Post by Admin on Jul 29, 2020 1:03:42 GMT
variety.com/2020/film/news/amc-universal-deal-entertainment-industry-future-1234718942/
Six Movie Business Questions After Universal and AMC’s Historic Deal
The theatrical window has been shattered, and it’s a pretty good bet that it will never be patched back together. That means that the movie business will never look the same.
The Universal and AMC Theatres deal enabling the studio to release new movies on premium video on-demand within three weeks of their debut has upended the exhibition industry. That substantially shrinks the amount of time during which films can only show on the big screen. The arrival of this moment had been threatened for decades.
Before Universal and AMC’s alliance, movies typically had to wait 75 to 90 days before they appeared on home entertainment platforms. Now, Universal will have the option to put its movies on digital rental services after they have played in theaters for 17 days.
“This is a watershed moment for the entertainment industry,” says Rich Greenfield, a media analyst with LightShed Partners. “Universal isn’t trying to hurt movie theaters. They’re trying to do what consumers want — which is to watch movies wherever.”
After the initial shock of the announcement, Universal’s competitors were skeptical about the immediate impact of the deal, citing all kinds of caveats. One film executive speaking on the condition of anonymity rattled off a list of questions and observations: AMC is distressed and flirting with bankruptcy; studios have to share profits with the theater owners at the very start of a film’s financial life cycle; what happens when people aren’t locked in their homes anymore because of COVID-19?
It’s only a matter of time before other theater chains feel pressure to sign similar pacts and other studios insist AMC and fellow cinemas allow them to release their films in the home earlier. It’s the kind of precedent-shattering pact that only came about because coronavirus has brought the theater business to its knees, limiting its negotiating power.
But it’s also an agreement that will have wide-ranging ramifications for how studios make films, how customers watch them and how cinemas and movie companies earn money.
Here are six burning questions raised by the Universal and AMC pact.
Will rival studios follow suit?
Of course, but probably not Disney. Universal has been the most aggressive at trying to trim theatrical windows (Remember the “Tower Heist” experiment?) But nearly every other major studio, with the exception of “the house that Walt built,” has also wanted to be able to release their films on-demand earlier. It’s advantageous for them because movies generate most of their box office ticket sales within the first few weeks of release. When they have to wait three months to launch the same title on demand, it requires them to shell out more money to reignite marketing campaigns. Look for Warner Bros., Paramount, Sony and Lionsgate to commence their own negotiations with AMC. Whether they ultimately decide to take the plunge is a question for another day.
Do Regal and Cinemark join in?
They may not have a choice. In case you haven’t noticed, the theater business isn’t doing so hot right now. The exhibition industry hasn’t figured out a way to reopen on a national scale while coronavirus is raging in many parts of the U.S., leaving cinemas without any revenues for months. They need “Jurassic World: Dominion” and “F9” to pack their multiplexes even if it means accepting that the next “Purge” movie may debut in the home within a few weeks of it hitting the big screen. Movie theater owners also could use some fresh revenue streams. By giving Universal the green light, they will receive a cut of its premium video on-demand sales. In the short run, money talks. In the long run, taking the check from Universal could be disastrous. If moviegoers decide it’s a better deal to skip theaters and wait a few weeks to pay a steep rental fee, that could take a big bite out of box office revenues.
Do smaller theaters get screwed?
Probably. The big chains will be able to use their size to ink better deals, but smaller, mom-and-pop businesses won’t have the same kind of bargaining power. They’ll have to accept a new normal for their industry — the perimeters of which will be determined by mega conglomerates and corporate giants that don’t care how much popcorn they need to sell to keep the marquee lights on. Many of these cinemas were teetering on the edge of financial ruin. If the theatrical window keeps cracking, or people decide it’s too great a risk to return to cinemas in a pandemic, it could mean they’ll be forced to roll credits.
What happens if AMC goes bankrupt?
Unclear. The theater chain is heavily leveraged and has already warned investors that it could stop being able to operate if the pandemic stretches on too long. It did reach a deal with its creditors to wipe out some of its debt and to improve its liquidity, but coronavirus, at least in the U.S., is getting worse, not better. At some point, AMC’s debt could become too great a burden. If it goes under or gets sold to new owners, will the deal with Universal still stand? It might not matter. This new agreement and the ones that are likely to follow between other theater chains and studios has likely changed things forever.
What does this mean for Netflix?
Everything changes, or nothing does. The formal terms of the Uni-AMC deal limited this agreement strictly to PVOD — meaning streaming video providers are still shut out, even if its own originals are hopeful for physical screens. Still, Netflix can easily gloat about this long-awaited moment for their notorious establishment foe. The streaming giant has tried and failed to force theaters to show its films on their screens, even carving out exclusive windows for films such as “The Irishman” and “Marriage Story” that dwarf the 17-day window Universal now enjoys. In the past, AMC has refused to show Netflix releases, arguing that the films debut on the streaming platform too early. The Universal pact likely torpedoes those arguments. With many major studios shifting their releases into 2021 and beyond, Netflix could be invaluable to AMC if and when it is able to mount a national reopening. Its fall slate, which includes Ron Howard’s “Hillbilly Elegy” and David Fincher’s “Mank,” looks strong, and content-starved theaters could have no choice but to yield to its demands.
Will this mean studios can make movies that aren’t about superheroes?
That’s the hope. Hollywood has made a point of backing comic book adaptations and franchise fare because it claims that the economics of the theatrical business are so brutal, they don’t reward creative risk-taking. The excuse from Hollywood, as of late, has always been that it’s too hard to build word-of-mouth for movies that are edgier or more challenging to market. Since it routinely costs tens of millions of dollars to advertise and distribute movies, it’s hard to make a profit on anything that doesn’t have a huge opening weekend. AMC and Universal’s deal would theoretically alleviate some of those pressures, enabling the studio to find alternate ways of earn money on a film that’s failing to catch fire at the box office. If better movies can come out of all of this tumult, that would be a win for studios, theaters, and audiences. That’s a Hollywood ending everyone could get behind.
Six Movie Business Questions After Universal and AMC’s Historic Deal
The theatrical window has been shattered, and it’s a pretty good bet that it will never be patched back together. That means that the movie business will never look the same.
The Universal and AMC Theatres deal enabling the studio to release new movies on premium video on-demand within three weeks of their debut has upended the exhibition industry. That substantially shrinks the amount of time during which films can only show on the big screen. The arrival of this moment had been threatened for decades.
Before Universal and AMC’s alliance, movies typically had to wait 75 to 90 days before they appeared on home entertainment platforms. Now, Universal will have the option to put its movies on digital rental services after they have played in theaters for 17 days.
“This is a watershed moment for the entertainment industry,” says Rich Greenfield, a media analyst with LightShed Partners. “Universal isn’t trying to hurt movie theaters. They’re trying to do what consumers want — which is to watch movies wherever.”
After the initial shock of the announcement, Universal’s competitors were skeptical about the immediate impact of the deal, citing all kinds of caveats. One film executive speaking on the condition of anonymity rattled off a list of questions and observations: AMC is distressed and flirting with bankruptcy; studios have to share profits with the theater owners at the very start of a film’s financial life cycle; what happens when people aren’t locked in their homes anymore because of COVID-19?
It’s only a matter of time before other theater chains feel pressure to sign similar pacts and other studios insist AMC and fellow cinemas allow them to release their films in the home earlier. It’s the kind of precedent-shattering pact that only came about because coronavirus has brought the theater business to its knees, limiting its negotiating power.
But it’s also an agreement that will have wide-ranging ramifications for how studios make films, how customers watch them and how cinemas and movie companies earn money.
Here are six burning questions raised by the Universal and AMC pact.
Will rival studios follow suit?
Of course, but probably not Disney. Universal has been the most aggressive at trying to trim theatrical windows (Remember the “Tower Heist” experiment?) But nearly every other major studio, with the exception of “the house that Walt built,” has also wanted to be able to release their films on-demand earlier. It’s advantageous for them because movies generate most of their box office ticket sales within the first few weeks of release. When they have to wait three months to launch the same title on demand, it requires them to shell out more money to reignite marketing campaigns. Look for Warner Bros., Paramount, Sony and Lionsgate to commence their own negotiations with AMC. Whether they ultimately decide to take the plunge is a question for another day.
Do Regal and Cinemark join in?
They may not have a choice. In case you haven’t noticed, the theater business isn’t doing so hot right now. The exhibition industry hasn’t figured out a way to reopen on a national scale while coronavirus is raging in many parts of the U.S., leaving cinemas without any revenues for months. They need “Jurassic World: Dominion” and “F9” to pack their multiplexes even if it means accepting that the next “Purge” movie may debut in the home within a few weeks of it hitting the big screen. Movie theater owners also could use some fresh revenue streams. By giving Universal the green light, they will receive a cut of its premium video on-demand sales. In the short run, money talks. In the long run, taking the check from Universal could be disastrous. If moviegoers decide it’s a better deal to skip theaters and wait a few weeks to pay a steep rental fee, that could take a big bite out of box office revenues.
Do smaller theaters get screwed?
Probably. The big chains will be able to use their size to ink better deals, but smaller, mom-and-pop businesses won’t have the same kind of bargaining power. They’ll have to accept a new normal for their industry — the perimeters of which will be determined by mega conglomerates and corporate giants that don’t care how much popcorn they need to sell to keep the marquee lights on. Many of these cinemas were teetering on the edge of financial ruin. If the theatrical window keeps cracking, or people decide it’s too great a risk to return to cinemas in a pandemic, it could mean they’ll be forced to roll credits.
What happens if AMC goes bankrupt?
Unclear. The theater chain is heavily leveraged and has already warned investors that it could stop being able to operate if the pandemic stretches on too long. It did reach a deal with its creditors to wipe out some of its debt and to improve its liquidity, but coronavirus, at least in the U.S., is getting worse, not better. At some point, AMC’s debt could become too great a burden. If it goes under or gets sold to new owners, will the deal with Universal still stand? It might not matter. This new agreement and the ones that are likely to follow between other theater chains and studios has likely changed things forever.
What does this mean for Netflix?
Everything changes, or nothing does. The formal terms of the Uni-AMC deal limited this agreement strictly to PVOD — meaning streaming video providers are still shut out, even if its own originals are hopeful for physical screens. Still, Netflix can easily gloat about this long-awaited moment for their notorious establishment foe. The streaming giant has tried and failed to force theaters to show its films on their screens, even carving out exclusive windows for films such as “The Irishman” and “Marriage Story” that dwarf the 17-day window Universal now enjoys. In the past, AMC has refused to show Netflix releases, arguing that the films debut on the streaming platform too early. The Universal pact likely torpedoes those arguments. With many major studios shifting their releases into 2021 and beyond, Netflix could be invaluable to AMC if and when it is able to mount a national reopening. Its fall slate, which includes Ron Howard’s “Hillbilly Elegy” and David Fincher’s “Mank,” looks strong, and content-starved theaters could have no choice but to yield to its demands.
Will this mean studios can make movies that aren’t about superheroes?
That’s the hope. Hollywood has made a point of backing comic book adaptations and franchise fare because it claims that the economics of the theatrical business are so brutal, they don’t reward creative risk-taking. The excuse from Hollywood, as of late, has always been that it’s too hard to build word-of-mouth for movies that are edgier or more challenging to market. Since it routinely costs tens of millions of dollars to advertise and distribute movies, it’s hard to make a profit on anything that doesn’t have a huge opening weekend. AMC and Universal’s deal would theoretically alleviate some of those pressures, enabling the studio to find alternate ways of earn money on a film that’s failing to catch fire at the box office. If better movies can come out of all of this tumult, that would be a win for studios, theaters, and audiences. That’s a Hollywood ending everyone could get behind.