In a sign of how the pandemic is remaking Hollywood traditions, AMC Theatres and Universal Studios on Tuesday announced an agreement to shorten the exclusive theatrical window to just 17 days for the studio's films.
The standard window of theatrical exclusivity typically runs about 90 days. Up until now, the largest chains have steadfastly refused to screen films that don't give releases a lengthy and exclusive run in theaters before moving onto video-on-demand or streaming services. Studios, meanwhile, have increasingly sought to deliver new movies more quickly into the home.
The new deal covers Universal films — which include the "Fast & Furious" franchise, "Jurassic Park" movies and the "Despicable Me" series — in the U.S. over the next three years.
After a run of at least three weekends, Universal (and its specialty label, Focus Features) will have the option of steering a film to premium on-demand, including AMC's own service. The shortened window only applies to premium video-on-demand — which often means digital rentals of $20 — not standard on-demand or other home platforms.
The agreement repairs a rift between AMC and Universal, which is owned by Comcast Corp. In April, with theaters shuttered nationwide, Universal released the animated sequel "Trolls World Tour" by video on demand. NBCUniversal CEO Jeff Shell then trumpeted the digital release as a success and said the studio would, even once theaters reopened, "release movies on both formats."
That infuriated theater owners. Adam Aron, chief executive of AMC, said the company would no longer play Universal releases and said he would do the same for any distributor that "unilaterally abandons current windowing practices absent good faith negotiations between us."
Terms of the deal weren't disclosed, but AMC will get a share of the premium video-on-demand revenue.
"The theatrical experience continues to be the cornerstone of our business," said Donna Langley, chairman of Universal Filmed Entertainment Group. "The partnership we've forged with AMC is driven by our collective desire to ensure a thriving future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality."
Aron called it "a historic, industry-changing agreement" that benefits both parties.
"This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film's release, during which time a considerable majority of a movie's theatrical box office revenue typically is generated," said Aron. "AMC will also share in these new revenue streams that will come to the movie ecosystem from premium video on demand."
The deal has potentially profound ramifications for an industry reeling from the coronavirus pandemic. The largest chains have been closed in the U.S. for more than four months. Exhibitors, including AMC, are currently planning on a large-scale reopening by late August, with Warner Bros.' "Tenet" prepared to usher moviegoers back over the Labor Day weekend, after debuting a week earlier overseas.
Universal has opted to postpone its largest upcoming films — including "F9" and "Minions" — into next year. The studio sent "The King of Staten Island" directly to homes. Its next scheduled release expected in theaters is "Candyman" on Oct. 16.
The National Association of Theater Owners declined to comment on the new deal.
