Universal’s decision to take DreamWorks Animation’s Trolls World Tour into homes at the 48-hour rental price of $19.99 during exhibition’s COVID-19 shutdown has reportedly racked up an estimated $95M in rental fees in the title’s first 19 days. With VOD terms in the studio’s favor at an estimated 80%, Universal is banking an estimated $77M in revenues before marketing expenses. Those are better terms for Universal then the 50/50 or 60%-65%/40% splits they reap in their relationship with movie theaters.
Of course, these are great results upfront for Trolls World Tour, but what does it mean for the pic’s downstream revenues?
In its first 19 days of release at the domestic B.O. back in November 2017, the first Trolls, released by 20th Century Fox which had the DWA distribution deal, grossed $120.8M at the domestic B.O., with approximately 50% of that going back to exhibition, and the rest going back to DWA with Fox receiving an 8% distribution fee from global theatrical, home entertainment and TV streams.
The recent PVOD revenue figures on Trolls World Tour come from the Wall Street Journal based on estimates of near 5M rentals. They also spoke with NBCUni CEO Jeff Shell, who has long rallied for a slimmer theatrical window and getting films into homes quicker. The report arrives a day after Universal and Judd Apatow announced that the filmmaker’s Pete Davidson comedy The King of Staten Island will skip theaters due to the COVID-19 climate, and head into homes on June 12, instead of having its theatrical date delayed.
While the numbers look huge on Trolls World Tour, a number of factors need to be kept in mind:
What’s the ceiling in regards to the ultimate revenue on Trolls World Tour? Will anyone want to buy the movie to own now that they’ve shelled out $19.99 to see it for a 48-hour window? Will they rent it again in a cheaper window? How will the film’s subsequent windows be impacted? It’s quite conceivable that Universal will make enough to cover the pic’s $95M budget and some portion of its marketing spend, but potentially lose some cash.
While movies like MGM’s No Time to Die moved to Thanksgiving and took an estimated $30M hit from already expended media buys, Universal didn’t do that, so Trolls World benefited largely from a theatrical-P&A sized release across NBCUni’s vertically integrated Symphony program. Some close to Trolls World Tour say that the P&A for the feature was $30M, but rival distributors highly disagree given the fact that Uni kept the film in place on the calendar, and thus carried close to the full freight spend of a global theatrical release (which is closer to $80M-$100M worldwide). Will King of Staten Island receive the same type of theatrical marketing push as Trolls World Tour? Universal has the upside of pushing the movie during SNL in the weeks ahead as well as via sister movie ticket retailer Fandango, which also has the streaming service FandangoNow.
Moviegoing begets moviegoing. When we see a movie on the big screen, in a big spectacle format, and if we had an enjoyable experience, we’re apt to buy or rent that title again. But what happens when you see a movie in the home? How jazzed are you to watch it again at a price?
Last year, Universal’s most profitable movie was How to Train Your Dragon: The Hidden World which cleared $448M in total revenues: That was from $218M in theatrical rentals, $80M in global home entertainment (rentals and streaming) and $150M in global TV. This was spurred by a global box office of $521.8M ($160.8M from domestic), with a net profit of $130M after total global costs of $318M. It remains to be seen whether Trolls World Tour emulates these types of figures.
Even if Trolls World Tour does not recoup per se, it’s another cog in the wheel of its franchise, which those close to the film tell us is a booming $700M, including merchandising.
But remember, the entire Trolls franchise of Netflix spinoff shows, toys, Justin Timberlake hit songs and Trolls World Tour happened because it was first standing on the shoulders of theatrical from the first film.
Can Universal build a pure franchise strictly from a future VOD animated release, even in a marketplace where all cinemas are open? If Dreamworks Animation’s Abominable skipped theaters (WW B.O. $189M) and headed straight into homes, would it have had the same type of resonance or better?
The first Trolls finaled at $346.8M WW ($153.7M domestic) off a combined budget and global P&A spend of $230M according to Deadline finance sources. Global home entertainment and TV revenues were estimated around $170M with a net profit of $19M.
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” Shell told the Wall Street Journal today, celebrating the sequel’s win on VOD, “As soon as theaters reopen, we expect to release movies on both formats.”
What’s clear coming away from the success of Trolls World Tour is that when theaters re-open, a serious discussion is apt to take place between theater owners and studios about crunching the 75-day window. Sources say that if exhibition’s hand is forced to close the window by a ridiculous measure, rental terms would need to lean heavier in their favor. With moviegoers apt to be hesitant about returning to cinemas initially once COVID-19 home restrictions lift, movie theaters may also need to take a haircut in regards to their ticket prices.
Forget about whether a studio can still open a movie to blockbuster form when we return to form — it’s the movie theaters that will be in greater need of advertising.