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'Premium' VoD will complement, not shatter, theatrical movie window, NBCU boss says

In comments that could expand a battle brewing between NBCUniversal and movie theaters, the media giant said it intends to continue using a new "premium" VoD (PVoD) release window for new movies, at least on a title-by-title basis.

NBCU is getting some severe blowback from certain theater owners after the studio sidestepped the theatrical release of Trolls World Tour while movie houses remain closed during the pandemic-driven lockdown and instead released the title digitally to homes using a PVoD model. Under that model, the title was available for rent for 48 hours for $19.99. The move reportedly generated about $100 million in PVoD rentals in North America in the first three weeks after release.

AMC Theaters responded by announcing it would refuse to screen Universal Pictures films in its theaters, a move that was recently echoed by Cineworld, the parent of theater owner Regal Entertainment. Cineworld called NBCU's plan to offer some titles under the PVoD window synced with a release into theaters "completely inappropriate and certainly has nothing to do with good faith business practice, partnership and transparency," according to Variety.

"We're very pleased with the PVoD success, the particular circumstances of each film are unique and we will determine our future distribution approach on a title-by-title basis," NBCU CEO Jeff Shell said today on Comcast/NBCU's first quarter call.

Although the latest Trolls movie skipped the theatrical window, NBCU has already decided to hold the release of two new movies from popular franchises – Minions 2: The Rise of Gru and Fast & Furious 9 – until 2021.

Shell said he expects theaters to once again become a "central element" of the movie business. "The flip side is the majority of movies, whether we like it or not, are being consumed at home."

He defended the decision with Troll World Tour, noting that it was ready to go and a choice was made to move ahead with the PVoD release and preserve the premium nature of movies during what's been an "unprecedented environment" for the business.

Shell said the initial financial results for the PVoD release of the new Trolls movie were "interesting," as it provided consumers with premium fare while they were hunkered down at home. At the same time, it gave NBCU employees a project to continue working on while also bringing in revenue.

"The question is, when we come out of this [pandemic] what is going to be the model," Shell said. "I would expect that consumers are going to return to the theaters and we will be a part of that. I also would expect that PVoD is going to be part of that offering in some way. It's not going to be a replacement; it's going to be a complementary element."

Peacock's July 15 national launch still on track
Shell also weighed in on Peacock, NBCU's new streaming service that is getting an early preview on Comcast's X1 and Flex platforms ahead of a national launch set for July 15. He didn't offer any precise metrics, but said the early results show that consumers are spending more time on the platform than expected.

"It's very early," he said, noting that Comcast's decision to launch Peacock on a wide scale after the preview will help get the product "right, technically" and help the company learn more about how consumers are using it.

Comcast had hinted that it might push up the national launch of Peacock because so many people are home. An analyst pressed execs today on why they hadn't already done so.

For now, the original plan remains on track. "We're in a marathon, not a sprint," Shell said.

Although Comcast's cable business came out of Q1 relatively okay, NBCU's business has been under duress during the pandemic due in large part to closures of its theme parks and the shutdown of theaters.

Q1 revenues at NBCU dropped 7%, to $7.73 billion, including a 31.9% decline at its theme parks unit and a 22.5% dip for filmed entertainment.

All of NBCU's theme parks remain closed. Comcast anticipates an EBIDTA loss of $500 million if they remain closed through Q2 2020.

Construction has been delayed at NBCU's "fourth gate" Epic Universe park in Orlando and at Super Nintendo World in Japan. However, construction has started again on a new park in Beijing, with 15,000 construction workers now on-site, up from the 12,000 who were there prior to the outbreak. NBCU expects the Beijing park to open on time and on budget for 2021.

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— Jeff Baumgartner, Senior Editor, Light Reading

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