Jeff Logan, owner of Logan Luxury Theatres, has been struggling to make ends meet for most of 2020. After being closed for months due to coronavirus, he recently reopened the three movie theaters he runs in South Dakota, screening classics like Indiana Jones and Star Wars. But ticket sales are slow and Logan’s cinemas are not making enough to cover their rent.
Now, he’s concerned a new deal struck between Universal Pictures and AMC Theaters could deliver a gut punch. Under their new pact, the two companies have agreed to shorten the amount of time that new movies from Universal play exclusively in AMC’s cinemas before customers can rent them at home. Logan, like many mom-and-pop theater owners across the country, is anxious that the new distribution model the powerful Hollywood studio and the world’s biggest exhibition chain have forged could upend their businesses and eat into their bottom lines.
“This is a real kick in the shorts to independent theaters,” Logan says.
Exhibitors point out that much remains to be seen in how the deal shakes out between Universal, AMC and the rest of the movie business. Though numerous movie theater owners opted not to talk to Variety for fear of being blacklisted by major studios, others were remarkably candid in their views that Universal is making a mistake and that AMC and its leader Adam Aron have betrayed the exhibition industry.
“We’re all resilient and will try to survive, but it’s difficult,” Logan says. “If your local theater in a small town or in New York City closes, blame Adam Aron. The responsibility is going to fall squarely on his shoulders.”
Even though they have a lower footprint across America, independently owned cinemas are vital to the lifeblood of moviegoing, especially in small towns. And while AMC does operate a bulk of the theaters in the country — with 661 locations in the United States — only 8,200 of the 40,000 screens in the U.S. belong to AMC. That alone wouldn’t rack up enough ticket sales to justify a $200 million-budgeted movie, in the event that other cinema chains opt not to play Universal titles in protest.
Independent Cinema Alliance, an organization that advocates on behalf of locally owned theaters, expressed concerns that the decision was made hastily during the pandemic. Movie theaters and studios have been hugely affected by prolonged cinema closures, prompting both sides to make bold moves to keep revenues flowing in the meantime.
“As with any crisis, industry-changing negotiations during the coronavirus pandemic should be about long-term goals that truly preserve and enhance the theatrical experience and not be driven by panicked decisions in search of immediate, short-term security,” the organization said in a statement to Variety.
Still, the group isn’t resigned to the idea that their business is doomed. They are optimistic that other Hollywood studios see the value in keeping movies on the big screen and won’t follow suit. And the agreement between Universal and AMC doesn’t mandate that every new release from the studio will move to premium video-on-demand in under a month; it means they have the option should a title perform below expectations. Blockbusters such as “Jurassic World” and sleeper hits like “Get Out” aren’t expected to fall under the expedited timeframe. (“Cats,” however, might be a different story).
“The ICA will continue to collaborate with its members and studio partners to help the industry navigate the challenges caused by the world’s pandemic crisis,” ICA wrote. “We believe these efforts will help set the stage for a recovery that will create a brighter future for all stakeholders.”
Privately, some theater owners have conceded that dramatic change is sometimes necessary to push an aging industry forward. Even before the pandemic forced cinemas to shutter, skeptics claimed that the movie business was running on fumes. They saw a future dominated by Netflix, Disney Plus and other streaming services. That’s not entirely true (the domestic box office generated over $11 billion in 2019), but the recent gap between hits and misses at the box office demonstrates that audiences think some movies don’t justify the cost of seeing them in a theater. And its often independent exhibitors who feel these downward trends most acutely.
The debate around theatrical windows has been brewing for some time now. Cinema owners acknowledged they would be naive to think it would never waiver, but many were surprised by how drastically the theatrical window shrunk. Traditionally, movies stay in theaters for up to 90 days before studios are allowed to put any given title on premium video-on-demand platforms. Under Universal’s new arrangement with AMC, they can drop titles on demand 17 days after they premiere on the big screen.
That can create complications for local chains because they don’t always have room to offer as many fresh offerings as larger venues. Take summer, often the busiest time of year for moviegoing when numerous blockbusters are released every weekend. At AMC’s locations, there are plenty of auditoriums to showcase as many movies as they want. But locally owned operations have fewer screens and can’t swap out movies as freely. That could become problematic for them if a movie is put on-demand before they can play it for the first time.
“One of my two theaters is a second-run, and I have no clue how this is going to affect me,” said Mark O’Meara, who operates two movie theaters in Fairfax, Va. “We always have to wait weeks anyway to get a movie. I might have to go to first-run.”
Does the new deal mean every theater other than AMC will be less willing to play Universal movies, even when they have space? It’s possible. But more likely than not, many will recognize it’ll be hard to pass up new installments from big franchises like “Fast & Furious” and “Despicable Me” — the kinds of tentpoles that draw major crowds and generate huge popcorn sales.
“I may have to play some Universal movies, I’ve got to pay the bills too,” Logan said. “But I’m going to try to avoid them if I can. The business decision isn’t a matter of principle of me taking a stand. It’s not as profitable to go with that picture if it’s off the break.”
Christopher Escobar, owner of Plaza Theatre in Atlanta, predicts AMC and Universal’s pact will spark “a big reckoning” and could have the potential to actually improve the moviegoing experience.
“We need a revolution,” he said.
Escobar isn’t worried that some movies might be available on-demand sooner. In fact, he already frequently plays titles after they’re put on digital rental services. He also routinely brings classics back to the big screen, and has even hosted TV events in his theaters. Escobar and other exhibitors, including AMC and major rivals, are banking on the likelihood that the new deal will give studios the freedom to put more movies on the big screen with less of a risk, in turn decreasing the number of films that are sent straight to streaming services.
“I’m already operating differently,” Escobar says. “I do everything I can as an owner to make going to the movies feel like an occasion. [Major theater chains] have become Applebee’s and Olive Garden. Those things are fine, but if that’s the only thing you have as an option, no wonder people are going to the movies less.”
Part of the reason that independent theaters reacted so strongly to the AMC and Universal deal is that it comes as they are worried about keeping the lights on. The pandemic has been an existential threat to their business, and many are just hoping to be able to stay open through the end of the year.
“The timing was disappointing from my standpoint,” O’Meara said. “We’re worried about so many other things, like day-to-day survival. We weren’t thinking about programming until this happened. It was back to reality.”