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Trolls 2 Picture Of Guitar Playing

It’s been a contentious few days between theater chains and Hollywood studios. Yesterday, both AMC Theaters and the National Association Of Theater Owners released statements pointing the finger at Universal over the studio’s decision to take Trolls World Tour directly to consumers via OnDemand. Today, it was Cineworld, the parent company of Regal, who released its own aggressive statement, vowing not to show any movies that don’t respect the theatrical window.

In a strongly-worded and at times even aggressive statement, Regal condemned Universal for lacking good faith business practices, transparency and partnership. It also vowed not to show any movies that don’t maintain the current theatrical window, or agreed upon buffer period between when a film is shown in theaters and when it is made available for consumers to rent or purchase at home. Here’s a portion of the statement, courtesy of Deadline

Universal unilaterally chose to break our understanding and did so at the height of the Covid-19 crisis when our business is closed, more than 35,000 employees are at home and when we do not yet have a clear date for the reopening of our cinemas… 

Universal’s move is completely inappropriate and certainly has nothing to do with good faith business practice, partnership and transparency… 

Today we make it clear again that we will not be showing movies that fail to respect the windows as it does not make any economic sense for us.

So, let’s back up a little bit and explain what’s going on for those of you out of the loop. Basically, when a movie is released into theaters, the chains themselves and the studios each take a percentage of the profit during the theatrical window. Then, after the theatrical window is over, the studio is free to sell the rights to show the movie to cable networks, streaming services or whoever else. It can also offer copies of the movie straight to consumers to rent or buy.

This is the reason why The Irishman and other Netflix releases typically only screen in small, independent theaters. Netflix has historically been unwilling to hold the movies back from its streaming services for 90 days, and the theaters, in turn, won’t show the films without that agreement. Well, after theaters were forced to close due to safety concerns in March, movies currently in theaters mostly broke the theatrical window and released directly to OnDemand services.

For the most part, that decision was fine with the theaters since they weren’t open and there wasn’t a ton of options, but when Universal decided to release Trolls World Tour, an upcoming movie that hadn’t yet been released, directly to OnDemand, the theater chains publicly condemned the decision. The anger seemed to be dying down, but earlier this week, Universal’s CEO gave an interview to the Wall Street Journal discussing the success of Trolls 2’s OnDemand run, and in it, he said he expects when theaters reopen, they’ll start releasing movies “on both formats.”

In response, AMC vowed not to show Universal movies, NATO released its own statement condemning the decision. Universal fired back and accused NATO and AMC of coordinating their statements and misrepresenting their viewpoint, which is actually to only release some movies OnDemand. Now not surprisingly, Regal is taking the side of AMC and NATO, though it’s important to note there is a difference in the statements. AMC has promised not to show any upcoming Universal movies. Regal is promising not to show any movies that violate the theatrical window. So, it seems like, in theory, if Universal agrees to a theatrical window for certain movies, it would show them.

This is a complicated issue, but at the end of the day, the basic viewpoints here are pretty clear. The theater chains want an exclusive window to show these movies. That window inspires more people to come to the theater so they can experience the movie quickly and at the same time as everyone else. Universal wants more control over its own content and wants the ability to make movies immediately available in a variety of different ways as soon as possible.

Expect this situation to continue evolving over the next few days as potentially more theater chains and more studios get involved.