As movie theaters begin to close, Universal moves some films to on-demand

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A Dr. Seuss The Grinch balloon appears in the 84th Annual Hollywood Christmas Parade in the Hollywood section of Los Angeles, California, November 29, 2015. REUTERS/David McNew

Universal Pictures took the boldest Hollywood step in response to the coronavirus pandemic, announcing that it will bring fresh theatrical releases to cable and other video-on-demand platforms for customer rental.

The news, a reversal of a decades-long Hollywood policy, comes as theaters around the country begin to shut down to contain the spread of the disease. On Monday, Regal Cinemas, the nation’s second-largest chain, said it was closing all 543 of its locations in the United States in response to the pandemic. AMC later announced it would close all of its locations, too.

In announcing Regal’s closure, Mooky Greidinger, chief executive of Regal parent Cineworld, said, “At this time, we have made the difficult decision to close our theaters. We value our movie-loving customers and have no doubt we will be serving them again as soon as possible with a full slate of Hollywood blockbusters.”

Universal’s decision to release four titles for home viewing even as they are being shown in theaters marked the first time that major studio releases will appear on other platforms simultaneously. The studio maintained that the move was a specific response to a unique moment, but online commenters wondered whether this could be the beginning of a sea change in Hollywood practice.

The movies are the Elisabeth Moss supernatural thriller “The Invisible Man,” the political satire “The Hunt,” the Jane Austen adaptation “Emma” and the upcoming animated adventure “Trolls World Tour.” The movies will be available at a suggested price of $19.99 for a 48-hour rental on platforms that include Comcast, Universal’s sister company.

“Universal Pictures has a broad and diverse range of movies with 2020 being no exception. Rather than delaying these films or releasing them into a challenged distribution landscape, we wanted to provide an option for people to view these titles in the home that is both accessible and affordable,” NBCUniversal chief executive Jeff Shell said in a statement.

“We hope and believe that people will still go to the movies in theaters where available, but we understand that for people in different areas of the world that is increasingly becoming less possible,” he added.

Among the companies being offered the Universal films are Charter Communications’ Spectrum, Comcast’s largest competitor, and AT&T, the country’s largest satellite provider and owner of NBCUniversal competitor Warner Media. On-demand platforms such as Vudu, Fandango and Apple will also get the offer. It is not known which companies will accept.

After staying open through the weekend, the theater closures came relatively quickly. At the end of the weekend, officials in Los Angeles and New York – the country’s two largest box-office markets – had ordered all theaters shut down. Ohio and Pennsylvania made similar orders. Washington, D.C., ordered theaters to close beginning at 10 p.m. Monday, along with restaurants and bars. Those orders came as President Donald Trump urged people to avoid gatherings of more than 10 people.

On Tuesday, the industry group, the National Association of Theatre Owners, released a long statement that sought to downplay the long-term impact of both the closures and Univeral’s move.

“Although there has been speculation in the media that the temporary closure of theaters will lead to accelerated or exclusive releases of theatrical titles to home streaming, such speculation ignores the underlying financial logic of studio investment in theatrical titles,” the group said. “While one or two releases may forgo theatrical release, it is our understanding from discussions with distributors that the vast majority of deferred releases will be rescheduled for theatrical release as life returns to normal. ”

In the past, theater owners have aggressively objected to studios bringing their films anywhere but theaters first and suggested they would be open to the idea only if they could participate in revenue-sharing.

Though the organization acknowledged that “movie theaters have faced voluntary and mandated restrictions and closures,” it sought to put a bright longer-term spin on the news. “People will return to movie theaters because that is who people are. When they return they will rediscover a cutting edge, immersive entertainment experience that they have been forcefully reminded they cannot replicate at home,” the group said.

It also noted that “when those titles are rescheduled, they will make for an even fuller slate of offerings than normal as they are slotted into an already robust release schedule later in the year.”

The Tuesday news came as Disney indefinitely postponed several spring releases, including Marvel’s “Black Widow.”

“Invisible Man” has been a modest hit since its late-February release, grossing $64 million in the United States. “The Hunt” and “Emma” have taken in less than $15 million apiece.

“Trolls World Tour” was expected to be a decent performer when it arrived in theaters in April. The DreamWorks Animation film, inspired by the popular toy and starring Justin Timberlake and Anna Kendrick, is a sequel to the 2016 movie that grossed $154 million in the United States.

Universal has begun to market “Trolls,” including with outdoor billboards. It will keep those in place, according to a person with knowledge of the plan who spoke on the condition of anonymity to discuss it publicly.

The studio will still need to find a way to market the film to at-home consumers, who are both inundated with streaming options and not accustomed to seeking out studio films on on-demand platforms.

The Universal news takes a step beyond Disney’s announcement Friday that it will shorten the “home video” platform for “Frozen 2” – that is, take a movie currently in DVD release and put it on Disney Plus in the hope of driving subscriptions. Comcast might have wished to do the same using Peacock, its new streaming service, but the platform does not launch until July.

Whether Universal will attempt this with higher-profile releases or use the “Troll” experiment as a gateway to try the same strategy after the pandemic ends is not clear: The studio had just moved its much-anticipated action sequel “F9” from a May theatrical release to a rollout in theaters in April 2021.

The company’s other major release for the coming months, “Minions: The Rise of Gru,” remains on the calendar for early July. The film, part of the “Despicable Me” universe, is a sequel to the 2015 “Minions” film that grossed $1.16 billion worldwide.

Beyond the pandemic, the Universal news opens the possibility of “day-and-date” releases for studio movies – that is, films available simultaneously in theaters and on home-viewing platforms.

Independent films have long used the tactic. But studios have mainly talked about it, often with a mix of excitement and fear. Comcast itself extolled the possibility as Steve Burke, then its chief operating officer, told television-industry professionals of such a plan.

“You can imagine a situation where we put ‘Spider-Man’ (on pay-per-view) concomitant with the opening weekend for $30 or $40 or $50,” he said. That was in 2007.

It is unclear what the revenue split would be between Universal and the platforms on the quartet of pictures announced Monday. Studios usually take 50 to 60 percent of domestic theatrical revenue, with the theaters taking the rest.

There is precedent for studios releasing day-and-date in emergency situations. In 2014, Sony Pictures took the North Korea-set comedy “The Interview” to on-demand platforms after many theater owners declined to play it in the wake of a hacking scandal.

Some experiments have tended to be costly for consumers. Universal offered a very limited trial in select markets with its comedy “The Tower Heist” in 2011 and charged $59.99 per rental.

Studios have wanted both to protect theaters and maximize revenue with single households inviting big groups of people to watch a film. In this case, though, large gatherings are unlikely.

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