 What's likely to be the most important and controversial movie of 2020 isn't a groundbreaking documentary or an emotional Oscar-bate indie. Nope, it's Troll's World Tour. How did the sequel to a movie that's little more than a loosely connected series of Justin Timberlake music videos, with a cookie cutter plot and a kid-friendly cacophony of colors gain such a prestigious distinction? Well, because it started a war between major movie studios and the theaters that screen their films. And that's going to have a profound effect on how we all watch movies in the future. Stick around, hit that subscribe button and bell icon and join us for this short edition of Out of Frame. With responses to COVID-19 requiring people to shelter in place and shuttering non-essential businesses like movie theaters, studios have been scrambling to rearrange their release schedules so that people can actually, you know, watch their movies. Release dates for everything from major tentpole projects like No Time to Die and Wonder Woman 1984 to kids movies like Peter Rabbit 2 are getting delayed. Of course they are. After all, there's no point in releasing a movie to theaters that can't even show it to customers. But with Troll's World Tour, Universal decided to try something a little different. Instead of pushing back the original release date of April 10th, the studio skipped the theatrical release altogether and instead offered the film directly to viewers as a premium video-on-demand rental. For 1999, viewers have 30 days to start watching and 48 hours of access. That might seem a bit steep for a movie that you don't even get to keep afterwards, but it's a fraction of the price of taking a family of four to watch it in a theater, especially once you factor in concessions. With kids home from school and parents hungry for fresh ways to keep them entertained, Troll's managed to gross about $100 million in its first few weeks. Now that's less than the original Troll's movie pulled in at the box office, but the split, how much of the total earnings go to the studio instead of the exhibitor, significantly favors the studio for video-on-demand. They get to keep about 80% of the revenue from VOD rentals as opposed to, at most, 50% from theaters. In fact, Universal was so pleased with their income from Troll's world tour that Jeff Shell, CEO of NBCUniversal, told The Wall Street Journal, as soon as theaters reopen, we expect to release movies on both formats. And that's when the fight broke out. AMC, the largest movie theater chain in the world, was not happy with Shell's announcement. In fact, AMC president Adam Aron fired back in a heated letter, saying, Going forward, AMC will not license any Universal movies in any of our 1000 theaters globally on these terms. Then Regal jumped into the mix. While their corporate leadership hasn't gone quite as far as AMC, they did tweet out that they would play movies that, quote, respect the theatrical window. For those who aren't familiar with that term, what they mean is that they won't play movies that don't comply with the window of exclusivity that's been guaranteed to theaters up to now. The broader concern here is that the movie theater business is already struggling to compete with the rapid improvement of home entertainment and streaming technology. COVID-19 policies dealt a huge blow to the movie theater industry. And if studios moved to a VOD focused release model, it could knock them out for good. For me, that really sucks. I love going to see movies in the theater, and I do it a lot more often than most people. There's something really special about experiencing a story with a large group of people. It's a uniquely shared experience that allows us to bond with strangers and connect to their emotions and reactions. There's a ton of neuroscience research on this, but just think about the last time you went to a theater and laughed, screamed, or cried with a huge group of people all feeling the same emotions at the same time. That experience just can't be duplicated at home. But one way or another, the movie going experience is going to change. My co-writer for this episode, Jen, suspects that in the post-COVID world, we'll see a transition to a more VOD focused release strategy for some films, particularly family movies like Troll's World Tour and Scoop, which just came out on premium VOD. As a mom, she'd rather skip the hassle and expense of going to the theater with young kids, especially since she can pause a digital rental when one of the children inevitably needs to run to the bathroom during a critical plot moment. A lot of other parents probably feel the same way. At least that's what she says she'd pitch during the board meeting. Maybe Jen's right. Maybe more indie films will get the VOD treatment too. Personally, I don't see the prestige and tentpole projects, studios invest tens and even hundreds of millions of dollars into not getting released on big screens at all. And a recent unconfirmed rumor that Amazon might be interested in acquiring AMC gave the theater chain stock a significant increase. But we've all got a front row seat to an incredible moment of rapid creative destruction in this industry. All industries change over time. Businesses adapt to new laws and changing customer behavior, or they die. This is true of movie theaters, even though they haven't significantly changed their fundamental business model in over 100 years. Companies like AMC have more comfortable seating, high definition digital projectors, mind blowing surround sound, and some of them even offer restaurant like food and beverage service. And yet going to the movies has gotten less and less special. So maybe the industry will find new ways to make the experience a true event again with private movie clubs and restricted access. Maybe some theaters will move in a more intimate art house direction showing niche films to smaller audiences. Or maybe we're all wrong, and movie exhibition will change in a way that neither Jen nor I foresee. But that's the beauty of markets. They don't need a guiding hand to see them through disruption and turmoil. They just need to be free to adapt on their own. As the lockdown start to end around the US and theaters are once again allowed to open to patrons like me, I'll be there showing my support. And as the whole industry adapts to the brave new world we find ourselves in, I'm looking forward to seeing what's next. Including being able to vote in polls about what these short episodes should be about. We'd love to see you there. Don't forget to like this video and subscribe to all our social channels on YouTube, Facebook, Twitter, and Instagram. Check out those links and more in the description. Thanks for watching.