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Not to deflate a rousing round robin of mudslinging between AMC, Cineworld and Universal, but this whole OMG melee between exhibition and studios over PVOD, theatrical-window crunching and hurt feelings is poised to calm down soon.
Some industry insiders believe the situation has already eased, and the statements made this morning on Comcast’s Q1 earnings call by SEVP and CFO Michael J. Cavanagh and NBCUniversal CEO Jeff Shell were more measured than the latter’s quotes to the Wall Street Journal which caused AMC boss Adam Aron to fire off a public note to Universal Studios Chairman Donna Langley regarding the chain’s embargo of the studio’s slate.
Essentially the longstanding agreement on whether a major circuit will play a studio’s same day theatrical PVOD titles still stands: They just won’t and Universal knows this.
Now whether the dynamics of that window changing, i.e. a title is regulated to a limited number of days in theaters before heading into the home, etc., we’ll just see about that as exhibition comes out of COVID-19. Uni knows that it will be a tough fight, and exhibition is going to make sure that there’s something in it for them. Don’t forget, studios and exhibitors need each other, and a $1 billion box office gross doesn’t happen on an event movie like Fast & Furious without movie theaters (and China).
Also, let’s wake up and smell the coffee about those movies which are skipping theatrical and heading to PVOD or streaming. Back in the 1980s, they were called direct-to-video movies, titles which didn’t have the stuff to play on screen, and that age-old Hollywood business formula still exists. It just has a more prestigious name now: PVOD and streaming.
Sorry, but there’s no coincidence here when it comes to studios’ recent plans to send movies like Artemis Fowl, Scoob!, The King of Staten Island, My Spy, and The Lovebirds straight into homes. If studios believed these movies merited a theatrical release, or if exhibition was particularly excited about them, they’d get a theatrical release. The miscalculation here by NBCUni is that theaters actually wanted Trolls World Tour. Also, in regard to movies like King of Staten Island, you can’t keep comedies lying around on a shelf for too long as they can go stale the longer their release is delayed.
Let’s remember, exhibition, that Universal did have the awesome common sense to release the fresh-face-cast Get Out into theaters –not simultaneous PVOD and theaters– and it reaped a great $255.4M global box office, net profit near $125M, plus four Oscar noms, including Best Picture, and a win for Jordan Peele’s original screenplay. But for any title that seems like a risk in regard to pulling in moviegoers, it’s best to cut your costs and make whatever money fast in the home.
Before Shell spoke on today’s earnings call, Cavanagh had a more sobering response as to how the conglom would handle this whole theatrical-PVOD windows situation post Trolls World Tour‘s PVOD revenue win (some industry insiders doubt the sequel will turn a profit off the pic’s $90M theatrical global P&A). As upsetting as it was for exhibitors to see Trolls World Tour go into homes, you can’t knock NBCUni’s attempt here to make money on a finished movie during a time when theaters are closed. The media conglom also emphasized again today how they’ve delayed big event theatrical releases like F9 and Minions: The Rise of Gru to 2021.
“In response to these shutdowns, we immediately and proactively moved our theatrical films to a premium video on demand service. While we are very pleased with the PVOD success, the particular circumstances of each film are unique and we will determine our future distribution approach on a title by title basis,” said Cavanagh.
Some studio distribution executives believe that they have the upper hand with exhibition in the best and worst of financial times, especially now when movie theaters have zero leverage being closed down, and in desperate need of product when they reopen. But if 50% capacity restrictions remain as cinemas gradually reopen in the slowing COVID-19 environment, they’ll only be able to accommodate a few marquee titles, with distribs’ counterprogramming and smaller movies being less likely to holdover. Maybe that’s where some of these films get sent to PVOD. We’ll see, but exhibitors will, of course, be designating more screen time to the powerful pics that perform. And, believe me, no studio in those high-grossing scenarios is going to demand that their event film be pulled offscreen so that they can immediately send it to PVOD.
As Late Show host David Letterman once said about the NBC’s Jay Leno-Conan O’Brien brouhaha ten years ago, “Don’t kid yourselves, it’s all about money.” That same adage applies here with this whole looming windows war.
Just like AMC and Cineplex Odeon got a cut of home entertainment revenues in Paramount’s truncated theatrical 2015 experiment with Paranormal Activity: Ghost Dimension and Scouts Guide to the Zombie Apocalypse, don’t think for a second that exhibitors aren’t going to insist on a higher rental for such titles or a residual. In such cased, exhibition and studios aren’t partners, they’re adversaries, forced to compete for audiences in a theatrical vs. home front. The fear in shortening windows as always been, if moviegoers catch on about a pic’s limited time in theaters, they’ll opt to skip it and watch it at home. By the way, both titles in that Paramount experiment failed at the box office, respectively making $18.3M and $3.7M stateside.
Also, don’t think for a second that AMC isn’t close-minded about shortening the window. The chain, along with Canada’s Cineplex Odeon, was close to a 60-day day corridor with Netflix on The Irishman. If there’s something in it for AMC, they’re onboard.
Also another reason why we shouldn’t be concerned about this AMC-Cineworld-Universal fight:
When it comes to studio-exhibition patter, any type of “Who the hell do they think they are?” hardball talks between the two are par for the course. This despite the fact that hot air had been building since mid-March following Universal’s last-minute pivot to take Trolls World Tour into homes as theaters were closing around the globe due to COVID-19. Such fighting occurs between studios and theaters every Monday as they negotiate over holding movies. The only difference in this situation is that Aron made a behind-closed-doors battle public when he released his note to Langley over BusinessWire.
Back when I worked at Savoy Pictures, hearing distribution executives marvelously haggle terms with exhibitors was akin to watching a great Martin Scorsese-directed Joe Pesci-Robert De Niro film, or listening to Al Swearingin and Bullock go at in HBO’s Deadwood. There’s always a shouting match over rentals or specific locations, resulting in a phone slamming on Monday and a friendly lunch by Tuesday between both parties.
Studio and exhibition folk go at like lions, but after they’ve reached a deal, it’s really all hugs and kisses. I also noticed this at the Motion Pictures Booker Luncheon every fall in NYC where both sides exchanged abrazos, back slaps and laughs. These guys love their jobs and appreciate each other’s grit in the end. Not to be all goody-goody about this, but, really, that’s their walk, and their talk. They’re constantly dealing with each other.
While Shell didn’t necessarily walk back his wishes to continue his PVOD experiment today saying it would be “complementary” to theatrical, his words were certainly less glib than those which sparked controversy in the WSJ two days ago. Furthermore, the NBCUni CEO was more respectful about exhibition saying, “The question is when we come out of this (pandemic), what is going to be the model? I would expect that consumers will return to the theaters and we will be part of that. And I also expect that PVOD is going to be a part of that in some way. It’s not a replacement.”
He also added, “There’s no question that theatrical will some day be a central element to our business and film business, it’s how people make their movies and how they expect their movies to be seen.”
Responded one industry insider recently about the AMC-Cineworld-Universal-fracas, “Exhibition already has the upper hand in this fight, and Universal has caved.”