On Wednesday, Wall Street analysts commented on the historic agreement between AMC Theatres and Universal Pictures, which will allow the studio’s films to be viewed on-demand premium video after just 17 days in theaters, adding 3 weekends.
The deal, which first covers AMC sites in the U.S., breaks the classic theatrical window nearly 3 months before studios can make movies to have at home. Partners did not detail the monetary terms, but AMC, the world’s largest cinema chain, is expected to provide a percentage of PVOD’s revenue.
In a report titled “The Day the Window Broke,” Mofffett analyst Nathanson Michael Nathanson described the progression as a “revolutionary moment for the film industry.”
What does this mean for movies and the like? Nathanson predicted that film attendance would be cannibalized. He said the review of the most productive films of 2019 in the key categories shows that about 80 to 90% of the overall workplace of the box was generated in the first 4 weeks, and the first 3 weeks represent 70 to 80%. “So if the 17-day option becomes the norm in all studios, we expect a higher point of cannibalization of cinema attendance than if operators had simply kept the PVOD window in 30 days,” Nathanson concluded.
What about the monetary effect on the study window agreement? “There’s good news here with this PVOD announcement, as they can open a shorter window for consumers to take advantage of marketing spending more effectively,” Nathanson said. “However, given only 17 days of release in theaters, we would also expect a greater negative effect on subsequent windows, such as electronic sales, VOD rentals and payment of 1 according to security.”
Nathanson in his report Wednesday also reiterated his past view that “the only long-term winners of cinema are Netflix, Amazon and Disney, as they have built large-scale global streaming platforms that will gain advantages from a shorter film release cycle in cinemas that populate their own proprietary SVOD platforms.” He hopes the AMC-Universal window agreement “puts pressure on non-aligned studios to combine to locate load synergies, as successful long-term movie windows, such as home entertainment, cable distribution, and pay 1, are crushed through the SVOD competition. “
As far as exhibitors are concerned, the fact that AMC entered into the first agreement with Universal “puts the rest of the industry at a disadvantage,” Nathanson suggested. “It is at all times imaginable that Cinemark and Cineworld will seek to drive a greater economy and/or a longer era of theatrical exclusivity. However, now that Universal (and perhaps other studies soon) have implemented this agreement as an initial model, it would possibly be difficult to locate other effects to particularly improve the terms.”
Credit Suisse exhibition analyst Meghan Durkin, in a report, argued that in the AMC-Universal agreement, “the transparent winner is the consumer.”
Durkin added, “If this arrangement was structured to increase studio profitability or studio risk, we may see more theatrical releases and a more varied list of films, which can be positive for theaters over time.”
Its general conclusion: “Given the environment created through COVID-19, in which cinemas in the United States remain closed and film releases are constantly postponed, investors are very likely to see this agreement as a developing uncertainty for theatrical distribution style until profits can be tested, and have an effect on customer habit and studio production is better understood”
B. Riley FBR analyst Eric Wold has one more waiting and seeing what happens to the AMC-Universal agreement despite some initial investor concerns. “In our opinion, it is too early to draw a line in the arena about this agreement and conclude that it is positive for Universal and negative for AMC (or any other exhibitor),” he wrote. “However, we stay out of it with a ‘neutral’ score for AMC and Cinemark Holdings until there is greater visibility into the industry’s restart [after the coronavirus pandemic] and the reaction of viewers.”
Wold expects more donations in this regard. “We wouldn’t be surprised to see other option agreements between the rest of the primary and primary display channels, especially since other operators may not need to leave a movie on their screens anyway once it’s available through PVOD. (And they would probably prefer an equal percentage of the PVOD economy) Said.
Meanwhile, MKM Partners analyst Eric Handler discussed the new window in a Wednesday report on the giant corporate Imax screen, arguing that “AMC’s PVOD agreement with Universal deserves that the curtains don’t affect Imax.”
The analyst said the news “surprised a lot of people,” adding: “While this occasion is perceived (rightly or incorrectly) as an additional negative aspect to the industry, we believe that Imax is far removed from any involvement of any PVOD development. Please note that Universal cannot announce the release of a film on PVOD platforms until the weekend of its release in theaters. Since almost all movies shown on Imax screens last only a week or two, the company deserves not to face an overlap with PVOD window.”
Handler said: “In addition, since many Imax consumers pay to watch a specific movie due to the platform’s large format and high-quality experience, we believe the marginal app is much larger for the company than what can offer an opportunity to see a home. . deliver.”
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