AMC Theatres will no longer screen Universal movies due to “radical change”

AMC Theatres will no longer screen Universal films in any of its theatres after Universal says it will begin releasing movies in cinemas and at home simultaneously.

Due to the coronavirus pandemic, several movie studios have released upcoming films on demand at home. Universal released Trolls World Tour on demand on 10 April, the same day it was meant to have its global theatrical release.

Theatrical vs at-home release

Now, Jeff Shell, CEO of Universal, has said in the Wall Street Journal that “The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD. As soon as theatres reopen, we expect to release movies on both formats.”

This comment prompted AMC CEO and President, Adam Aron to pen an open letter to the Chairman of Universal Studios, Donna Langley.

Aron says that this “radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable to AMC Entertainment”.

He explains that when a movie is released ‘Only in Theatres’ “consumers perceive it to be higher quality entertainment.”

At the time, Universal explained its at-home release of Trolls by saying that cinemas were closed and it had committed to a toy licensing deal. Aron says that AMC “had our doubts that this was wholly Universal’s motivations” but they accepted the action as “an exception to our longstanding business practices.”

trolls world tour

Universal Pictures

Breaking an established business model

But by now planning on releasing films at the cinema and at home simultaneously, Aron believes that this is breaking the established business model between the two companies.

He continues, saying that this statement shows that Universal believes it “can have its cake and eat it too” without thinking about modifying “the current economic arrangements between us.”

Aron is clear that this statement from AMC does not just apply to Universal. Any company that makes a similar arrangement without renegotiating with AMC will receive a similar treatment. Aron stresses that AMC would be willing to discuss this with Universal to form “different economic models” between the two companies.

CNN Business reports that Universal disputed this interpretation from Aron. The company said that it believes in the cinema experience and will distribute future films directly to cinemas. On-demand releases will occur “when that distribution outlet makes sense.”

An uncertain future for cinema

From these comments, it is clear that Aron thinks a theatrical and at-home movie release would seriously damage cinemas. Fewer people might go to see a film at the cinema if they can rent it more cheaply at home, especially if there are lingering concerns about safety in a post-COVID-19 world.

The future of cinema as we know it is uncertain after this pandemic, says Bob Cooney. Cinema attendance has declined year-on-year. The pandemic may have accelerated “what was a natural trend towards in-home viewing”.