Opinionated: Cinema Is On The Verge Of A Big Change
Universal and AMC's deal is the first crack in the window
Credit: Universal Pictures
The business of how movies are distributed just experienced what could be a seismic shift. Sneaking out under the guise of a relatively mundane deal announcement, it’s the sort of change that few people expected would actually happen. And yet, one worldwide pandemic later, here we are. Universal Pictures and AMC Entertainment (which runs chains such as AMC in the US and Odeon in Europe) have agreed to a multi-year deal whereby Universal and Focus Features releases show on AMC screens for three weekends or 17 days before the studio can make them available on Premium Video On Demand for around $20 per rental. That might not seem like a huge change, but believe me... It is. It’s also a huge shift from the bad blood earlier in the year when Universal decided to release Trolls World Tour on PVOD, bypassing cinemas all together, and AMC announced it would not carry the studio’s films going forward.
Now for some dry, but needed exposition. Journey back with me to the Before Times, when cinemas were open, and films were flooding screens. A long-held “window” agreement meant that cinema chains had the exclusive right to show movies for three months before home entertainment releases. A profit-sharing arrangement favoured the studios (the exhibitors tended to make more money from popcorn and other concessions), but both companies benefitted. NATO – that’s the National Association Of Theater Owners, not the defensive alliance, though they do get defensive – was quick to insist that arrangement stay put. At least, until now. And there is still a financial aspect, with the companies sharing the revenue from the PVOD rentals (again, weighted towards the studios).
Obviously, there is flexibility built in here; not every film will be treated this way. Universal would naturally be expected to keep the original three-month agreement for giant films such as No Time To Die and Jurassic World: Dominion, but more mid-range movies will find themselves heading home earlier than ever before. Right now, the deal is only for AMC and Universal here in the States, but you just know that if it works, the studio will want to expand it out to the other territories where the exhibitor has cinemas. Plus, this opens up the opportunity for studios to move underperforming films off of screens quickly, shifting them to venues where audiences might be willing to stump up the PVOD money rather than the usual cinema expenditures of tickets, concessions and any other potential outlays, including parking and, for families, babysitting.
We can also expect to see many of the other studios looking to make their own deals, and therein lies the change. How we consume movies is going to shift forever, and this crack in the window will only widen as time moves on. Now that studios know they have more wiggle room, expect more dominoes to fall. Of course, this shift will really only happen if the other big cinema chains hatch similar agreements, and Cinemark has already come out as saying it doesn’t think the Universal/AMC concept is a sound one. Yet you just know that it will be exploring options and figuring out how to make changes because of the shift in viewing habits. While the cinema experience is still the best way to see films (believe me, I truly miss going to watch a new release on the biggest screen possible with a crowd), audiences have become increasingly frustrated with rising prices for tickets and concessions and less stringent monitoring of annoyances such as people using their cell phones. The pandemic, too, has affected how we all view showing up at a cinema. Some are all too eager to head back but don’t want to wear masks. Others would rather wait until there is a viable vaccine. Different countries have reacted with various levels of competency to the threat posed by the virus, which means that some of the biggest markets in moviegoing (including where I live in Los Angeles) face much bigger challenges in re-opening cinemas. Not forgetting the challenges presented by Netflix, Amazon, Disney Plus, and other streaming services, which have a global reach, large funds to buy or produce content and can offer a serious alternative to having a film come out in cinemas.
And what of smaller cinemas, the indies, that won’t have the same leverage as giant corporations? Do they get a much worse deal? Chances are, they will. And where does it leave the smaller movies, who benefitted from being discovered in cinemas, and can point to box office returns to help their filmmakers find other work, as opposed to the fuzzy math and obscured results from PVOD and other services?
It will take a while for this all to work itself out, but the bottom line is that cinemagoing and distribution/exhibition is going to change forever. But what do you think? Agree? Disagree? Let me know in the comments, or you can reach me on Twitter.