Under the new deal between Universal Pictures and AMC, the ‘theatrical window’ will shorten to 17 days, from the current 75.
Photo: Marcio Jose Sanchez/Associated PressMovies will play in theaters for much less time before moving to home video under a new agreement between theater chain AMC Entertainment Holdings Inc. AMC 7.24% and Universal Pictures, upending the way Hollywood has done business for decades.
Under the deal, the “theatrical window” will shorten to 17 days, from the current 75, at least when it comes to movies made by Comcast Corp. ’s Universal that play at AMC theaters, the world’s biggest movie-theater chain. That means that instead of waiting 2½ months to watch a new movie at home, viewers will be able to see at least some titles just 2½ weeks after they premiere in theaters.
The deal settles a public spat between the two companies over how soon new films should be allowed to appear on digital platforms. AMC in April said it wouldn’t play any Universal releases after the studio used mass theater closures amid the coronavirus pandemic as an impetus to release “Trolls World Tour” directly online and said it would continue experimenting with such a strategy.
The argument was essentially academic since most theaters have been closed since mid-March because of the coronavirus pandemic. Amid those closures, Universal made “Trolls World Tour” available as a $20 online rental on April 10, the day it had been scheduled to open in theaters.
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Such a seismic shift in the dealings between the world’s largest theater chain and one of Hollywood’s leading studios is likely to put pressure on rivals of both companies to follow suit.
Movie theaters have long considered it essential for their businesses to be able to play movies exclusively before consumers can watch them other ways. Studios have long pushed to shorten that exclusive period because it would allow them to avoid mounting two costly marketing campaigns months apart for the same movie, and to expand the potential audience for new releases by luring viewers who can’t or don’t want to leave home.
After Universal’s online release of the “Trolls” sequel racked up nearly $100 million in digital revenue in three weeks, the studio said it planned to continue experimenting with releasing some new films directly to digital platforms such as Apple Inc.’s iTunes and Amazon.com Inc.
Even though movies traditionally generate the bulk of their box-office revenue in the first few weeks of playing in theaters, exhibitors have staunchly defended their exclusive windows, fearing that if films are made available online prematurely, customers would have little incentive to see new movies in theaters. The tension dates back at least to the DVD era. Studios have gradually chipped away at the exclusive theatrical window, but attempts to eliminate it altogether have rarely gained traction, other than for some relatively low-profile releases from small studios, typically playing in cinemas that aren’t part of the biggest chains.
In a written statement, AMC Chief Executive Adam Aron said the company “enthusiastically embraces this new industry model,” which will include generating additional revenue by offering new Universal releases on its own streaming platform, AMC Theatres On Demand.
AMC also succeeded in negotiating a share of the revenue new Universal movies will earn from digital rentals purchased on other platforms such as Apple TV and Amazon’s website, according to a person familiar with the matter. The companies said the complete terms of their deal are confidential and won’t be disclosed.
Most movie theaters have endured a monthslong shutdown as governments around the world seek to curb the spread of the new coronavirus by limiting public gatherings. Hollywood’s major studios, in turn, have been forced to adapt.
Studios have repeatedly delayed some releases. Walt Disney Co. recently said it was delaying its live-action “Mulan” remake for the third time—this time indefinitely. AT&T Inc.’s Warner Bros. moved the U.S. debut of “Tenet” to early September, in a limited number of locations, after postponing the release three times.
Other films have moved directly to premium-video-on-demand, or PVOD, or other online platforms. Warner Bros. released the family film “Scoob!” online rather than wait for theaters to reopen, while Universal also recently debuted the R-rated comedy “The King of Staten Island” on digital rental platforms.
Disney went a step further with “Artemis Fowl,” skipping not only theaters but even online rental platforms, instead rushing it straight to its new subscription streaming service, Disney+.
The about-face by AMC highlights the way the Covid-19 pandemic has put pressure on all kinds of businesses to adjust their strategies.
With reopening dates for U.S. theaters pushing further and further back on the calendar, movie studios and exhibitors are looking for ways to eke out revenue from homebound consumers.
AMC currently plans to reopen its domestic theaters in mid- to late August.
Movies that Universal releases early online will be available only as premium-priced rentals, the same approach it took with “Trolls World Tour.” The company said it isn’t changing the amount of time consumers will need to wait for those titles to appear as standard-priced online sales or rentals.
Mr. Aron, AMC’s chief executive, also pointed out in his statement that the 17-day theatrical window means Universal titles will play exclusively in theaters for three full weekends—the period most movies make the bulk of their ticket sales—before moving online.
AMC and Universal will also be discussing international distribution strategy for regions such as Europe and the Middle East, the companies said.
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