Covid-19 Strains Ties Between Movie Theaters and Studios

It would be a cliche at this point to say that 2020 has been a year of uncertainties, what should have remained constant was Disney and Warner Brothers’ incessant back-and-forth to establish box office dominance. Even in the middle of a disruptive pandemic, Hollywood has not disappointed thus far. Have the studios’ struggle to find an audience in every market (theater, ancillary, digital, streaming) proven successful for either? Is there a clear winner, or has it proven to be a loss for both? The answer, unfortunately, veers toward the latter. 

Just as it has been the case for virtually every industry, Covid-19 has forced Hollywood’s hand, and movie theaters were a malleable proxy. What feels like years ago, Universal announced that it would be releasing its sequel to Dreamworks’ Trolls a month later than its expected March release date. 

Universal Studios effectively opened the flood gates. Like it or not, Dreamworks’ Trolls: World Tour made Hollywood history by being the first major tentpole blockbuster to be released first through Premium Video On Demand (PVOD) for a $19.99 48-hour rental period. To many people’s surprise, Trolls: World Tour grossed nearly $100 million within its first 19 days. What followed proved to be less sanguine, as Universal Studios then announced that it planned on shortening the theatrical-home video window of their movies, essentially stating that it would release their films on both theatrical and digital formats on the same day. Many theater owners took this as an act of aggression. AMC Theater’s CEO, Adama Aaron, soon stated in a letter that, “…effective immediately, AMC will no longer play any Universal movies in any of our theaters in the United States, Europe, or the Middle East.” Despite the initial shock, it was clear that both of the studios’ statements were tactical threats rather than any official business decision. By the end of July, AMC and Universal struck a deal to resolve their feud, allowing Universal to release its films on PVOD three weeks after a theatrical release, with AMC getting a cut of the money. 

Where were Disney and Warner Bros. when the first shots were fired? They were both periodically reshuffling release dates throughout the spring and summer, as the United States’ Covid-19 Crisis had remained unchanged. While movie theaters were in an easier position to negotiate with Universal Studios, the power dynamic between Warner Brothers, Disney, and movie theaters is anything but balanced. At this point, Disney has no plans to release any movies theatrically, having pushed back their entire slate months or even a year. For instance, Marvel Studio’s Black Widow film was set to release in May 2020. Now, after having been moved several times, it’s expected release date is May 2021. While there has been much speculation as to whether Disney will put Black Widow on streaming, it is clear that their initial “Premium Access” endeavour with Mulan fell short. Although the film was rife with controversy, the price of $29.99 may not have done Disney any favors, as the price fell to $19.99 in the following weeks as it premiered on other digital platforms. 

Warner Bros’ approach, while less pragmatic than Disney’s, was more appealing to movie theaters. Christopher Nolan insisted that his new feature, Tenet, premiered in theaters. While nobody has a doubt in their mind that Tenet would be better on the big-screen, it is 2020, afterall. The studio took the opposite approach as Disney and yielded the same results, as Tenet has only grossed around $54 million domestically to date. It is worth mentioning that the film has enjoyed modest success overseas as other countries have Covid-19 under control. Now Tenet is on track to gross $350 million worldwide. Warner Bros’ has indicated that once it reaches this number, they will release Tenet on Blu-Ray and Digital.

It is clear that Disney, Universal, and Warner Bros. all have different approaches in the time of covid. Movie theaters, unfortunately, bear the brunt of the consequences. Will 2020 finally be the straw that breaks the camel’s back? Is there going to be an irreparable rift between movie studios and theater chains for the foreseeable future? Only time will tell.




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