The COVID-19 pandemic has shaken the film industry to its core, forcing rapid adaptations from both movie theaters and studios alike. One major change implemented by some studios is releasing movies immediately on streaming platforms, rather than adhering to the standard “theater-first” distribution model.
This new digital-first strategy has sparked a heated public clash between AMC Theatres and Universal Pictures, with AMC banning all Universal films from its cinemas in retaliation. As an avid movie buff, I’ll break down exactly what’s fueling this high-stakes feud and what it could mean for the future of movie theaters.
Streaming vs. Theatrical – Tensions Rise
On-demand home entertainment and movie theaters have co-existed for years, but often uneasily. Streaming platforms have slowly chipped away at the supremacy of the big screen. Data shows theater attendance declining over the past decade.
In 2019 alone, ticket sales in North America dropped by nearly 6% – that’s over 80 million fewer tickets sold compared to the previous year. Simultaneously, streaming services like Netflix have exploded, amassing over 60 million subscribers in the U.S.
While blockbusters still generate major box office revenues, the convenience and savings of streaming have cut deeply into profits. This tension escalated after Universal Pictures made an unprecedented move to release Trolls World Tour directly on premium video-on-demand (PVOD), circumventing theaters entirely.
With theaters closed, Trolls World Tour hauled in nearly $100 million in rentals – numbers that Universal CEO Jeff Shell called “encouraging and impressive”. He doubled down by affirming future Universal releases would launch in theaters and on-demand simultaneously.
That strategy crosses a line for cinema chains who rely on theatrical exclusivity, especially for major releases destined to be box office hits.
Drawing the Battle Lines
Shell’s announcement provoked a forceful response from AMC Theatres, the largest cinema chain in the United States.
AMC CEO Adam Aron issued a letter banning all upcoming Universal films from their theaters worldwide. He stated: “This radical change…leaves us no choice.” AMC has refused to carry Universal releases before, including when the studio sought to shorten the theatrical window.
Make no mistake, this is mutually assured destruction. AMC loses out on hugely popular Universal franchises that normally dominate screens, like Fast & Furious, Jurassic World, and Despicable Me.
Meanwhile, sidelining AMC’s 10,000+ screens damages Universal’s theatrical distribution and profits. But AMC must take a stand before consumer habits permanently shift towards home streaming over theaters.
Is This the End of Theaters?
Streaming’s rise and theater declines mean the AMC vs. Universal feud may determine if movie theaters have a future at all.
True, Trolls World Tour was a pandemic exception. But if studios consistently re-route blockbusters to homes, over time, consumer incentive to visit theaters evaporates. Even as restrictions lift, home entertainment keeps improving.
While hardcore cinephiles will always choose a theater, most general audiences go for convenience. If new movies are always available to stream at home, why bother with pricey theater trips?
This could start a vicious cycle where lower attendance dissuades studios from theater releases, further reducing ticket sales until the model collapses entirely. AMC is essentially trying to stop the theatrical business from bleeding out completely.
But in the near-term, theaters lack leverage while still closed indefinitely. AMC’s ultimatum may fail as Universal forges ahead with streaming plans regardless.
By the time AMC reopens, consumer habits may permanently favor streaming first. The days of movie theaters dominating film distribution appear numbered.
What Comes Next for Theaters?
AMC and other chains will need to seriously rethink their business models to adapt. Simply reopening may not attract audiences back en masse anymore.
Theaters must enhance their value proposition compared to our living rooms. This could mean investing in premium large format screens and amenities like luxury seating, enhanced food menus, alcohol, reserved seating, and concierge-style service.
Incorporating virtual reality, 4D motion seats, dynamic pricing for blockbusters, and subscriptions plans could help entice people too. But significant industry downsizing seems inevitable with at-home streaming eating up market share.
Ultimately, theaters will likely play a reduced role in film distribution going forward. But they can still survive by highlighting an unmatched communal experience that streaming can’t replicate.
If they can successfully reframe their place in the entertainment landscape, movie theaters may just endure – even if their glory days have passed.
The AMC vs. Universal battle reveals a reckoning taking place in the film world. As home entertainment gets more immersive than ever, streaming now challenges the supremacy of theaters for movie releases.
AMC is standing its ground to protect its long-term viability. But consumer preferences are shifting irreversibly towards streaming for the unbeatable convenience.
It’s an existential crisis that theaters must adapt to or else concede defeat. Chains need to urgently redefine their value proposition, or else get left behind as streaming becomes the dominant film distribution model.
What do you think? Can theaters bring audiences back post-pandemic? Or are their days as the epicenter of movie releases ending? I’d love to hear your perspectives in the comments!