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AMC Entertainment (NYSE: AMC) and Comcast (NASDAQ: CMCS. A) Universal Pictures would possibly have replaced the film industry forever. On Tuesday, they announced an agreement that narrows the window of exclusivity in movie screenings in theaters and allows partners percentage of profit when movies are distributed on video-on-demand (VOD) platforms.
The two had disagreed with Universal’s resolution this year of bypassing theaters and bringing their film Trolls World Tour directly to VOD. Universal was a huge success, which led AMC to claim that it would never show another Universal film in its theaters. But the agreement means we’ll probably see other studios and theater operators sign similar deals soon.
It is very rare for a film to appear on streaming platforms before the classic 90 days after its release in theaters, although previous films have rarely been released, including in theaters and on demand. But those are exceptions that turn out to be the rule.
However, the exclusivity of the theatre was inevitable. About 15 years ago, it lasted up to 135 days and has declined since then. The coronavirus pandemic has replaced industry dynamics, not even as AMC is suffering until its rooms can reopen next month.
The agreement between AMC and Universal stipulates that Universal and Focus feature films must be shown in theaters for at least 3 weekends, or 17 days, before they can be shown in VOD. AMC CEO Adam Aron noted that the maximum profit from a film is generated in this period, but also under pressure that the film operator “will now share those new earnings resources that will come to the movie ecosystem from premium videos on demand.”
The two are also negotiating overseas distribution agreements, a measure that can push other studios and operators to follow the game. The full terms of the agreement have been published.