AMC says it will boycott Universal movies as ‘Trolls’ battle heats up

AMC Theatres, the largest theater chain, said Tuesday it would boycott Universal Pictures movies at its cinemas after the studio suggested that it would pursue online releases for more of its films.

“Effectively immediately AMC will no longer play any Universal movies in any of our theatres in the United States, Europe or the Middle East,” AMC Chief Executive Adam Aron said in a statement addressed to Universal Pictures Chair Donna Langley. “This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat.”

AMC’s move follows comments by NBCUniversal Chief Executive Jeff Shell about the release of “Trolls World Tour,” the sequel to 2016’s computer-animated musical “Trolls.” The new DreamWorks Animation movie, which was originally planned for a wide theatrical run before the coronavirus outbreak, generated nearly $100 million in online sales in three weeks.

In a statement to the Wall Street Journal, which first reported on the “Trolls” online sales, NBCUniversal Chief Executive Jeff Shell said the “Trolls World Tour” sales “demonstrated the viability” of premium video on demand, adding that “[a]s soon as theaters reopen, we expect to release movies on both formats.”

Universal released the DreamWorks Animation feature “Trolls World Tour” to strong sales April 10, when it became available to rent for $20. The studio cheered record-breaking results.

Theater owners, meanwhile, decried the Comcast-owned studio’s decision to bypass the traditional theatrical window, in which cinemas get exclusive access to new movies for months before they appear online. For a major Hollywood movie, the theatrical window averages 90 days.

Few, if any, Hollywood executives think the solid digital sales of “Trolls World Tour” mean that the future of movies is solely premieres online, rather than in bricks-and-mortar cinemas. But the film has opened up a vigorous debate about how movies will be released once multiplexes reopen.

Talk of “both formats” by Shell clearly set off alarm bells for theaters, which are under financial distress due to closures. Cinemas have vociferously pushed back on the notion that the “Trolls” release strategy will become a larger trend once cinemas reopen.

Leawood, Kan.-based AMC, which operates 1,000 theaters worldwide, recently raised $500 million in debt to withstand the closures.

“It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice,” Aron said.

The National Assn. of Theatre Owners, the Washington, D.C.-based lobbying group that represents theater circuits, also pushed back hard on the notion that the “Trolls” experiment portends a future in which more movies go to the home sooner.

The organization, which covers 35,000 screens in the U.S., said Tuesday that brisk sales of “Trolls World Tour” reflected the fact that people are isolated in their homes with few fresh entertainment options, rather than a long-term wish to forgo theaters.

“Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases,” said the organization’s president and chief executive, John Fithian.

Universal Pictures defended its direct-to-video strategy as “the right move,” and accused AMC and the theater lobby of trying to misrepresent its intentions.

“We absolutely believe in the theatrical experience and have made no statement to the contrary,” a studio spokesman said in an emailed statement. “[G]oing forward, we expect to release future films directly to theatres, as well as on PVOD when that distribution outlet makes sense.”

“We look forward to having additional private conversations with our exhibition partners but are disappointed by this seemingly coordinated attempt from AMC and NATO to confuse our position and our actions,” the spokesman added.

It’s hard to know how many people would have gone to theaters to see “Trolls World Tour” had the nation’s movie houses not closed in mid-March due to government restrictions to slow the spread of the novel coronavirus.

But amid the COVID-19 pandemic, parents flocked to online retailers such as Apple and Amazon to entertain their kids with a new movie for a couple hours. Families described watching the film multiple times during the 48-hour rental window to get their money’s worth.

All that viewing added up.

“Trolls World Tour” generated about $95 million in online sales in three weeks, according to a person familiar with the matter. To compare, the 2016 “Trolls” grossed $154 million in domestic ticket sales, and $193 million internationally, for a global total of $347 million. Movie theaters typically collect roughly 50% of the box office gross, whereas online retailers get 20%, meaning studios keep more of the digital revenue. Thus, “Trolls World Tour” has generated $77 million in revenue for the studio so far.

Following Universal’s controversial lead, multiple studios have pursued unconventional release strategies. Warner Bros. is releasing “Scoob” online in May, while Disney will put “Artemis Fowl” on Disney+ in June. Paramount sold “The Lovebirds” to Netflix, while STX unloaded “My Spy” to Amazon.

Whether that will become the norm remains to be seen, but it is concerning for theater owners. Universal abandoned an early video on-demand plan for the Eddie Murphy-Ben Stiller movie “Tower Heist” in 2011 after major theater chains threatened to boycott.

“Theaters provide a beloved immersive, shared experience that cannot be replicated — an experience that many of the VOD viewers of this film would have participated in had the world not been sequestered at home, desperate for something new to watch with their families,” Fithian said.