Universal Pictures, home of The Fast and Furious, Jurassic World and Trolls, is at odds with AMC Theatres, one of the largest cinema chains in North America. After Trolls World Tour performed better on VOD than its predecessor did in theaters, NBCUniversal CEO Jeff Shell announced that when theaters reopen, the studio will release some films simultaneously in cinemas and digitally.

With theaters closed nationwide because of COVID-19, this news is alarming, especially because questions about the relevancy of theaters in the face of the rising popularity of streaming services. However, this case is slightly different, because Universal is not producing direct-to-digital content, like Netflix, nor is it releasing its larger films in theaters first, like Disney.

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Film Title: Jurassic World: Fallen Kingdom

The decision to release future films in theaters and on VOD at the same time has especially struck a chord with AMC, which is already in serious financial trouble. The theater chain's chair-CEO, Adam Aron, sent a letter to Shell, stating that Universal films will no longer be screened by the chain's locations in the United States, Europe and the Middle East.

Universal is somewhat clarifying its stance, saying executives "absolutely believe in the theatrical experience," and will continue to release films in theaters first and plan to release on VOD simultaneously when it makes sense. However, it's unclear how the studio will determine what films would benefit most in both forms and which ones would be better suitedl to release in theaters first. Regardless of the clarification, there has yet to be word from AMC whether Universal's new model is enough to allow the studio's movies to be screened by the chain.

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The positions seem untenable for both parties. AMC risks losing blockbuster franchise films like F9 and Jurassic World: Dominion. These properties have some of the highest-grossing films, both domestically and internationally. While AMC would have other blockbusters to screen from competing studios, the loss in ticket sales would be astronomical, especially with so many productions delayed because of the coronavirus crisis.

While AMC is among the largest chains, there are other theaters that could screen the Universal films. Cinemark Theaters has hundreds of locations across the country, and could service fans who cannot see the releases at AMC theaters. Smaller companies that still have locations nationwide, like Landmark Theaters, Alamo Drafthouse Cinema and iPic Theaters. However, with Regal Cinema also warning Universal, the risk for the studio rises.

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On the other hand, properties like Jurassic World and Fast & Furious are intended to be experienced in theaters. They're spectacle movies with jaw-dropping effects and heart-pounding action. While they can be enjoyed at home, the viewing experience is far from the same. With VOD prices currently around $19.99, audiences may not want to spend so much for half the experience when they could get it fully in theaters for about $9.26 a ticket.

Along with that, if audiences want to see action films for a more reasonable price, streaming services, which range between $5.99 to $12.99, offer unlimited access to their libraries, which have films from across all genres.

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In addition, streaming services are creating original content for their digital platforms for a fraction of the price. Amazon's The Boys, Netflix's Stranger Things and Disney+'s The Mandalorian are some of the most popular shows, and for multiple episodes, fans pay less than they would have to for one of Universal's VOD films. Along with multiple shows, viewers have access to hundreds of films for about half the price of one VOD movie from Universal.

Universal's new model, along with AMC's planned boycott, does a disservice to both companies. Theaters were already at risk of losing audiences, and studios are competing tooth and nail for each viewer, so this development only furthers both parties' pain. While Universal seems to be the first to budge with its clarifying statement, it's not enough. And with Regal Cinema threatening to join AMC, Universal's options are dwindling.

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