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Tuesday, May 05, 2020

Exhibs vs. Universal: What's The End Game?

The feud between Universal Pictures and the major cinema chains goes well beyond the movie experience.

Universal, owned by NBC (which, in turn, is owned by Comcast Communications) last week proclaimed that they would be offering more and more first-run films on a video-on-demand (VOD) basis. This edict brought out a tit-for-tat from AMC Theaters (the largest cinema chain in the U.S.) which stated it would no longer be exhibiting Universal movies at any of its theaters. Then, in unison, Regal Theaters' parent Cineworld jumped-in announcing that they would join AMC in boycotting Universal pics. Later in the week, AT&T, parent of Warner Bros., came out in support for Universal stating, "there was a need for a reworking of the theatrical model."

It's no secret that the studios and theaters are both in very poor financial condition, but the theaters are worse as they have no other revenue drivers sans the box office. The studios have VOD, and add-ons: merchandising, cable and airline fees, and streaming.

The rift started when Universal offered 'Trolls:World Tour' on VOD. Well, no big deal thought the circuits, as all movie theaters were shut-down due to the virus. However, in three weeks, the 'Trolls' had racked-up $100 million in rentals - and the exhibs knew they had made a huge mistake in not battling Universal's release scheme for that film - for if VOD became the norm it would be a kill-shot to the exhibs. Meanwhile, the studios are sitting on billions in unreleased movies and productions that are at a standstill.

CMG has been predicting the eventual day-and-date release of movies via VOD, streaming, and cinemas; however, skipping-over theaters and going directly to release via online formats is not in the best interests of the movie industry. Of course, the outcome of all this depends entirely upon the public. CMG believes the public cares about theaters, and they want to be able to "go to the movies."

Jim Lavorato

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