TROLLS WORLD TOUR (2020): Digital Release Profits & PVOD Declaration Cause AMC Theatres to Ban Universal Pictures Movies

Trolls World Tour’s VOD Success Prompts AMC Theatres to Ban Universal Pictures Movies

Following the digital release success of Troll World Tour (2020) and Head of NBCUniversal Jeff Shell‘s announcement of coterminous future releases in-theater and on VOD, AMC Theatres has banned all Universal Pictures movies from showing in their theater chain. AMC is the largest movie theater chain in the Unites States. AMC Theatres CEO Adam Aron sent this open letter to Universal Pictures following Shell’s statement:

“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theatres in the United States, Europe or the Middle East. This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat.”

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National Association of Theater Owners President and CEO John Fithian blasted Universal Pictures’ potential day-and-date film release strategy as well:

“Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases. We are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release.”

With the potential revenue loss that this potential spells for Universal Pictures, a new position on same day VOD and in-theater releases was quickly adopted and released by Universal:

“Our desire has always been to efficiently deliver entertainment to as wide an audience as possible. We absolutely believe in the theatrical experience and have made no statement to the contrary. As we stated earlier, going forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense. We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions.”

What caused all of this kerfuffle between movie exhibitor and movie studio?

The three-week digital release of Troll World Tour has made more money for Universal Pictures than Trolls made during its five months in theatrical release. Trolls World Tour‘s revenue take on VOD release could blaze a new trail for Hollywood versus traditional movie theater releases. Because of prevalence of Coronavirus (Covid-19), instead of releasing Trolls World Tour in-theaters on its previously scheduled release date, Universal Studios opted to release the film on VOD, like Amazon Prime Video, Apple TV, in the hopes of making a percentage of its production budget and marketing budget back.

Being a brand new, high-end animated family film, a follow-up to a successful film, and charging twenty dollars per rental spelled unexpected success for Universal Pictures and Trolls World Tour. The twenty dollar price tag is much higher than the normal movie ticket price of five to fifteen dollars. Usually, the twenty dollar price tag is reserved for films released on the 3D format or for films released in expensive markets like Manhattan, New York City.

That rental price and the fact that Universal Pictures gets to keep the lion’s share of the revenue, they don’t have to share it with movie theaters, has led to an unprecedented moment for Universal Pictures – Trolls World Tour has made $95 millions in three weeks of digital release via five million rentals.

This is bad for movie theater chains for two reasons: 1.) “With theatrically released films, studios only earn around 50% of the ticket sales. But with VOD releases, the studio hauls in 80%. Which means Trolls 2 has netted Universal more $77 million in revenue.” and 2.) Trolls World Tour “performance has convinced Universal executives that digital releases can be a winning strategy, and may diminish the role of theaters even after the pandemic passes.” Head of NBCUniversal Jeff Shell had this to say about the situation: “As soon as theaters reopen, we expect to release movies on both formats.”

The latter reason could dramatically cut into the profits of movie theater chains across the United States, especially if this move catches fire with other movie studios.

This situation may cause some films in the future to forgo movie theaters entirely and to be released straight to the consumer on digital formats. It may also cause a further erosion of the theatrical release window (the time between a film being released in-theater and on home formats like VOD). Formerly that window was six months, now it is three months. With the potential profit awaiting films on VOD, that window could shrink to two months with the argument being that most films are out of theaters well before the two months time period has even lapsed.

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