This week, AMC Theaters said it would ban Comcast's Universal movies from its theaters after Universal bragged about the success of the “Trolls World Tour" in-home streaming release that reached an estimated $100 million in on-demand rentals in its first three weeks in North America.
Regal Cinemas owner Cineworld also threatened to ban any films that fail to respect the usual theatrical window when the pandemic is over. Normally, theaters are granted a roughly 75-day exclusive window to screen films before they’re released digitally.
Here is your problem: “Trolls World Tour” has collected $95 million in rental fees, with each individual rental costing around $20. Since digital sales have a higher profit margin than theatrical releases (studios and theaters typically split revenue 50/50), Universal keeps $77 million of that $95 mil.
While historical numbers would argue that Universal in normal times would have made far more by releasing the movie into theaters, NBCUniversal CEO Jeff Shell said, "The majority of movies, whether we like it or not, are being consumed at home.” “Trolls World Tour” on premium video-on-demand (PVOD) “could herald a permanent change in how Universal releases its movies.”
While I have a soft spot in my heart for theaters — nothing satisfies like a good movie — the chains are in a race to the bottom to ruin the experience and chase customers into the direction of PVOD. Let’s review.
Digital downloads (which I can stop while I hit the potty or ravage the cupboards hoping against hope that there is a cookie or two left in the house) cost $20. Two tickets to the local theater run close to $25. Winner: PVOD.
Special shout-out to Regal for charging odd amounts for tickets (like $10.57), so some high school dropout can take several minutes to give you change you don’t want back anyway. Ask them why they don’t round up or down to nearest dollar, and the stares back from ticket booth executives are universally blank. Winner: At-home viewing.
In a misguided effort to cater to the lowest audience common denominator, most theaters now sell a variety of noxious fast food — which I understand is where they make most of their revenues. But sitting next to someone eating chicken wings and a pizza is noisy and disgusting. And could someone have invented a LOUDER snack than popcorn? I doubt it. Winner: At-home viewing.
With loungers replacing seats, being in a theater can feel like sitting in your favorite chair at home. But that same sensibility somehow encourages customers to talk out loud as if they were in their own living rooms and not in a public place where the rules used to be whisper or shut the hell up. Line up a small group of teens, and you might as well just go to another theater. Winner: At-home viewing.
Just to pile on: a half hour of very loud previews and commercials, obscene prices for snacks, and sitting next to someone who decided not to shower after the gym, but headed straight to the movies, and POVD looks better and better.
While Shell says Universal will continue to release into theaters, it will all come down to economics. But from where I sit, the theater chains are doing everything humanly possible to minimize in-person attendance and drive the business toward in-home digital.