Theater Owners Accuse Universal Of “Destructive Tendency” And Not Involving Circuits In ‘Trolls World Tour’ PVOD Decision


2nd Update, 8:05PM: Following the National Association of Theatre Owners’ earlier statement today deflating NBCUniversal’s $95M PVOD victory with Trolls World Tour in the Wall Street Journal, the exhibition organization has issued another public statement tonight after Uni accused them of being in cahoots with AMC over the chain’s refusal to play Uni films.

Earlier this evening, AMC fired off a note to Universal Studios Chairman Donna Langley, saying he was frustrated by NBCUni CEO Jeff Shell’s statements to “release movies” on both PVOD and theaters once cinemas reopen, and that the chain won’t be playing Uni movies going forward around the globe.

NATO and AMC did not coordinate those statements in any way,” says the theater trade org, and that Universal “has made the reckless charge this evening.” More to NATO’s point: “Unfortunately Universal has a destructive tendency to both announce decisions affecting their exhibitor partners without actually consulting with those partners, and now of making unfounded accusations without consulting with their partners,” in a complete reference to the studio’s last minute pivot during the COVID-19 pandemic to take Trolls World Tour into homes.

Here’s NATO’s note:

Earlier today NATO issued a statement regarding Universal Studios’ public comments in the Wall Street Journal regarding that studios’ evaluation of the results of releasing the movie Trolls World Tour directly to the home without a theatrical release, and specifically that Universal would release future movies both theatrically and to the home.

Also today, according to various public press reports, AMC released a letter that company sent to Universal stating AMC’s individual company reaction to Universal’s public statement earlier in the day in the Wall Street Journal. NATO and AMC did not coordinate those statements in any way. Indeed, AMC had no comment on NATO’s draft statement when sent to NATO’s Board of Directors, nor did AMC participate in the Board deliberations regarding that statement. Regarding AMC’s reported letter to Universal, NATO had no involvement with nor knowledge of that letter before reading about it in the press.

Without any knowledge of the facts, or the common courtesy to inquire about those facts, Universal nonetheless made the reckless charge this evening that  the company is “disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions.”  Unfortunately Universal has a destructive tendency to both announce decisions affecting their exhibitor partners without actually consulting with those partners, and now of making unfounded accusations without consulting with their partners.

1st Update, 12:41PM: In the wake of the Wall Street Journal‘s report that Trolls World Tour minted $95 million off its domestic PVOD rental in its first 19 days, the National Association of Theatre Owners sent out a statement Tuesday.

This performance is indicative of hundreds of millions of people isolated in their homes seeking entertainment, not a shift in consumer movie viewing preferences,” it said. “It is not surprising that people under shelter-in-home ordinances for weeks on end with increasingly limited entertainment options would take advantage of the movie’s direct-to-VOD move to keep children entertained, even at a premium price.”

The theater owner org also underscored, “Universal heavily marketed the title as a theatrical release, in theaters and elsewhere, for weeks on end. That is unlikely to recur in normal times, and those costs haven’t been disclosed. While Universal may be pleased with the PVOD results of Trolls World Tour, this outcome should not be interpreted as a sign of a ‘new normal’ for Hollywood.”

“Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases,” said NATO president and CEO John Fithian. “Theaters provide a beloved immersive, shared experience that cannot be replicated – an experience that many of the VOD viewers of this film would have participated in had the world not been sequestered at home, desperate for something new to watch with their families. We are confident that when theaters reopen, studios will continue to benefit from the global theatrical box office, followed by traditional home release.”

In the wake of their success with Trolls World Tour, Universal announced that its Judd Apatow-directed Pete Davidson comedy The King of Staten Island will be released in homes June 12, forgoing a June 19 theatrical release, which is when some movie theaters were planning to come back online as they head for a full-on opening in July. Uni isn’t the only ones doing this: Warner Bros is skipping theaters and going to straight to digital with their originally conceived theatrical release Scoob! on May 15. My Spy, from STX, is headed to Amazon, The Lovebirds from Paramount/MRC is going to Netflix, Artemis Fowl to Disney+, and the list grows.

NATO cited a Morning Consult poll, “U.S. adults say the on-demand price range that they’d be willing to pay in-home for a movie currently in theaters is $5 to $8, with the optimum price being $6.” Essentially, the point being that consumers are more price sensitive when considering at-home entertainment during normal times, thus showing the financial upside to an exclusive theatrical release.

NATO also pointed out that transactional video was in secular decline since 2004 with sales and rentals of individual titles in the home dropping from $24.9 billion in 2004 to $9.3 billion last year.

Essentially the theatrical shutdown has forced studios to pivot and be experimental with their release strategies, but the question is, in a normal marketplace with theatrical available, who’ll spend extra on an in-home title rental when you’re already shelling out for streaming. Indeed, different times now.

Once exhibition is up and operating, sources say studios will have hard discussions with exhibition to close the window. The expectation is that exhibition would push back with stiffer terms. The conundrum though is: theater chains are going to need product.

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