LOS ANGELES – Universal and AMC, the largest cinema chain in the United States, announced on Tuesday a historic agreement that shakes up Hollywood’s longstanding policy of film distribution.
Under the deal, new films of Universal and sister studio Focus Features will be shown at AMC branches for 17 days, including three weekends, after which the studio will be able to take its titles to digital premium on-demand services, including AMC’s own.
This pact greatly shortens the time between new films opening in cinemas, to their availability on the domestic market, known in Hollywood as the “theatrical window.” The usual time frame is three months.
Theatrical windows have been a source of friction in recent years between studios and cinema chains in an audiovisual market that is increasingly inclined towards streaming, to the detriment of traditional runs on the big screen.
Universal and AMC did not give great details about the agreement beyond the fact it is a multi-year pact and for the moment affects only the United States.
“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 companies said in a joint statement.
AMC assured that it will receive part of the income that Universal obtains from the premium on-demand services.
“This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated. AMC will also share in these new revenue streams that will come to the movie ecosystem from premium video on demand,” AMC CEO Adam Aron said.
Universal Filmed Entertainment Group Chair Donna Langley, assured that “(t)he theatrical experience continues to be the cornerstone of our business. 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.”
The agreement between Universal and AMC resolves a recent row over a film premiere with the coronavirus crisis as a backdrop.
In April, with most cinemas closed due to the pandemic, Universal was the first studio not to suspend the opening of a film, in this case the “Trolls World Tour” animation, instead deciding to take it simultaneously straight to the digital market and any cinemas left open at that time.
Universal said that “Trolls World Tour” raised nearly $100 million online in its first three weeks and showed its intention to continue digitally, something that irritated cinema chains with AMC at the forefront.
“This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment, the world’s largest collection of movie theaters. Going forward, AMC will not license any Universal movies in any of our 1,000 theaters globally on these terms,” Aron told Universal Studios in a letter.
But under this new agreement, Universal will have the option of taking a film to the video-on-demand market after the first 17 days or to extend its run in cinemas.
It has not been disclosed how much premium digital distribution will cost the viewer, although “Trolls World Tour” was released in the US at $20 for a 48-hour rental window.
The situation of rival cinema chains in the US, such as Regal and Cinemark, now under pressure to rethink their relationship with Universal, is also not clear.