Theatrical Future/PVOD Thread

[Nick]

I'm surprised they got it that short. I was thinking a month would be the most theaters would be willing to go to. I get that AMC will get a cut of the VOD take, but man, this seems like a suicidal thing to do. If a movie is going to be on PVOD 17 days after release, a lot less people will be going to the theaters (although it still does give theaters the first 3 weekends, which are the most lucrative).

Also... what about other theater chains? AMC is the biggest so this is a big deal, but I wonder if they will even bother with other theaters or if Universal movies will be exclusive to AMC.

 

[Legacy]

There we go. Now we’re operating in the 21st century.

 

[MrBlonde]

I'm surprised they got it that short. I was thinking a month would be the most theaters would be willing to go to. I get that AMC will get a cut of the VOD take, but man, this seems like a suicidal thing to do. If a movie is going to be on PVOD 17 days after release, a lot less people will be going to the theaters (although it still does give theaters the first 3 weekends, which are the most lucrative).

Also... what about other theater chains? AMC is the biggest so this is a big deal, but I wonder if they will even bother with other theaters or if Universal movies will be exclusive to AMC.

My best guess is they did a deal they're comfortable expanding to other big enough chains to matter, or Universal paid something upfront because AMC is desperate for cash so they took an extreme haircut on the days.

 

[rageofthegods]

I'm surprised they got it that short. I was thinking a month would be the most theaters would be willing to go to. I get that AMC will get a cut of the VOD take, but man, this seems like a suicidal thing to do. If a movie is going to be on PVOD 17 days after release, a lot less people will be going to the theaters (although it still does give theaters the first 3 weekends, which are the most lucrative).

Also... what about other theater chains? AMC is the biggest so this is a big deal, but I wonder if they will even bother with other theaters or if Universal movies will be exclusive to AMC.

It is important to note just at the start that 17 days is when Universal is able to pull movies; not all movies are going straight to PVOD after that window. Universal is surely going to keep its tentpoles in theaters for longer. I think we'll start seeing 45 days being standard for all but the biggest movies like Fast 9 and JW, while 17-30 days is reserved for smaller indie movies and especially midbudget comedies and dramas.

As for other theater chains, they might not have a choice. Pretty much every other major studio besides Disney has been pushing for this, with Paramount's new Distribution Boss being particularly gung-ho about PVOD. Even if no-one else follows through on the content side, the alternative is that Universal is going to be offering families practically new films for $20 while theaters are trying to turn them out for a $40 of tickets and $20 of popcorn. They're just gonna get out-competed. AMC is getting a stake, so they're still getting money, even though it's basically chump change.

 

[OLSinFLA]

I'm surprised they got it that short. I was thinking a month would be the most theaters would be willing to go to. I get that AMC will get a cut of the VOD take, but man, this seems like a suicidal thing to do. If a movie is going to be on PVOD 17 days after release, a lot less people will be going to the theaters (although it still does give theaters the first 3 weekends, which are the most lucrative).

Also... what about other theater chains? AMC is the biggest so this is a big deal, but I wonder if they will even bother with other theaters or if Universal movies will be exclusive to AMC.

While its true for smaller films less people may show up (its been that trend anyways) for big blockbusters it will still be a draw for theaters. I mean, I have a pretty decent setup at home (55 inch, 3D, 7.1 surround) but its never going to match the huge screens and higher sound quality in a theater. (And if its a 70mm showing, count me way in)

 

[Nick]

Regal theaters owner Cineworld has spoken on the AMC/Universal deal. As I said yesterday, this is a potentially suicidal deal for theaters and it sounds like all theaters are reacting this way:


Basically, if these other theaters don't play ball, then the 17-day window with AMC means nothing unless Universal plans to be AMC-exclusive for their releases since all other theaters still have a 90-day window policy. I expect NATO to come out will a statement that basically condemns AMC.

While its true for smaller films less people may show up (its been that trend anyways) for big blockbusters it will still be a draw for theaters. I mean, I have a pretty decent setup at home (55 inch, 3D, 7.1 surround) but its never going to match the huge screens and higher sound quality in a theater. (And if its a 70mm showing, count me way in)

I agree. I much prefer watching blockbusters in a theater than at home and I have a pretty good setup now, too. Especially the AMC Dolby theaters. If i'm seeing a big Marvel movie or something, it's in the Dolby Theater at Disney Springs.

 

[lowbudget]

While its true for smaller films less people may show up (its been that trend anyways) for big blockbusters it will still be a draw for theaters. I mean, I have a pretty decent setup at home (55 inch, 3D, 7.1 surround) but its never going to match the huge screens and higher sound quality in a theater. (And if its a 70mm showing, count me way in)

Yep, and if i'm going to a theater its easy to dedicate a 3-hour block to watching a show. If i'm at home, unless its the wee hours of the morning i'm guaranteed to have someone interrupting me.

 

[OLSinFLA]

Regal theaters owner Cineworld has spoken on the AMC/Universal deal. As I said yesterday, this is a potentially suicidal deal for theaters and it sounds like all theaters are reacting this way:


Basically, if these other theaters don't play ball, then the 17-day window with AMC means nothing unless Universal plans to be AMC-exclusive for their releases since all other theaters still have a 90-day window policy. I expect NATO to come out will a statement that basically condemns AMC.


I agree. I much prefer watching blockbusters in a theater than at home and I have a pretty good setup now, too. Especially the AMC Dolby theaters. If i'm seeing a big Marvel movie or something, it's in the Dolby Theater at Disney Springs.

It also depends on what the other studios do. If they decide to follow in Universal's footsteps there's not much the chains can do - unless they want to show only indie films

 

[Viator]

It also depends on what the other studios do. If they decide to follow in Universal's footsteps there's not much the chains can do - unless they want to show only indie films

Yeah--at this point, with this play, I am watching Disney and Warner Bros. like a hawk--as I'm wondering what'll happen if they make similar deals with AMC.

Part of me wonder's if Disney's already in the ball with talking to AMC--especially if it means on certain films from 21C and their lesser studios.

 

[Nick]

Yeah--at this point, with this play, I am watching Disney and Warner Bros. like a hawk--as I'm wondering what'll happen if they make similar deals with AMC.

Part of me wonder's if Disney's already in the ball with talking to AMC--especially if it means on certain films from 21C and their lesser studios.

Disney and WB have been staunchly sticking to theatrical with their release dates. With the amount of money Disney makes at the box office, I doubt they have any interest on cutting multiple theatrical chains into their PVOD take.

AMC is going to get 10% of Universal's PVOD money. So if AMC is getting that much, how much is Cineworld (Regal) going to want? Cinemark? etc. By the time you've cut all these chains in, your PVOD take is roughly down to 50% (from the normal 80%) and you're making less money since parties of 2 or more are getting a steal at $20/rental instead of getting everyone's money. I think Universal is serious about this, but I think it's foolish, from a business perspective. They'll never make the same amount of money they used to make at the box office and you likely make less on PVOD due to cheaper group cost.

 

[rageofthegods]

Yeah--at this point, with this play, I am watching Disney and Warner Bros. like a hawk--as I'm wondering what'll happen if they make similar deals with AMC.

Part of me wonder's if Disney's already in the ball with talking to AMC--especially if it means on certain films from 21C and their lesser studios.

This might answer your question reisney.

Essentially, Disney is actually the only major studio that doesn't support this move, because a robust theatrical experience is needed for their massive tentpole money-generator strategy. But keep in mind that while that's pretty big, they're also quite literally the only one. Universal may have been the most aggressive, but Paramount and Sony have been pushing this aggressively for years, with Paramount already having experimented with this and their current head of distribution having suggested ways of making PVOD a viable option post-Pandemic. Ditto with Lionsgate. Warner Bros, meanwhile, have said they're exploring the idea. That leaves literally only Disney (and I suppose MGM but they've only been a rump distributor until very recently and their upcoming drama-heavy slate would presumably be the biggest beneficiary of lower windows); almost 60% of the 2019 BO have said they want PVOD.

Studios want this, and have wanted it for years. It's probably not going to be a rush like I initially expected it to be, however, given that AMC is demanding ludicrous terms from any studio not housed in 30 Rockefeller Plaza. Expect Tenet's release to set the tone for PVOD deals going forward; if it flops in the US - which frankly I expect it to - then you'll see both studios and exhibition being more inclined to strike a deal.

AMC is going to get 10% of Universal's PVOD money. So if AMC is getting that much, how much is Cineworld (Regal) going to want? Cinemark? etc. By the time you've cut all these chains in, your PVOD take is roughly down to 50% (from the normal 80%) and you're making less money since parties of 2 or more are getting a steal at $20/rental instead of getting everyone's money. I think Universal is serious about this, but I think it's foolish, from a business perspective. They'll never make the same amount of money they used to make at the box office and you likely make less on PVOD due to cheaper group cost.

Percentage of gross PVOD is probably going to be the best deal theaters can get at this point, and I'm guessing that 10% AMC is getting is going to be the biggest slice any theater can ask for. You gotta remember that while theaters get 45% of the BO, that BO take is only for their theater, while the percentage of PVOD will be for the entire nationwide gross, which will result in a ton of money for them. That's not an ideal situation for studios, so I would guess the standard that Comcast will try to push people towards is to get consumers to "buy" PVOD "tickets" from their local theaters with a portion of proceeds going to that specific theater (this because they own Fandango, which conveniently combines VOD platform and movie ticketing site).

 

[Nick]

This might answer your question reisney.

Essentially, Disney is actually the only major studio that doesn't support this move, because a robust theatrical experience is needed for their massive tentpole money-generator strategy. But keep in mind that while that's pretty big, they're also quite literally the only one. Universal may have been the most aggressive, but Paramount and Sony have been pushing this aggressively for years, with Paramount already having experimented with this and their current head of distribution having suggested ways of making PVOD a viable option post-Pandemic. Ditto with Lionsgate. Warner Bros, meanwhile, have said they're exploring the idea. That leaves literally only Disney; almost 60% of the 2019 BO have said they want PVOD.

Studios want this, and have wanted it for years. It's probably not going to be a rush like I initially expected it to be, however, given that AMC is demanding ludicrous terms from any studio not housed in 30 Rockefeller Plaza. Expect Tenet's release to set the tone for PVOD deals going forward; if it flops in the US - which frankly I expect it to - then you'll see both studios and exhibition being more inclined to strike a deal.



Percentage of gross PVOD is probably going to be the best deal theaters can get at this point, and I'm guessing that 10% AMC is getting is going to be the biggest slice any theater can ask for. You gotta remember that while theaters get 45% of the BO, that BO take is only for their theater, while the percentage of PVOD will be for the entire nationwide gross, which will result in a ton of money for them. That's not an ideal situation for studios, so I would guess the standard that Comcast will try to push people towards is to get consumers to "buy" PVOD "tickets" from their local theaters with a portion of proceeds going to that specific theater (this because they own Fandango, which conveniently combines VOD platform and movie ticketing site).

AMC is the biggest theater, but not by a giant margin. Regal is pretty close to them and would command the same % or wouldn't even be interested in discussing.

Also, I don't get how you guys think the Studios are the ones with leverage. If Regal, Cinemark and other theaters don't cave, then any deal a studio makes with AMC is null and void anyway if they want to play in all theaters. Plus with at least Disney on the theaters side, that's a major Studio - and the most box office lucrative - backing them up.

The way I see this is Universal taking advantage of how vulnerable AMC is to bankruptcy and offering to cut them in on PVOD was something they were willing to take because they're desperate. But this is like taking hydroxychloroquine because you think it will save you today only for it to poison you tomorrow (on AMC's part).

 

[Legacy]

AMC is the biggest theater, but not by a giant margin. Regal is pretty close to them and would command the same % or wouldn't even be interested in discussing.

Also, I don't get how you guys think the Studios are the ones with leverage. If Regal, Cinemark and other theaters don't cave, then any deal a studio makes with AMC is null and void anyway if they want to play in all theaters. Plus with at least Disney on the theaters side, that's a major Studio - and the most box office lucrative - backing them up.

The way I see this is Universal taking advantage of how vulnerable AMC is to bankruptcy and offering to cut them in on PVOD was something they were willing to take because they're desperate. But this is like taking hydroxychloroquine because you think it will save you today only for it to poison you tomorrow (on AMC's part).

In any sort of situation like this, with creators and distributors, the creators always have more leverage because their the only thing keeping the distributors alive. Especially now, when studios have the ability to self-distribute via any sort of on-demand. All it takes is a couple of studios to say, “we’ll take a short term for long term control,” and they could choke distributors out of existence. Because if the creators stop using the distributors, there is literally nothing they can do.

 

[rageofthegods]

AMC is the biggest theater, but not by a giant margin. Regal is pretty close to them and would command the same % or wouldn't even be interested in discussing.

Also, I don't get how you guys think the Studios are the ones with leverage. If Regal, Cinemark and other theaters don't cave, then any deal a studio makes with AMC is null and void anyway if they want to play in all theaters. Plus with at least Disney on the theaters side, that's a major Studio - and the most box office lucrative - backing them up.

The way I see this is Universal taking advantage of how vulnerable AMC is to bankruptcy and offering to cut them in on PVOD was something they were willing to take because they're desperate. But this is like taking hydroxychloroquine because you think it will save you today only for it to poison you tomorrow (on AMC's part).

Legacy pretty much said it better than I could, though I'll note a couple extra things:

- Audiences have been abandoning theaters since 2002, and if the experience of the newspaper industry in the Great Recession is any indication, the pandemic will only accelerate things.

- Theaters lose money at a constant rate while studios can afford to hold onto their movies for a much longer time since it doesn't directly lose them money, although obviously they can't hold onto them forever. This was more relevant to AMC than it is for Cineworld, which has funding to last through 2021, but it'll be very relevant for smaller chains like Marcus and Alamo. Imagine a scenario where Universal has AMC and sews up all the smaller chains like Cineplex and Marcus. The three largest chains only make up half the screens in the country, there's a lot of smaller exhibition companies who might take up Universal if AMC is on board.

As for Regal, well, remember there's also a benefit to AMC for being first. Having a big exhibition partner on their side gives Universal alot more leeway to play hardball. Also, having Disney on your side is great, but they make up 40% of the Domestic BO. That's huge for one studio, but it's still less than half.

 

[Nick]

Legacy pretty much said it better than I could, though I'll note a couple extra things:

- Audiences have been abandoning theaters since 2002, and if the experience of the newspaper industry in the Great Recession is any indication, the pandemic will only accelerate things.

- Theaters lose money at a constant rate while studios can afford to hold onto their movies for a much longer time since it doesn't directly lose them money, although obviously they can't hold onto them forever. This was more relevant to AMC than it is for Cineworld, which has funding to last through 2021, but it'll be very relevant for smaller chains like Marcus and Alamo. Imagine a scenario where Universal has AMC and sews up all the smaller chains like Cineplex and Marcus. The three largest chains only make up half the screens in the country, there's a lot of smaller exhibition companies who might take up Universal if AMC is on board.

As for Regal, well, remember there's also a benefit to AMC for being first. Having a big exhibition partner on their side gives Universal alot more leeway to play hardball. Also, having Disney on your side is great, but they make up 40% of the Domestic BO. That's huge for one studio, but it's still less than half.

They make up 40% without Fox/Searchlight even included.

In any sort of situation like this, with creators and distributors, the creators always have more leverage because their the only thing keeping the distributors alive. Especially now, when studios have the ability to self-distribute via any sort of on-demand. All it takes is a couple of studios to say, “we’ll take a short term for long term control,” and they could choke distributors out of existence. Because if the creators stop using the distributors, there is literally nothing they can do.

I totally agree there will be post-pandemic changes, but I don't think this is going to be the walk in the park that Universal and AMC are trying to make it appear to be is my only point.

And yeah, they can self-distribute, but the major blockbuster movie is then wiped away from existence basically. There's no world where PVOD will make anywhere near as much as theaters (even with the higher % - which they are now splitting with theaters) and less people will go to the theaters with a 17 day window, so I see it as a loss on both ends of the deal. Bigger upside for Universal because they aren't in immediate danger of going under, but still I see this as a self destructive deal all the way around.

 

[rageofthegods]

They make up 40% without Fox/Searchlight even included.

Distributors Movie Breakdown for 2019

Distributors Movie Breakdown for 2019

m.the-numbers.com

33.32% + 4.38% + 0.69% = 38.39%

Keep in mind also that Fox is probably going to continue going down considering their poor track record under Disney and the continued retirement of their big franchises like X-Men. They have a few big movies like Avatar coming up but it's clear from the constant distribution and calendar tango that 20th is playing that they're preparing to seriously wind down in the near future.

I totally agree there will be post-pandemic changes, but I don't think this is going to be the walk in the park that Universal and AMC are trying to make it appear to be is my only point.

And yeah, they can self-distribute, but the major blockbuster movie is then wiped away from existence basically. There's no world where PVOD will make anywhere near as much as theaters (even with the higher % - which they are now splitting with theaters) and less people will go to the theaters with a 17 day window, so I see it as a loss on both ends of the deal. Bigger upside for Universal because they aren't in immediate danger of going under, but still I see this as a self destructive deal all the way around.

I don't think anyone is disagreeing with you that 17 days is unreasonable for most movies, least of all Universal. 17 days is when Uni will have the option to pull the movie from theaters, not when they'll automatically yank it. If the movie dips below a certain bar maybe a month or so from release, they can put it on PVOD and give it a second wind. Etc. And honestly, I think theaters understand that Universal isn't trying to yank movies 17 days out from release either, it's just that giving studios the unfettered ability to do so probably - rightfully - skeevs them out a bit.

What you're likelier to see imo is the next bevy of deals between Universal and exhibition like Cinemark codifying what kinds of titles can go PVOD when, e.g. smaller films can go PVOD after four weeks, tentpole films after 60 days, etc. Theaters can probably live with that.

 

[Nick]

Distributors Movie Breakdown for 2019

Distributors Movie Breakdown for 2019

m.the-numbers.com

33.32% + 4.38% + 0.69% = 38.39%

Keep in mind also that Fox is probably going to continue going down considering their poor track record under Disney and the continued retirement of their big franchises like X-Men. They have a few big movies like Avatar coming up but it's clear from the constant distribution and calendar tango that 20th is playing that they're preparing to seriously wind down in the near future.



I don't think anyone is disagreeing with you that 17 days is unreasonable for most movies, least of all Universal. 17 days is when Uni will have the option to pull the movie from theaters, not when they'll automatically yank it. If the movie dips below a certain bar maybe a month or so from release, they can put it on PVOD and give it a second wind. Etc. And honestly, I think theaters understand that Universal isn't trying to yank movies 17 days out from release either, it's just that giving studios the unfettered ability to do so probably - rightfully - skeevs them out a bit.

What you're likelier to see imo is the next bevy of deals between Universal and exhibition like Cinemark codifying what kinds of titles can go PVOD when, e.g. smaller films can go PVOD after four weeks, tentpole films after 60 days, etc. Theaters can probably live with that.

I mean, I totally agree with smaller films having a small window and then PVOD (or even straight to PVOD). They don't pull the box office necessary to justify a 90-day window. But theaters need to exist for Blockbusters and like you are saying, I don't think it should be a blanket 17 days. For smaller films, yes. But for blockbusters, I don't think 30-45 days is unreasonable.

Also, I think you're being a bit down on Fox over one bad year. Their 2019 slate wasn't made by Disney and it was a terrible slate of movies aside from Jojo Rabbit, Ford V. Ferrari and Ad Astra. 2020 Fox was supposed to have what looked to be a fairly incredible slate. Unfortunately most of that has been pushed to 2021 or late 2020 as of now. I'm expecting Free Guy gets a release date change as they had big hopes of a franchise coming out of that movie.

EDIT: Here's a good read from Variety. “The level of animosity, globally, against Universal is like nothing I’ve ever seen.” “The only thing that’s guaranteed for AMC is it’s not going to drive more people into their cinemas; it will drive more people to [premium video on-demand]. I can’t see them making much money on this,” the source said.

I know a lot of people like PVOD, but I think this was a absolute trash business decision by AMC and not much better for Universal. It's only better because they got what they wanted, but I don't think that what they want is going to lead to higher profitability, but lower.

Bold or Reckless? Movie Business Debates AMC and Universal’s Early VOD Deal

Will the Universal/AMC early VOD deal doom the movie business or save it?

variety.com

 

[OLSinFLA]

Disney and WB have been staunchly sticking to theatrical with their release dates. With the amount of money Disney makes at the box office, I doubt they have any interest on cutting multiple theatrical chains into their PVOD take.

AMC is going to get 10% of Universal's PVOD money. So if AMC is getting that much, how much is Cineworld (Regal) going to want? Cinemark? etc. By the time you've cut all these chains in, your PVOD take is roughly down to 50% (from the normal 80%) and you're making less money since parties of 2 or more are getting a steal at $20/rental instead of getting everyone's money. I think Universal is serious about this, but I think it's foolish, from a business perspective. They'll never make the same amount of money they used to make at the box office and you likely make less on PVOD due to cheaper group cost.

Remember, this isn't designed for big movies. Universal isn't going to put their next Jurassic World on PVOD after 17 days. This is for middle and low-tier films which would have dropped off by week 3 anyways. From the studio's point of view it means, they don't have to remarket the film 3 months later for home video. And the theaters aren't losing much, as those films are usually dead in the water by week 3. Just because they CAN release in 17 days doesn't mean they WILL. The articles were quite clear on that.

 

[quinnmac000]

Per the earning call, this deal was made to push small scale films to theaters with minimal losses for both Universal and the theatre. There are not enough theatres open to justify new content as Universal would have to bit marketing costs. This plan allows new movies to be released with theaters getting new content to bring in audiences and allows Comcast to get money. This plan is mainly for COVID times.

Also some movies will move to Peacock after the three weekends in theatres.

 

[rageofthegods]

Per the earning call, this deal was made to push small scale films to theaters with minimal losses for both Universal and the theatre. There are not enough theatres open to justify new content as Universal would have to bit marketing costs. This plan allows new movies to be released with theaters getting new content to bring in audiences and allows Comcast to get money. This plan is mainly for COVID times.

Also some movies will move to Peacock after the three weekends in theatres.

Yo could I get a link to that?