Brent Lang and Rebecca Rubin for Variety, ‘Universal, AMC Theatres Forge Historic Deal Allowing Theatrical Releases to Debut on Premium VOD Early’:
Universal Pictures and AMC Theatres have put aside a bitter feud and signed a multi-year agreement that will allow the studio’s films to premiere on premium video on-demand within three weeks of their theatrical debuts.
The pact, sure to send shockwaves throughout the exhibition industry, has the potential to reshape the ways that movies are marketed and distributed. Rival studios are likely to begin pushing for exhibitors to grant them more flexibility when it comes to determining when and how their theatrical releases can make their way onto home entertainment platforms.
Financial terms of the agreement were not disclosed. However, in a statement, AMC’s CEO Adam Aron said the company will “share in these new revenue streams,” which means that it will get a cut of any money made on these digital rentals. Universal only has the ability to put its movies on premium on-demand, meaning the rentals that go for roughly $20 a pop. It cannot sell films or rent them for lower on-demand fees, in the $3 to $6 range, until three months after they debut in cinemas.
Interesting deal by these two former BFFs — somehow AMC, desperate for any amount of money, has found a way to make money by not doing anything at all. When AMC threatened to ban Universal films from their theaters — theaters which were (and still are) closed across the country — I assumed it was an idle threat and they’d just quietly “forget” the whole kerfuffle. But it sounds like Universal saw this as an opportunity to change the rules of the game: although they’re losing a little in early Premium VOD rentals, they’re potentially making more in the long run by having a second platform to release their films on just 17 days after the theaters get their release.
$20 is a high price to pay for a home rental unless you have the home theater setup to make the experience great, and I suspect those who have invested in that setup will likely not pause at the high ticket price. Hell, when you divide that ticket up between a pair of adults or a family of four, that $20 is cheaper than four tickets at the discount mall theater. I can’t wait to see how other studios respond to the deal.