The world’s largest cinema chain, AMC, whose one thousand sites include Odeon in the UK, says it will refuse to play any Universal Pictures films after the head of NBC Universal said he wanted to continue launching features on-demand after the Coronavirus lockdown.
Universal has been the only one of the major studios to release a big title straight to homes, as the global restrictions – including cinema closures – meant it couldn’t put Trolls World Tour on big screens.
Other major studios are waiting for cinemas to re-open before releasing their blockbusters, but with cinemas likely to be limited to fifty per cent capacity, to aid social distancing, there’ll be less money to be made by studios and exhibitors alike.
With other studios unable to make money from their investments until lockdown restrictions are lifted, the CEO of NBC Universal Jeff Shell took a gamble on Trolls World Tour and says it’s already earned the equivalent of about £80 million worldwide in less than four weeks.
But could the coronavirus outbreak end up having a bigger long-term effect on the cinema industry than anyone first envisaged?
In a newspaper interview, Shell said he was considering releasing future titles online at the same time as in theatres once the lockdowns have ended – a suggestion which prompted anger from the AMC boss Adam Aron, who wrote an open letter to the chair of Universal Studios, saying, “AMC believes that with this proposed action to go to the home and theatres simultaneously, Universal is breaking the business model and dealings between our two companies.” He accused Universal of wanting to “have its cake and eat it too” and insisted that his warning was “not some hollow or ill-considered threat.”
The row comes amid a rising challenge to cinemas from streaming – not least from companies such as Netflix and Amazon, which have both production facilities and a platform for getting their films directly to audiences without having to go via cinemas. And with a recent attitudes survey in the UK suggesting that more than 70% wouldn’t feel comfortable leaving their homes even if the lockdown was lifted, cinemas could find themselves coming under even more pressure from video-on-demand.
But the kudos and publicity that comes from cinema releases and awards, such as Oscars, will always provide enough of a carrot to lure features to the big screen. Indeed Netflix and Amazon release many of their highest-profile titles in cinemas before launching them on their own platforms; many people are more likely to pay to see films at home if they’re previously enjoyed them on the big screen or heard about good publicity or reviews from their theatrical release. Adam Sandler’s recent Netflix crime thriller Uncut Gems hit UK cinemas on 10th January this year, three weeks before streaming subscribers were able to view it at home.
With the possibility that more cinema chains or studios could be brought into the fight, depending on what happens with the social distancing advice, the resolution of the row between AMC and Universal might come in negotiation over the length of that window.
With no sign of cinemas being able to open imminently, there’s time for more behind-the-scenes talks – rather than open-letters – to reach a compromise that will enable cinemas to show films that people want to see, while studios can see a quicker return on their investment from smaller titles whose earnings are more likely to come from home viewers.
It’s a symbiotic relationship; cinemas can’t survive without films to show but studios need a platform to get their films to viewers. Unless a satisfactory deal can be reached to return stability to an industry that’s currently neither producing nor exhibiting, the winners are likely to be the vertically integrated giants, which have their own platforms to exhibit their productions; Netflix and Amazon have led the way but Apple is increasingly producing its own output to stream on AppleTV while Disney is the first major studio to push its own streaming service, with Disney+ giving viewers at home access to its library of Pixar, Star Wars and Marvel titles.
If cinemas try to flex their muscles too much, more studios could take the approach of setting up their own platforms, leaving film fans having to subscribe to even more services. Perhaps this could even leave Sony as one of the most powerful entertainment companies, as they also manufacture the TVs and sound systems people will be installing in their homes as they try to recreate the cinema-going experience at home.