How An Animated Musical Sparked A Show Business Civil War

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The plot of Universal Pictures' animated movie "Trolls: World Tour" isn't complicated: different kinds of music can come together harmoniously. But the film's straight-to-digital premiere has angry theater owners singing a very different tune.

In what has become a nasty referendum on how movies are released both during and after the pandemic, Universal and theater owners are fighting not only over "Trolls" but also the very viability of the multiplex. While other studios have yet to choose sides, exhibitors have fired an industry-wide warning shot at Hollywood moguls: abandon us now, and pay the price later.

As the coronavirus spread and theaters locked their doors, most studios rushed movies already in theaters to digital platforms, or postponed the theatrical releases of titles like "Black Widow," "Wonder Woman 1984" and the next James Bond movie.

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But rather than delay its "Trolls" sequel, Universal instead released the film directly on video-on-demand platforms such as Apple TV, Amazon Prime and YouTube for $19.99, bypassing the multiplex entirely. The studio boasted to the Wall Street Journal that "Trolls" generated nearly $100 million in digital revenue in its first three weeks online.

Earlier this week, the studio made the same decision with its upcoming Judd Apatow comedy "The King of Staten Island," which will premiere on video-on-demand sites on June 12.

'NOT SOME HOLLOW OR ILL-CONSIDERED THREAT'

Theater owners, already angry over the "Trolls" decision, turned livid, and vented directly to Universal's top executives. AMC Entertainment, the nation's biggest theater chain, said it won't show any of Universal's future films -- including a highly anticipated "Fast and Furious" sequel -- in its theaters in the United States, Europe and the Middle East.

In a letter sent Tuesday to Universal studio chief Donna Langley, AMC head Adam Aron lamented that "decades of incredibly successful business activity together has sadly come to an end." He also warned that other studios following Universal's lead could face a boycott.

"This policy affects any and all Universal movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat," Aron wrote. "Incidentally, 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," Aron said, in reference to the typical three-month time gap -- or "window" -- between a film's theatrical and digital debut.

Cineworld, the London-based chain whose U.S. brands include Regal, United Artists and Edwards, also slammed Universal, but stopped short of a boycott. "Universal's move is completely inappropriate," the company said in a statement Wednesday.

Regal Theaters in downtown Los Angeles. Movie theaters around California have closed as the state attempts to slow the spread of COVID-19. (Chava Sanchez/ LAist)

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THEATERS ARE GREAT, BUT CLOSED

The National Association of Theatre Owners, the trade group for exhibitors, echoed AMC's sentiments, having earlier hinted at a potential payback for Universal's "Trolls" decision.

"Universal does not have reason to use unusual circumstances in an unprecedented environment as a springboard to bypass true theatrical releases," John Fithian, the president of NATO, said in a statement."Theaters provide a beloved immersive, shared experience that cannot be replicated."

Universal said Fithian's comment misses the point: Yes, theaters are great, but they're closed -- and likely will remain shuttered for a while to come. (It's precisely why the Academy of Motion Pictures on Tuesday said that movies no longer have to premiere in theaters to be eligible for an Oscar.)

"Given the choice of not releasing 'Trolls: World Tour,' which would not only have prevented consumers from experiencing the movie but also negatively impacted our partners and employees, the decision was clear," Universal said in an emailed statement Wednesday.

THEATERS ALREADY WERE IN TROUBLE

Outside of threatening studios, theater owners have little power these days. Admissions were dropping even before the pandemic, and as new streaming services flourished, theater owners showed little interest in changing their booking practices to screen movies produced by companies like Netflix.

With box office revenues plunging to zero almost overnight, the publicly traded theater chains -- including AMC -- are facing liquidity crises and possible bankruptcies.

For the studios, the pandemic may offer a rare chance to redefine the business going forward. A studio typically splits box office revenue 50/50 with a theater owner. But when the studio is its own digital distributor, there's no such split.

NBCUniversal, the parent of Universal Pictures, will launch its new streaming service, Peacock, on July 15, where it's safe to assume some upcoming Universal movies could premiere. Disney, which had controlled about 40% of the domestic box office before the pandemic, runs the streaming platforms Disney+ and Hulu. Disney previously said it would move some planned theatrical releases, like May's "Artemis Fowl," to its streaming site later in the summer.

It could be the studios are parroting a lyric from the Dierks Bentley song "Leaving Lonesome Flats" in "Trolls: World Tour": I got the hammer down and won't look back.