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AMC Strikes Major Deal With Universal Over Movie Release Schedule

By Rich Duprey - Jul 29, 2020 at 9:01AM

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It's an industry-defining change that could forever alter how theater owners and studios operate.

AMC Entertainment (AMC -6.58%) and Comcast's (CMCSA 0.18%) Universal Pictures may have just forever changed the movie industry. On Tuesday, they announced an agreement that narrows the window of exclusivity on showing films in theaters and allows the partners to share the profits when movies are distributed to video-on-demand (VOD) platforms.

The two had been at loggerheads following Universal's decision earlier this year to bypass theaters and take its Trolls World Tour movie directly to VOD. Universal scored a major hit, leading AMC to declare it would never show another Universal movie in its theaters. But the agreement means we will likely see other studios and theater operators soon sign similar deals.

Moviegoers cheering

Image source: Getty Images.

On the big and small screen

It's very rare for a movie to appear on streaming platforms sooner than the traditional 90 days after its theatrical release, though occasionally movies are released earlier, even simultaneously in theaters and on demand. But those are exceptions that prove the rule.

Yet it was inevitable theater exclusivity would narrow. About 15 years ago it was as long as 135 days, and has been shrinking since. The coronavirus pandemic changed the industry dynamic, not least because AMC is struggling to survive until its theaters can reopen next month.

The deal between AMC and Universal says Universal and Focus Feature films must play in theaters for at least three weekends, or 17 days, before they can be released to VOD. AMC CEO Adam Aron noted most of a movie's revenue is generated during that period, but also pointed out the theater operator will now "share in these new revenue streams that will come to the movie ecosystem from premium video on demand."

The two are also negotiating over international distribution deals, a move likely to push other studios and operators to follow suit. The full terms of the agreement were not released.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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Stocks Mentioned

AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$18.02 (-6.58%) $-1.27
Comcast Corporation Stock Quote
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CMCSA
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