Following AMC Theatres’ landmark decision to allow Universal Pictures to distribute movies into consumer homes just 17 days after their theatrical debut, rival chain Cinemark is questioning the move indirectly.
Headquartered in Plano, Texas, Cinemark operates 554 theaters and 6,132 screens in the U.S. and Latin America. Speaking on the Aug. 4 fiscal call, CEO Mark Zoradi said theatrical exclusivity for new studio movies must be maintained despite the current COVID-19 environment that has seen the exhibition business shuttered since mid-March.
Saying the company wouldn’t comment on the strategies of its rivals, Zoradi said an exclusive theatrical window is critically important to the industry.
“While we have publicly stated that we’re willing to have conversations with our studio partners to evolve windows, we’re mindful that an overly aggressive shortened theatrical window could have an adverse impact to the mid-to-tail-end of a film’s life,” he said.
Key to the AMC/Universal deal is the exhibitor’s revenue-sharing agreement on sales/rentals of titles into the home entertainment market.
Mindful of incremental revenue possibilities via transactional VOD following a fiscal quarter that saw Cinemark generate just $37,000 in ticket sales over 90 days, Zoradi said he remains open to change during the pandemic and beyond.
“We will be very careful and methodical about how we approach any change to the theatrical windows,” he said. “We continue to carefully analyze and research this matter. And we will endeavor to ensure any modifications are in the best interests of the overall industry, our company and our shareholders.”
It’s a fiscal line item no Hollywood studio accountant ever wants to see. Universal Pictures generated just $8 million in 90 days at the box office in the second quarter (ended June 30). Instead of hundreds of millions in ticket sales, Universal, like all other studios, saw its legacy business model sidelined by the coronavirus pandemic — shuttering movie theaters and production globally.
Picking up the slack: home entertainment and content licensing. Universal Pictures Home Entertainment generated $229 million in the quarter from sales of digital and packaged-media titles — on par with the previous-year period. Content licensing generated $850 million in the period — up 18.5% from the equivalent previous-year period.
Total studio revenue topped $1.19 billion, down 18% from $1.45 billion a year ago.
NBCUniversal CEO Jeff Shell said the lack of movie production and marketing costs actually had a positive impact on the quarter, but would have a negative impact on the “coming years.” He said production began on several major films in the past few weeks, including the new Jurassic World: Dominion in the United Kingdom.
The results in part contributed to Universal hammering out a landmark distribution deal with AMC Theatres that enables the studio to deliver movies into homes just 17 days after their theatrical debut.
As expected, Comcast chairman/CEO Brian Roberts said little about studio operations, focusing instead on distribution alternatives and the company’s resilience during the pandemic.
“Based on our results and the many organic growth opportunities that we have across our company, I am confident in our ability to continue to successfully navigate the impact of COVID-19, and emerge from the crisis even stronger,” Roberts said in a statement.
Universal Film Entertainment Group and AMC Theatres July 28 announced a landmark distribution deal for the studio’s new release movies, which includes provisions for early debuts into the home on premium VOD.
The deal allows Universal, which has aggressively launched movies into retail channels via PVOD during the coronavirus pandemic — creating an acrimonious rift with the nation’s largest exhibitor, AMC, and others — to distribute titles on PVOD three weekends (as little as 17 days) after their initial bow in AMC Theatres. The agreement, which also includes new titles from Focus Features, will afford early consumer access via AMC Theatres On Demand. In the coming weeks, the two companies will begin discussions surrounding international distribution agreements in the countries in Europe and the Middle East served by AMC.
The typical theatrical window has been up to three months. AMC will split the $20 PVOD fee with Universal in return for the abridged window. The agreement does not include the typical retail window when titles are rented and sold from $3 to $6 through myriad digital channels such as Redbox, iTunes, Amazon Video, Google Play and Movies Anywhere.
Universal’s traditional windows for electronic sellthrough and video on demand (VOD) remain unchanged. The companies said they reached this agreement based on their “shared commitment” to a mutually beneficial long-term partnership that is focused on serving consumers worldwide, while preserving and enhancing the theatrical experience.
As a result, the deal means when the next “Fast & Furious” installment, F9, hits theaters April 2, 2021, Universal could give consumers the choice to either see it in the cineplex or wait a few weeks to buy or rent it.
“The theatrical experience continues to be the cornerstone of our business,” Donna Langley, chairman of Universal Filmed Entertainment Group, said 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.”
Peter Levinsohn, Vice Chairman and Chief Distribution Officer of UFEG, who led negotiations on behalf of the studio, said the studio’s commitment to innovation in how it delivers content to audiences is what artists, partners and shareholders expect of Hollywood.
“We are excited about the opportunity this new structure presents to grow our business,” Levinsohn said. “We are grateful to AMC for their partnership and the leadership they have shown in working with us to reach this historic deal.”
AMC CEO Adam Aron, who said the chain “enthusiastically embraces this new industry model,” said the deal puts a premium on the long-term health of the exhibition industry.
“We would note that just as restaurants have thrived even though every home has a kitchen, AMC is highly confident that moviegoers will come to our theatres in huge numbers in a post-pandemic world,” Aron said. “As people enjoy getting out of their homes, we believe the mystical escape and magical communal experience offered at our theatres will always be a compelling draw, including as it does our big screens, big sound and big seats not to mention the alluring aroma of our perfectly prepared popcorn.”
AMC is planning to reopen about 600 U.S. theaters in August.
Deep catalog product isn’t the only part of the studio library fueling home entertainment as theatrical titles are stalled during the pandemic.
Jason Spivak, EVP of U.S. distribution at Sony Pictures Television Distribution, notes that Sony Pictures had a full pipeline of high-profile product when the pandemic hit. “And we’ve been actively promoting those titles to keep them top of mind, as well as releases from the end of last year, like Little Women and Once Upon a Time in Hollywood,” he says.
“Mother’s Day gave us an opportunity to revisit one of our more recent releases, Greta Gerwig’s Little Women,” adds Sony Pictures Home Entertainment senior EVP of worldwide marketing Lexine Wong. “Our team worked with Hello Sunshine to help launch a brand-new online series called ‘Comedians on Classics’ just in time for the holiday. The content featured rising female comedian Taylor Tomlinson giving a fresh and hilarious take on the beloved Louisa May Alcott story, which resonated with the film’s audience. The video has been viewed over 515,000 times since launch.”
Universal Pictures Home Entertainment is coming up with inventive ways to market films that premiered digitally at premium prices (due to the theaters shutting down) once they become available on Blu-ray Disc, DVD and regular digital channels.
“With captive at-home audiences demonstrating a heightened need for great family entertainment during this time, we recognized a unique opportunity to evolve and elevate our new home entertainment release for Trolls World Tour to fit the tone and tenor of the moment,” says Hilary Hoffman, EVP of global marketing, Universal Pictures Home Entertainment. “We created a robust Dance Party Edition offering that includes dynamic song and dance elements and all-new character-driven short-form content, we launched TikTok and Zoom-style Trolls music videos, and we adapted other marketing efforts to virtual tactics to remain connected to consumers in real time and further keep Trolls World Tour relevant.”
At Warner Bros., the May release of Scoob! was the studio’s first-ever PVOD and premium digital ownership title. The animated film came to market through “a tremendous joint effort between our theatrical team and home entertainment,” says Jessica Schell, EVP and GM, film, for Warner Bros. Home Entertainment. “When the health crisis hit and the decision was made to release Scoob! in homes, the marketing campaign for the film shifted from theatrical to at-home messaging and we enjoyed a very successful release. International release plans were just announced and it will be a mix of theatrical exhibition in markets where theaters are open, and premium in-home viewing.”
Schell says the film has become Warner Bros.’ No. 1 digital release, ever. “We recently announced our 4K and Blu-ray release dates for Scoob!,” Schell says, “and we are leveraging the extensive at-home messaging and awareness from the May debut and are drafting heavily on the film’s success to continue strong sales through our physical availability.”
Home entertainment’s success in supporting new releases cut off by theater closings is attracting attention from the studio hierarchy. Bob Bakish, CEO of ViacomCBS, Paramount Pictures’ parent company, sang the praises of home entertainment during a presentation during the first Credit Suisse Virtual Communication Confab in mid-June. He said home entertainment has helped Paramount justify capital spending on new movies during a year of uncertainty.
“We sold The Lovebirds [to Netflix] early in the COVID-19 window,” he said. “We also accelerated the EST window with Sonic [the Hedgehog], which performed very well for us.”
The movie, starring Jim Carrey, James Marsden, Tika Sumpter and Ben Schwartz as the voice of Sonic, grossed more than $300 million at the global box office before the theatrical shutdown.
The executive said the company is monetizing the Paramount library by releasing more than 100 movies via CBS All Access and through the “Sunday Night Movie” on the Paramount Network.
While the theatrical pipeline may be stalled for now, home entertainment executives look forward to its robust return.
Ron Schwartz, the longtime president of worldwide home entertainment at Lionsgate, says the entertainment industry is united in helping the theatrical exhibition business return to full strength quickly.
“We, like everybody else, are eager to see our partners in the theater business open again soon,” he says. “We want to see crowds again flock to theaters, to see tentpoles and art-house films, to buy concessions and to enjoy a tremendous community experience that has made our industry so special for so many years. It’s an important part of our ecosystem, and we’re all looking forward to a safe and productive return to the movie-going experience, which we believe is right around the corner.”
Some challenges lie ahead, Schwartz says: “What will exhibition look like when theaters reopen? What’s going to happen with capacity? We can’t rush back, but we have to make sure we give theaters enough great content so they can re-open quickly, successfully, and thrive.”
The home entertainment side of the business, Schwartz says, will remain catalog-driven until theaters have fully re-opened and the supply of theatrical titles has been completely replenished. “We will continue to work with our retail partners to come up with creative ideas, dig deep into our catalogs, and look for repromotes and anniversaries — any opportunities to engage the consumer,” he says.
Schwartz says he is heartened that during the stay-at-home period, the public’s love of movies, TV shows and other filmed content seemed to intensify.
“The one thing we’ve all seen is a love of content,” he says. “We’re seeing it consumed like never before — physical, streaming, transactional, packages — and it is clearly evident that the public’s appetite to consume our product is not only healthy but still growing. That’s why I remain so bullish about our business.”
Editor’s Note: This is the fourth and final installment in a four-part series, “Restocking the Shelves: With No Theatrical Releases, Studio Home Entertainment Marketers are Getting Creative.” The complete story will be available in the July print and digital editions of ‘Media Play News.’
One positive trend that has emerged during the pandemic, home entertainment studio executives say, is that consumers seem to be gaining a better understanding of the difference between transactional and subscription streaming and are realizing that not everything they might want to see is available on Netflix or the other big SVOD services.
“Because consumers are spending so much watching digital video at home, they are acutely aware of which titles are available on the various platforms,” says Jason Spivak, EVP of U.S. distribution at Sony Pictures Television Distribution.
“It has become clear that consumers sheltering at home not only have become increasingly engaged in our catalog offerings to keep entertained, but also have progressively grown to become more savvy in navigating the spectrum of formats,” says Hilary Hoffman, EVP of global marketing, Universal Pictures Home Entertainment. “As such, we have continued to invest and reward consumers to stay engaged in the category and have been working in lockstep with our digital and physical retail partners to ensure that we remain hyper-focused on delivering the broadest access and best possible in-home experience.”
“Consumers have become much more receptive to different price points,” adds Sony Pictures Home Entertainment’s senior EVP of worldwide marketing Lexine Wong. “They realize not everything’s on Netflix, and it’s worth it to them to pay a transactional amount for something they really want to watch. They really have embraced all the ways to consume digital video.”
That includes the physical disc. “We are encouraged by the resilience,” Spivak says. “When you think of the structural impediments, stores being closed, online ordering taking longer to fulfill — consumers who love the physical disc are persevering and that business is holding up quite well.”
Studios were fortunate that two of the biggest retail sellers of DVDs and Blu-ray Discs, Walmart and Target, were able to remain open throughout the pandemic because they also sell groceries and thus were deemed “essential” businesses. Alanna Powers, SVP of brand marketing, catalog, at Paramount Home Entertainment, says studio marketers have already met with Walmart to discuss fourth-quarter plans, with a focus on catalog.
“We went through a whole planning session with the Walmart team,” Powers says.
But the biggest lift to DVD and Blu-ray Disc sales, studio marketers say, comes from e-commerce sellers such as Amazon.
“We’ve seen quite a boom in e-commerce,” Powers says. “Initially we were unsure about the supply chain and how retail would react, but we kept all our new-to-Blu-ray titles on the calendar and saw a very positive response so we’ve continued to fill the slate with additional titles.”
Indeed, in addition to monthly waves of “Paramount Presents” releases, Paramount recently has come out with a 25th anniversary edition of the Alicia Silverstone comedy Clueless and 40th anniversary editions of horror classic Friday the 13th and John Travolta’s Urban Cowboy. Clueless and Friday the 13th also are available in limited edition steelbooks.
“We’re really leaning more into the collector’s market,” Powers says. “That’s where e-commerce really shines.”
It’s not just movies, either. Warner Bros. Home Entertainment enjoyed a banner spring with TV product, says Jeff Brown, EVP and GM, Television. “The second quarter was a panacea for transactional television content, physical as well as digital,” Brown says. “Our business grew over 40%, year on year. And if you exclude ‘Game of Thrones,’ which had an extraordinary performance last year with the final season broadcast and transactional release, our business nearly doubled. This really shows peoples’ appetite for television content, and while obviously stay-at-home behavior contributed to this, there were several other opportunities we were able to capitalize on.”
One was the fact that Warner now distributes TV content from HBO and Turner digitally as well as physically.
Another is a strong slate of product, released just in time for viewers to enjoy while encouraged by state and local governments to stay in their homes. “Our top drivers included ‘Rick and Morty,’ ‘Friends’ and ‘The Big Bang Theory,’ as well as the animated original movie titles Justice League Dark: Apokolips War, which was probably our best-performing DC animated movie since Batman: The Killing Joke and Mortal Kombat Legends: Scorpion’s Revenge,” Brown says.
The third factor behind Warner’s strong TV quarter is a series of “Entertaining the World” promotions, Brown says, with a menu of promotional actions for digital retailers such as Amazon Prime Video, iTunes, Google Play, Vudu and FandangoNow.
“We promoted shows such as ‘Fresh Prince of Bel-Air,’ ‘Two and a Half Men,’ ‘The Sopranos,’ ‘The Wire,’ and Hanna-Barbera and DC animated classics,” Brown says. “We were able to look at the total Warner-HBO-Turner TV and animation library and come up with compelling retail programs, and we coordinated this on a semi-monthly ‘wave’ basis to provide an abundance of promoted content to retailers in a timely manner.”
Editor’s Note: This is part three in a four-part series, “Restocking the Shelves: With No Theatrical Releases, Studio Home Entertainment Marketers are Getting Creative.” The complete story will be available in the July print and digital editions of ‘Media Play News.’
Kino Lorber has announced the July 28 release, on Blu-ray Disc and DVD, of the 1916 silent version of Jules Verne’s classic novel 20,000 Leagues Under the Sea in a new 4K restoration. The Blu-ray ($29.95) and DVD ($19.95) are part of the Kino Classics edition, and include a musical score by Orlando Perez Rosso and feature audio commentary by silent film historian Anthony Slide.
The film’s restoration is from a 35mm nitrate print provided by the UCLA Film & Television Archive and restoration services provided by NBCUniversal StudioPost.
Directed by Stuart Paton and produced by Universal Pictures, 20,000 Leagues Under the Sea was a groundbreaking production for its time, gaining much acclaim for its pioneering use of the underwater photography process developed by Ernest and George Williamson, making it one of the big-budget special effects epics of its day and a screen classic that has endured over the century since it was first released.
Shot on location in the Bahamas, Allen Holubar stars as the domineering Captain Nemo, who rescues the passengers of an American naval vessel after ramming them with his ironclad, steampunk submarine The Nautilus. Incorporating material from Verne’s The Mysterious Island, the film also follows the adventures of a group of Civil War soldiers whose hot-air balloon crash-lands on an exotic island, where they encounter the untamed “Child of Nature” (Jane Gail).
Calling itself “The First Submarine Photoplay Ever Filmed,” the film is highlighted by underwater photography (engineered by Ernest and George Williamson), including an underwater funeral and a diver’s battle with a giant cephalopod. In honor of the film’s extraordinary technical and artistic achievement, 20,000 Leagues Under the Sea was added to the National Film Registry by the Library of Congress in 2016.
Universal Pictures and the American Film Institute (AFI) June 22 announced they partnering to offer free digital rentals of Spike Lee’s Do the Right Thing, a 1989 film centered on racial tensions in a Brooklyn neighborhood that ultimately lead to violence and death.
Do the Right Thing, an AFI Movie Club selection, will be available for free viewing from June 22 through June 29 through digital retailers Amazon, Apple, Charter, Comcast, Cox, Dish, DirecTV, FandangoNow, Google, Microsoft, Redbox, Sony, Verizon and Vudu.
Lee will join the AFI Movie Club for a live conversation June 25 beginning at 5 p.m. PT on the AFI YouTube channel.
“AFI Movie Club’s global reach has inspired the need for more thoughtful discussions about films that have shaped our culture,” said Bob Gazzale, president and CEO. “Do the Right Thing is a timeless and timely classic, and Spike Lee has forever proven himself the voice for change that we need now more than ever. We would like to thank our partners at Universal for their essential support in educating and inspiring audiences around the world.”
Do the Right Thing was nominated for two Academy Awards, including a Best Original Screenplay nod for Lee and a Best Supporting Actor nomination for Danny Aiello. The film also received four Golden Globe nominations and a Palme d’Or nomination. AFI ranked it as one of the 100 Greatest Films of All Time.
Launched on March 31, AFI Movie Club’s first selection was The Wizard of Oz. Subsequent selections have included Ali, Black Panther, Casablanca, Erin Brockovich, Gilda, Jurassic Park, Just Mercy, Lost in Translation, Milk, Nine toFive, North by Northwest, The Sound of Music, Straight Outta Compton, When Harry Met Sally and Wonder Woman.
AMC Entertainment CEO Adam Aron remains adamant the nation’s largest theatrical chain will not screen Universal Pictures movies when it re-opens — following the coronavirus pandemic shutdown — in select locations on July 15.
The chain and studio have been embroiled in a dispute after NBCUniversal CEO Jeff Shell said Universal theatrical releases going forward would also entertain direct-to-consumer distribution on launch day — thus upending the traditional exclusive 90-day theatrical window. That move came after scuttled theatrical release Trolls World Tour generated $100 million from premium VOD in the home in just three weeks.
In an June 18 interview with CNN Business, Aron was asked if pending Universal sequels such as Fast & Furious 9, Jurassic World: Dominion and Minions: The Rise of Gru would be banned from AMC.
“Yes, assuming we can’t have discussions with Universal that solve our concerns,” Aron said. “Remember, AMC has been showing Universal movies happily and profitably for decades. We didn’t change the status quo, and we didn’t actually have any protest about Trolls at all. We understood that our theaters were shut, that they have a business to run, and that they felt they needed to take Trolls to the home rather than waiting.”
Aron says his concern revolves around Universal’s decision to ignore the theatrical window and screen movies in theaters and via home entertainment concurrently.
“If they take movies to the home and theaters at the same time, they’re the ones who are changing the status quo and they would make it unprofitable for us to play Universal movies in our theaters,” Aron said.
The executive said his April letter to Universal Pictures Chairwoman Donna Langley underscored the fact the studio — not AMC — had broken the business relationship between the two companies, and would force the exhibitor to “come up” with a new business relationship.
“We’re in active dialog with Universal now,” Aron said. “We’ll see where that leads, but it is our current plan not to show Universal movies if we can’t do so profitably.”
Langley in April said the studio “absolutely believe[s]” in the theatrical “experience” and made no statement to the contrary.
“As we stated earlier, going forward, we expect to release future films directly to theaters, as well as on PVOD when that distribution outlet makes sense,” she said. “We look forward to having additional private conversations with our exhibition partners, but are disappointed by this seemingly coordinated attempt from AMC and [National Association of Theatre Owners] to confuse our position and our actions.”
With the success of Universal Pictures’ PVOD release of Trolls Word Tour, and the studio’s plan to distribute future theatrical feature films concurrent with digital retail, Wedbush Securities media analyst Michael Pachter contends a compromise between studios and exhibitors resulting in a shorter theatrical window is coming.
With studios reportedly making 80% on a movie’s digital release compared with 50% for theatrical, the incentive to go direct-to-consumer is financially appealing. At the same time, theatrical revenue and home entertainment marketing for major movie franchises such as “Fast & Furious,” “Star Wars,” “Mission: Impossible,” “James Bond” and “Spider-Man,” among others, is immense.
Universal’s next major PVOD release, The King of Staten Island from director Judd Apatow, is slated for June 12. And Disney is expected to release smaller movies on its Disney+ SVOD platform.
“We very much believe in the value of the theatrical experience,” Disney CEO Bob Chapek said on the recent fiscal call. “But we also believe that either because of changing and evolving consumer dynamics or because of certain situations like COVID, we may have to make some changes to that overall strategy.”
Pachter said he views Disney’s tepid approach to transactional VOD as limited in the long-term. He says Disney’s switch will spark further debate and negotiations on the existing theatrical windows and revenue share agreements.
“What we expect is that the exhibitors will make some small concessions on the windows or revenue share for these smaller films that would otherwise go to PVOD, so that all parties can maximize profitability, but the exhibitors cannot bend on simultaneous releases or they will go out of business,” Pachter wrote in a June 8 note. “The studios do not have any incentive to push the exhibitors out of business, and we believe that a mutually beneficial arrangement can be found before the studios begin releasing new content to theaters later this year or in 2021.”
This much is certain: Warner Bros.’ PVOD release Scoob! was a big hit on major digital transaction charts.
In its first three days of availability, the erstwhile animated theatrical release, issued May 15 for rental or purchase at a premium price, finished atop the FandangoNow, iTunes, Google Play and Amazon Prime charts.
The movie also featured prominently as the first “theater at home” releases available on Vudu and Comcast’s Xfinity Movie Premiere.
The title, which bypassed theatrical distribution when exhibitors shuttered in March due to the coronavirus, is available to rent for $19.99, and to purchase for $24.99.
How much Scoob! has generated in revenue is anyone’s guess. That’s because unlike the traditional weekend box office tally, digital rental/retail industry numbers and how to market them during a pandemic remains a work in progress.
Universal Pictures set the bar high last month when it revealed to much media attention that its animated Trolls World Tour sequel generated $100 million in digital revenue after three weeks. Unless Scoob! tops that tally sooner, it’s a waiting game when Warner will make a fiscal announcement — if at all.
In the meantime, Trolls World Tour continues to resonate with cinema-starved consumers stuck at home with children. The feature remains near the top podium on most charts except iTunes. Newcomer Capone, from Vertical and starring Tom Hardy as the cigar-chomping title gangster, has resonated with consumers on FandangoNow and iTunes in the No. 4 position.
Early digital release holdovers, including Sony Pictures’ Bad Boys for Life, Bloodshot and Fantasy Island; Universal’s The Invisible Man; Paramount’s Sonic the Hedgehog; and Warner’s Birds of Prey continue to sell — albeit at reduced price points.
Indeed, Bloodshot is the No. 1 seller on Charter Spectrum, while Lionsgate’s Arkansas ranks sixth. Knives Out (Lionsgate) sits in eighth on Amazon Prime.
Disney has refused to play the PVOD game, opting instead to move some theatrical releases to Disney+ or delay box office debuts until the COVID-19 dust settles. To fill the void, Disney has pushed catalog titles, including Fox’s The Greatest Showman (No. 5 on Amazon) and Tombstone (No. 7 on iTunes).
And then there’s the elephant in the room: Netflix. With the largest SVOD subscriber base in the U.S. and worldwide, new original movie release The Wrong Missy, from Adam Sandler’s Happy Madison Productions, and starring David Spade and Lauren Lapkus, ranks No. 1 on the streamer’s U.S. chart. Netflix ended the most recent fiscal period with 70 million domestic subs.