Still from "Trolls World Tour".
The feud between AMC Theaters and Universal Pictures that started with the on-demand release of "Trolls: World Tour" in March is over.
On Tuesday, the two companies announced an agreement that AMC would once again show universal films on the big screen and grant Universal a smaller cinema window so that its titles could be available earlier on request.
The agreement requires Universal and Focus features to play movies in cinemas for at least three weekends or 17 days before they are released on premium video on demand platforms. Previously, theaters had exclusive rights to films for 90 days.
"AMC will also participate in these new sources of revenue that will enter the film ecosystem through premium video-on-demand," said Adam Aron, CEO of AMC, in a statement.
None of the companies announced the full terms of the deal and said it was confidential.
"The theater experience remains the cornerstone of our business," said Donna Langley, chairman of the Universal Filmed Entertainment Group, in a statement on Tuesday. "The partnership we have entered into with AMC is based on our shared desire to secure a prosperous future for the film distribution ecosystem and to meet consumer demand with flexibility and option."
The agreement between AMC and Universal is really historic. For decades, cinemas have stuck to the 90-day cinema window and haven't even done it to Netflix when it first looked for Oscar.
The exclusivity of bringing films to cinemas over a longer period of time increases demand and excitement, which is reflected in ticket sales. It is of great value to be the only place where moviegoers can see the latest titles, and it is something that has been carefully guarded so far.
It is unclear whether other theaters will follow suit and studios will make such offers, or whether studios will seek a similar deal with AMC. The National Association of Theater Owners declined to comment, but has protected the status quo in the past.
Trolls of the First World War
The dispute between AMC and Universal started in March. Due to growing concerns about the coronavirus pandemic, Universal released "Trolls: World Tour" in cinemas and on demand the same day.
On April 10, the sequel to "Trolls" was available as a digital rental for $ 19.99. Since most theaters were closed except for a few car locations, the film was viewed primarily on demand by an audience who had settled in the early days of the US coronavirus lock.
Three weeks later, Jeff Shell, CEO of NBCUniversal, pointed out the film's digital success, which had raised nearly $ 100 million in loans, and suggested that the company would make more simultaneous releases in the future.
While this figure was less than the $ 153.7 million that the first "Trolls" film had collected at the box office at home, the revenue Universal generated was approximately the same for both films because of less digital sales Percent stands out from the income of the studios.
Theater owners typically make up about half of a film's gross, while 80% of the digital rental fee goes directly to the studio.
The exhibitors were already annoyed by the first simultaneous release of "Trolls", which prompted AMC to announce that Universal & # 39; s slate would no longer be shown at its more than 1,000 locations.
After prolonged theater closings in the United States, the result of increasing coronavirus cases and the constant pressure from Hollywood blockbusters from the publication calendar, AMC's attitude has softened and an agreement with Universal has been concluded.
"AMC enthusiastically welcomes this new industry model, both because we are involved in the overall profitability of the new structure and because Premium Video on Demand creates the additional potential for higher profitability of the film studio, which in turn should lead to the green light of more films" said Aron.
Earlier this year, Universal postponed most of its remaining 2020 film calendar to 2021. However, there are still a handful of films to be released in cinemas before the end of the year.
"Candyman", a horror film produced together with Metro-Goldwyn-Mayer Pictures and Monkeypaw Productions, will be released on October 16. The James Bond film "No Time to Die", which was produced together with Metro-Goldwyn-Mayer and Eon Productions, is scheduled for November 20, and "The Croods 2", a dreamworks animated film, is for the Scheduled for December 23.
The deal with Universal could help AMC regain lost earnings. The film chain has been closed for months and it is likely that future earnings will be limited as the number of visitors is limited to prevent the spread of corona viruses in cinemas when they reopen.
The company's stock recently fell 3% in expanded trading. The company's shares have fallen nearly 43% since January as AMC has struggled to avert bankruptcy. Most recently, the company was able to conclude a debt contract in order to be solvent until 2021.
The Comcast share gained less than 1% after the market closed. The stock has fallen nearly 4% since January and has a market value of $ 197 billion.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.