Film News

The Last 24 Hours in Crazy Hollywood News, Explained

Well, that escalated quickly.

Yesterday morning, The Wall Street Journal ran the following piece:

In it, NBCUniversal head Jeff Shell is quoted as saying: “The results for Trolls World Tour have exceeded our expectations and demonstrated the viability of PVOD. As soon as theaters reopen, we expect to release movies on both formats.”

By yesterday evening, the National Association of Theater Owners (NATO) yelled “Et tu, Brute?” at Shell, AMC announced in an open letter that it will henceforth refuse to exhibit any Universal movies, and then Shell responded, clarifying that Universal still believes in the theatrical experience but that NATO and AMC’s response had the stink of a coordinated attack meant to confuse the situation and make an example out of him.

Oh, also, unrelated to all of that – but actually kind of related – the Academy announced streaming movies like Trolls World Tour that were originally intended to have a theatrical release will be Oscar-eligible for one year only.

Total. Insanity.

Except kind of not.

About the Oscars…

Still not eligible

The Academy’s traditionalist, movie=plays in movie theater rules were obviously not built for a year like 2020. It’s worth remembering the Academy didn’t even exist during the 1918 Spanish Flu pandemic, the last time the country shuttered nearly all of its movie theaters. Like just about every other organization right now, they’re simply doing their best to adjust while still clinging to some hope for normalcy. For example, when pressed by THR as to whether a streaming series like ESPN’s acclaimed Michael Jordan documentary The Last Dance should be Oscar-eligible the Academy President David Rubin & CEO Dawn Hudson suck to their “only something originally meant to be played in a theater” guns.

I guess that leaves out HBO’s Hugh Jackman drama Bad Education and Netflix’s Chris Hemsworth actioner Extraction, both super popular streaming options at the moment from high profile people, but neither originally meant for theaters. (Technically, Bad Education went to a film festival with the intention of becoming a traditional, theater-released Oscar contender, and then HBO shocked everyone by buying it for $20 million.) But, hey, Paramount’s Kumail Nanjiani-Issa Rae comedy The Lovebirds – originally meant to hit theaters this month but now sold to Netflix and due May 22 – is totally eligible now.

Still, at least the Academy – with its ever-waning cultural relevance – is kind of trying to be reasonable in the face of something that completely lacks precedent. AMC CEO Adam Aron, on the other hand, is singularly obsessed with a different kind of precedent, namely what Universal’s Trolls World Tour might mean for the future of the film business.

About AMC’s “letter”…

Here’s what AMC’s Adam Aron had to say to Universal in his publicly-released letter:

“It is disappointing to us, but 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.”

“This policy affects any and all Universal movies per se, goes into effect today and as our theaters reopen, and is not some hollow or ill-considered threat. Incidentally, this policy is not aimed solely at Universal out of pique or to be punitive in any way, it also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us, so that they as distributor and we as exhibitor both benefit and neither are hurt from such changes. Currently, with the press comment today, Universal is the only studio contemplating a wholesale change to the status quo. Hence, this immediate communication in response.”

Generally speaking, when you feel to need to clarify this “is not some hollow or ill-considered threat” you’re probably in the middle of making a hollow or ill-considered threat. I’m sorry – I just struggle to picture people walking into an AMC a year from now and asking for a ticket to F9 only to be told, “Sorry, we’re not showing that movie because Universal’s boss pissed off our CEO. You can try the Regal across town, though.” But what about Disney, you might ask the beleaguered ticket clerk? I can still buy a ticket to their movies even though they put Artemis Fowl on Disney+? “Oh, yeah. We’re not about to poke that bear.”

Sure, AMC’s official stance is Universal is more deserving of retribution than the others because it has thus far plowed forward without even consulting the theaters, but the proposition still teeters on the absurd. However, if the paradigm is to shift the theaters were always going to fight back and attempt to draw some kind of line in the sand, and here is that line: you can’t just nonchalantly plan for a future of putting major movies in both theaters and on VOD without asking us.

Trolls World Tour – a blah kids movie about trolls fighting over what kind of music to listen to – is now one of film history’s most improbable game-changers. It’s the film that will be marked down in the history books as the first to break the theatrical window, kicking the door open for Disney and WB to do the same with Artemis Fowl and Scoob (hitting VOD May 15th) respectively. Less remembered will be Universal’s decision to shift the Judd Apatow/Peter Davidson comedy The King of Staten Island from theaters and over to streaming, but it’s just as noteworthy because unlike Trolls, Artemis, or Scoob we’re not talking about a family movie this time. Other genres can do this too.

NATO and AMC hate every part of that. The nerves are already pretty raw at the moment. The Cinemax theater chain in Florida just filed for bankruptcy. AMC narrowly avoided the same fate by raising $500 billion in a private debt offering – to go along with the company’s pre-existing $4.85 billion long term debt – and laying off or furloughing thousands of workers. Even Aaron, the author of yesterday’s “fuck you, Universal” letter has been furloughed. Some states in the US are allowing theaters to re-open, but AMC’s public position is the ongoing safety concerns combined with lack of new product means it will not open its doors again until probably early July in advance of Christopher Nolan’s Tenet (7/17) and Disney’s Mulan (7/24), not that it’s any guarantee the pandemic won’t eventually force those films to later in the year.

So, the theater owners are in a fighting mood and were particularly displeased last week when WarnerMedia chief Jeff Stankey told investors:

“We’re rethinking our theatrical model and looking for ways to accelerate efforts that are consistent with the rapid changes in consumer behavior from the pandemic. The theatrical business is obviously a stressed business right now. When theaters are closed, it’s hard to generate revenue. And don’t expect that that’s going to be a snap-back”

The situation, however, was quickly de-escalated later that same day when Stankey and Warner Bros. studio Ann Charnoff re-affirmed the company’s commitment to the theatrical experience. Time will tell if Shell’s similar statement about Universal’s belief in the traditional theatrical model will smooth things over.

I’m guessing not, and here’s why: Universal is scaring the living daylights out of the theater owners because it’s actually sharing its receipts. That Wall Street Journal article – the one that kicked off this whole ordeal – claims Trolls World Tour has generated nearly $100 million in rental revenues in the U.S. and Canada in just three weeks and is now projected to gross more than the first Trolls did at the domestic box office. Better yet, studios take home 80% of VOD profits as opposed to sometimes just 50% of theatrical meaning Universal stands to make more domestically from Trolls World Tour than the first film.

(Granted, those figures come from WSJ’s insider sources and not officially from Universal, but for the theaters that might as well be an official press release.)

Will be interesting to see what kind of figures Disney releases – if any – when Artemis Fowl hits Disney+ May 29.

All this AMC/NATO bluster about Universal not consulting with the theaters beforehand is the original sin, but the true threat is announcing to the world that a blockbuster kids movie like Trolls World Tour might do just fine financially without theaters. “You’re banned!” is AMC’s panicked way to shout at the other studios “And don’t any of you other bastards get any crazy ideas. We’re all in this together – remember!”

“Actually, Netflix just offered us crazy stupid money for…” pipes up one studio executive.

“IN. THIS. TOGETHER!” shouts down AMC.

The more cogent argument might be to point out that Universal earning beacoup bucks from Trolls World Tour’s VOD release is not quite as impressive as it seems. Film profitability is tied to a long-standing windowing system in which a movie is sold to different stakeholders at pre-agreed intervals. A direct-to-VOD release, however, condenses the theatrical and home video windows into one. Whatever you make on VOD sales doesn’t account for everything you’re losing from sacrificing one of your most lucrative windows. It’s a sacrifice you knowingly make in search of short-term cash, and as Aron points out in his letter Trolls World Tour benefited from the novelty of going straight into our living rooms, a novelty that might not be so easily replicated.

But I suppose “You’re banned!” plays better in print.

We’re through the looking glass here, people, but to ban all films from one of the world’s top 3 distributors is a maximalist position that is just absurd on its face, particularly when you’re not the only game in town. Then again, AMC was this close to filing bankruptcy two weeks ago and has clearly reached a survivalist mindnest. Like Glenn Close in Fatal Attraction, the theaters want the studios to know: “I will not be ignored!”

It’s a tough stance to take in the middle of a pandemic with no foreseeable endpoint and a high likelihood that the traditional moviegoing experience won’t be “back to normal” for at least a year, if not longer.

Still, look what you did, Trolls World Tour. Happy?

Awwww, Poppy’s always happy. So adorable!

Worth pointing out: Tenet, Wonder Woman 1984, Mulan, In the Heights, The Batman, Malignant, The Many Saints of Newark, Ghostbusters Afterlife, Morbious, Peter Rabbit 2, Uncharted, Eternals, Raya and the Last Dragon, Jungle Cruise, Infinite, The Tomorrow War, King Richard, Escape Room 2, The Man From Toronto, SpongeBob: Sponge on the Run, A Quiet Place II, The French Dispatch, Black Widow, Soul, No Time to Die, Free Guy, The Hitman’s Wife’s Bodyguard, Bill & Ted Face the Music, The One and Only Ivan, The Empty Man, and Universal’s F9, Minions: Rise of Gru, BIOS, Halloween Kills, Candyman, and News of the World all remain committed to a theatrical release in 2020-2021.

UPDATE: Regal theater owner Cineworld has now joined the debate and is backing AMC’s play: “Our policy with regard to the theatrical window is clear, well known in the industry and is part of our commercial deal with our movie suppliers… We make it clear again that we will not be showing movies that fail to respect the windows.”

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