Released on-demand as a result of COVID-19, "Trolls: World Tour" has generated more revenue for Universal in its first three weeks than the first film did over five months in theaters.
Is it a one-off fluke due to an extraordinary time in American history, or is it a sign of things to come? Theaters have long been dreading the encroachment of streaming on their revenue, but one kids film may be paving the way for a monumental shift in how consumers receive their film content.
Not only as "Trolls: World Tour" proven to be a huge VOD success -- after shifting its distribution model directly to customers amid the ongoing coronavirus pandemic -- it's actually made considerably more money in a much shorter span than the original "Trolls" film did in theaters.
In fact, in just three weeks according to The Wall Street Journal, the sequel has reportedly earned $95 million and generated more revenue for Universal than the original film did over five months in theaters. As a result of this success, Universal Studios has shifted their planned theatrical release of the Pete Davidson starrer "The King of Staten Island" from a June 19 theatrical release to home VOD release on June 12 and that may just be the start.
The biggest difference here is that a studio stands to make on average 50 percent of the ticket sales for a theatrically released film, while VOD nets them a cool 80 percent of the revenue stream. That makes it far easier to make bank with a direct release as opposed to the traditional theatrical model, making it look appealing even beyond this pandemic.
In touting the success of the animated sequel, NBCUniversal CEO Jeff Shell said that "as soon as theaters reopen, we expect to release movies on both formats." Needless to say, theater owners are not at all happy about that idea, just as they were outraged when Universal opted to go ahead with the release of "Trolls: World Tour" rather than delay the film as so many other studios have done.
AMC Theates went so far as to proclaim that they are henceforth banning all Universal films from their theaters. The world's largest theater chain, with more than 660 screens in the United States alone, made this declaration in response to Shell's comments in a letter to Universal Studios Chairman Donna Langley.
"Universal stated it only pursued a direct-to-home entertainment release for 'Trolls World Tour' because theaters were closed and Universal was committed to a lucrative toy licensing deal," wrote AMC CEO Adam Aron. "We had our doubts that this was wholly Universal's motivations, as it has been a longstanding desire by Universal to go to the home day and date."
Saying the shift to day-and-date VOD releases offers nothing but a downside for AMC and theater owners, Aron called the idea "categorically unacceptable" before making the clear declaration that "going forward, AMC will not license any Universal movies in any of our 1,000 theatres globally on these terms."
Stating that this is not a threat, but rather a firm policy. And it won't necessarily stop with AMC. "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," Aron continued.
The severity of his comment appear to have made Universal blink, as a spokesperson responded via Variety, defending their decision to offer "Trolls: World Tour" directly to families during the coronavirus pandemic while emphasizing that they "absolutely believe in the theatrical experience and have made no statement to the contrary."
They went on to say that they "look forward to having additional private conversations with our exhibition partners," while expressing disappointment in AMC's severe statements, which were also echoed in a separate statement by the National Association of Theatre Owners. In other words, it seems like Shell made a rather slapdash comment with no real context that scared both AMC and NATO and everyone decided to air this in public rather than really sit down and figure out what everyone is thinking.
Possibly muddying the waters ahead of those talks is the coincidentally awkward announcement from the Academy of Motion Picture Arts and Sciences revealing some eligibility changes for the upcoming Oscars ceremony, including a shift that will allow for streaming movies to be under consideration "for this awards year only."
While it is a one-year consideration by the Academy in response to the pandemic-induced shutdown of theaters nationwide, it is nevertheless a temporary boon for studios that have bucked the traditional theatrical model by going on-demand. The Academy insists that they will return to their mandate that a film screen in a Los Angeles theater for at least one week once theaters reopen.
"The Academy firmly believes there is no greater way to experience the magic of movies than to see them in a theater," Academy President David Rubin and CEO Dawn Hudson said, as reported by ET. "Our commitment to that is unchanged and unwavering."
The scheduled Feb. 28, 2021 date for the 93rd Oscars has also not changed, meaning there are likely to be fewer films in contention overall as so many have been postponed or had their production shut down prematurely.
For films on hold, will this eligibility shift offer further incentive to forego a theatrical release as some studios have done (Disney's "Artemis Fowl" and Warner Bros.' "Scoob!" as upcoming examples)? Could we see more studios change their strategy to VOD now that they know that Oscar contention is still on the table?
And if they do, how will AMC an other theater owners respond? And perhaps most importantly, will any of this matter once the lockdown lifts and everyone is trying to settle back into what life was like before COVID-19? As they say, only time will tell.