Theater chains are paying the Troll Toll, and trying to figure out what’s next
There are a few movies throughout American film history that have become synonymous with ushering in change to the medium. Movies like The Jazz Singer. Citizen Kane. Gone With the Wind. Psycho. Jaws. Avatar.
Now, thanks to Coronavirus, we can add Trolls World Tour to that list.
Trolls World Tour is the second film in Dreamworks’ franchise about a group of musical trolls led by Justin Timberlake and Anna Kendrick. The first one grossed nearly $154 million domestically in 2016, and took in nearly $347 million worldwide. World Tour has already made at least $100 million domestically in premium video on demand rentals in its first month of release, according to Universal, the film’s distributor. That’s in addition to the nearly $2 million it’s already made worldwide.
Those numbers are great for Universal, which was the first studio to figure out how to bypass the theatrical distribution system entirely and premiere a film directly on VOD during the coronavirus pandemic, which has closed all but a few theaters. Each rental of Trolls World Tour is $20 a pop, for 48 hours of viewing.
“The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD,” NBCUniversal CEO Jeff Shell told The Wall Street Journal. He added that once theaters opened, Universal would plan to debut the movie in theaters.
That plan pissed off a couple of movie theater chains, who weren’t too happy with Universal’s laissez-faire attitude toward the typical 90-day window for theatrical distribution.
On April 28, when Universal released how much it made in Troll tolls, AMC Theatres responded by saying it would refuse to show any future Universal films because of the way the studio bypassed the theatrical distribution system.
“Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East,” AMC Theatres chairman and CEO Adam Aron wrote in a letter to Universal. AMC Theatres’ policy extends to any studio that releases straight to VOD.
Soon, Regal joined in the film fracas, albeit without outright banning Universal movies, and NATO even stepped in to say that Universal can’t go changing the distribution rules so quickly.
Universal quickly responded that they did not want to diminish the moviegoing experience and was simply testing the waters on a VOD business model.
A Long History of Tension
This tension between studio and theater is just the latest in a long line of tensions between the two sides of distribution, and comes at a time when many theaters are going bankrupt and furloughing staff.
The fight over theatrical windows and who gets to distribute what is a conflict that is nearly as old as American film itself. Back in 1948, The U.S. Supreme Court ruled that film studios could not own the theaters they distributed their films in. The so-called “Paramount Decrees” was a landscape antitrust case that broke up decades of vertically-integrated Hollywood oligopoly.
Last year, the Department of Justice said it was looking into repealing the Paramount Decrees, because “consumers today are no longer limited to watching motion pictures in theatres. New technology has created many different distribution and viewing platforms that did not exist when the decrees began. After an initial theatre run, today’s consumers can view motion pictures on cable and broadcast television, DVDs, and over the Internet through streaming services.”
When you look at it through that lens, it’s no wonder AMC and Regal are up in arms. The table is set for studios to possibly own their own theaters again at some point in the future, and Coronavirus has wiped out any way for theaters to make money off of new releases in a traditional manner. But the theaters’ posturing is typical Hollywood ego-stroking.
Is AMC so principled that it would walk away from a studio that has rights to some of the biggest non-Disney blockbuster franchises of all time? No more Jurassic Park, James Bond or Fast & Furious, all of which have films slated for the next year? Nah. This is a bluff. AMC needs Universal more than Universal needs AMC.
However, VOD may be lucrative for Universal now, but it’s not a great business model for everyone. And it’s not as profitable as ticket sales at the box office would be; after all, a family of four could rent Trolls World Tour, watch it multiple times in 48 hours and still pay only $20. That’s not sustainable in the long run. And if they’re looking for ways to figure out how to be sustainable now, AMC might look to some theaters in Central Texas.
Crawl Before We Walk
Amid all of this, some theaters are making it work, and they’re showing Trolls in an actual theater. Central Texas theater chains Santikos and Evo opened back up last weekend following Gov. Greg Abbott’s order that certain businesses can reopen as long as they follow social distancing guidelines. Drive-in theaters have also been making a bit of a comeback, since they don’t require leaving the car to watch a movie.
San Antonio-based Santikos Entertainment CEO Tim Handren said in a recorded message to customers that formerly furloughed employees will practice social distancing and wear masks at the theater, and said this decision was made in tandem with what employees wanted.
“We think that psychologically, we just need to get out of our houses and go to a place where we can enjoy a great movie, and enjoy some great popcorn and just go someplace with our family and escape this reality that this COVID-19 pandemic has created within our lives,” Handren said.
And at Evo Entertainment in Kyle, where Book & Film Globe editor Neal Pollack went last weekend, temperature checks are standard, tickets are cheap and the seats are distant.
In the past 39 days the theater chain has been closed, it’s managed to retain its entire staff.
“It’s a crawl before we walk exercise,” Evo Entertainment CEO Mitch Roberts told Austin TV station KXAN. “We want to know that we can execute well on all fronts of that plan before we roll it out to anywhere else.” The theater chain only opened up one other theater, in Schertz, as a part of phase one of its reopening plan.
Meanwhile, AMC has said it is still eyeing a potential July reopening date to coincide with Christopher Nolan’s new film, Tenet. We’ll see. As much as I’d love to be back in a theater, I would stay home if I could watch the film from my couch.
And that’s the $100 million consumer hurdle AMC has to deal with.