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Universal/AMC deal: a new era for movie distribution?

Some weeks ago, AMC and Universal Pictures brokered a groundbreaking deal, which allows the studio to release movies on so-called “Premium VOD” (PVOD) as early as 17 days after the theatrical launch. Premium VOD is a high-priced ($20+) 48 hours-rental services.

The move is surprising as it marks a 180 degrees-turn from AMC’s pre-COVID-19 stance on VOD. In April, as Universal released “Trolls World Tour” on demand stating that it would consider simultaneously releasing films in theatres and on VOD, AMC threatened to boycott the studio’s future releases. 4 months later, the theatre industry is on its knees and AMC changed its mind, having now reached an agreement to get a cut of Universal’s PVOD revenues in exchange for a much shorter theatrical window (the pre-COVID industry standard stands at around 75 to 90 days).

It would be easy to see the move as opportunistic from AMC: its CEO recently argued that being the first major chain to agree to such a deal implied better conditions. It would also be too simplistic to call it a sign of weakness from a company so desperate for liquidity that it is ready to undermine its core business for cash. In fact, it highlights an underlying change in the movie indudstry.

This development goes with a long-term trend: box-office revenues have been stagnating for years in cinema’s biggest Western markets, whereas VOD revenues have been steadily growing. The coronavirus, like in other industries, acts as a catalyst for a change that was slowly happening in the background. Cash-strapped studios now need to release their movies even as most theaters do not or cannot reopen, whereas those fear for their weakening position as premiere screens.

Only time will tell if such a scenario can happen, and the actions of both AMC’s and Universal’s competitors in the next months will hint at the future of the cinema business across the value chain. As the VOD cake is growing, more theatre chains will want a piece of it, which might bring some interesting developments: after all, VOD platforms linked to theatres already exist, for example in Germany or in Czech Republic. However, contrary to the US, these countries have strict theatrical window laws that would prevent deals such as this one to happen. Unless governments, pushed by the industry lobbies, decide to add exceptions or even to change the rules altogether.

Quentin Stallivieri

Market Analyst

Dataxis


August 31, 2020

Quentin Stallivieri

Market Analyst

Dataxis


August 31, 2020

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