainment channel from 17 to 31 days after their Cinemark, Century Theatres, Rave Cinemas, Tinseltown and CineArts debut. Cinemark operates 533 theaters and 5,974 screens in the U.S. and Latin America.

Under the agreement, any Universal movie that does better than $50 million at the domestic box office can be made available on PVOD 31 days after its domestic box office debut. Other Universal titles from DreamWorks Animation and Focus Features can be streamed into the home 17 days after their theatrical bow.

The shortened window comes as exhibitors contend with government-mandated shutdowns, distanced seating and other restrictions due to the ongoing coronavirus pandemic. Universal this spring reported generating more than $100 million in PVOD with erstwhile theatrical release Trolls World Tour. Other PVOD releases includes The King of Staten Island and the upcoming Freaky.

That 17-day window is similar to the landmark agreement over the summer between Universal and AMC Entertainment. As with that deal, Cinemark is expected to share in the PVOD revenue with Universal.

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“We believe a more dynamic theatrical window, whereby movie theaters continue to provide an event-sized launching platform for films that maximize box office and bolsters the success of subsequent distribution channels, is in the shared best interests of studios, exhibitors and more importantly, moviegoers,” Mark Zoradi, CEO of Cinemark, said in a statement.

Universal Filmed Group Chairman Donna Langley said the PVOD deal does not take away from the studio’s long history with theatrical distribution.

“Universal’s century-long partnership with exhibition is rooted in the theatrical experience, and we are more committed than ever for audiences to experience our movies on the big screen,” Langley said.

Analyst: Lackluster Weekend Box Office Could See Studios Further Delay New Releases

With Warner Bros.’ Tenet generating $30 million at the domestic box office over two weekends, and Disney’s Mulan almost surpassed by a local sci-fi film (The Eight Hundred) at the Chinese box office, the jury remains out on the state of the theatrical market’s return to normal from the coronavirus pandemic.

The third-quarter domestic box office is trending down 96.8% quarter-to-date to $101.1 million compared with the previous-year period, as theaters nationwide only recently began re-opening — and at reduced capacity. The latest box office weekend was 89% lower than the comparable weekend last year, according to industry figures.

The sluggish re-start, coupled with a majority of screens still dark in major markets New York and California, suggests studios will reconsider bowing major new releases in any great numbers in the near future, according to Michael Pachter, media analyst with Wedbush Securities in Los Angeles.

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Indeed, Warner just pushed back again the theatrical bow of Wonder Woman 1984 from Oct. 2 to Dec. 25 — more than a year after the sequel’s original launch date. Subsequent release dates included June4 and Aug. 14.

Sony Pictures Entertainment CEO Tony Vinciquerra last week told an investor event the studio would delay all major releases until 2021.

“What we won’t do is make the mistake of putting a very, very expensive $200 million movie out in the market unless we’re sure that theaters are open and operating at significant capacity,” Vinciquerra said.

Pachter says that trend will only grow as nervous studios contend with wary moviegoers and local government restrictions.

“We think the relatively lackluster second theatrical week for Tenet juxtaposed with the difficulty Disney has faced with Mulan has made film releases seem like a risky business in the current environment,” Pachter wrote in a Sept. 14 note.

The uncertainty is bound to increase pressure on studios to shorten the 90-day theatrical window and seek alternative distribution channels such premium and transactional VOD. The COVID-19 era has produced unusual circumstances (and opportunities) for studios, including dabbling in direct-to-consumer distribution.

The ongoing interest for at-home content could impact long-term decisions by studios regarding which content they send to theaters and which goes direct to streaming platforms, according to Pachter.

“This is particularly compelling for the studios that have launched or will soon launch their own subscription/ad-supported streaming video platforms,” he wrote.

 

Disney Offering ‘Mulan’ Access via Roku, Apple, Google Play

The Walt Disney Co. is a longtime champion of preserving the traditional theatrical window, eschewing industry efforts to push premium VOD in the home for new release movies.

As a result, the company’s decision to offer the live-action remake Mulan directly to consumers on Sept. 4 for $29.99 is a one-time bet requiring maximum distribution.

To that end, Disney will sell “premium access” to Mulan to Disney+ subscribers via Google Play, Apple and Roku. The move is significant considering that when CEO Bob Chapek first announced direct-to-consumer access to Mulan on the the company’s fiscal call, it was through Disney+ exclusively. Now Disney will share Mulan revenue with Apple, Roku and Google.

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The move suggests Disney might be having difficulty convincing Disney+ subs to directly purchase the film on its app.

“Starting Sept. 4, with Premier Access, you can watch Mulan before it’s available to all Disney+ subscribers,” Disney said in its FAQ section. “Disney+ will offer Premier Access to Mulan for $29.99 on DisneyPlus.com and select platforms, including Apple, Google and Roku. Once you have Premier Access to Mulan, you can watch as many times as you want on any platform where Disney+ is available. Your access to Mulan will continue as long as you are an active Disney+ subscriber.”

The movie thus far is not available through Amazon Fire TV, Sony PlayStation and Microsoft Xbox, despite the platforms affording access to the Disney+ app.