Opinion: Universal Studio's new video-on-demand policy is a slippery slope for the theatrical window

No one could have seen the wide spread problems that the coronavirus has had on the film industry. From productions shutting down to theaters closing, the industry seems to be in free fall.

Studios have decided to push back its major tentpole films and to shorten the gap between when a movie leaves theater's and is released on streaming and video-on-demand (VOD) Universal took a gamble that paid off for them. While every studio pushed their eminet and near releases back, Universal Studios released "Toll's World Tour" stright to VOD.

This gamble seemed to pay off as acording to the Wall Street Journal, "Trolls World Tour" has made about $100 million in its first three weeks. Based on that the film has made more money for the studio then the original movie made in it's entire theatrical run.

Due to the films success, NBCUniversal's film cheif Jeff Shell announced that the studio would further explore releasing films in theaters and onVOD time saying "as soon as theaters reopen, we expect to release movies on both formats.”

In response, the company that owns the theater chain Regal announced that they will not screen any films to break the traditional theatrical window. AMC took it a step furthure saying they won't screen any Universal films due to Shell's comments.

Currently, studios and theaters are in a perdicament. Both need to make money, both need to pay employees, and both don't know what to do.

The reason I say it's a slippery slope is that the reason that "Trolls World Tour" is more profitable then its original 2016 film is because studios return more profit from digital rentals. A studio get about 80% of the profit from digital rentals and split the profits in an even 50 50 from the theaters.

Why wouldn't studios bypass the theatrical window if it can make more from digital rentals? Why wouldn't theaters get mad if studios break their agreements with theaters?

Thanks to COVID-19 studios have every right to do what is going to be profitable. But after that there shouldn't be any change. There won't be big tentpoles going to VOD and theatrical release simultaneously anytime soon, but who is to stop Universal if it turns out to be profitable.

Universal should honor the theatrical window, if they want to shorten the time from the end of it's theatrical run and the time the film is released on VOD, go ahead.

Even if you look at a family of four at the average ticket price of $9.16 and compare it to renting it at $19.99, Universal will keep $18.32 from the family of four going to the theater compared to the $15.99 from a digital rental.

I would assume that Universals decision is going to be on a case by case bases but theater owners are sending a message. As digital continues to outpace theaters and theaters doing everything to keep people coming back to their theater, AMC and Regal refusing to screen Universal is not a panic but a necessity. They want to show films that respect the theatrical window and brings them revanue as well.

What Universal is doing to movie theaters is disgraceful and they should be ashamed of themselves. Movie theaters are still widely more attended then sporting events and theme parks due to their low cost of admission. The theatrical experience is important, half the people who rented "Trolls World Tour" said they would have "definitely" seen it in a theater and a fifth of them said they rarely or never rent movies from a digital service. Before Universal goes all gung-ho on VOD releases consider the why you did it in the first place and why people probably rent it.

Here is the trailer for "Trolls World Tour" released by Universal Studios and DreamWorks on April 10th. The movie curently has a 69% on Rotten Tomoatoes.