Multiple sources confirm that the first week of VOD rentals for “Trolls World Tour” has likely passed $50 million in domestic revenues in its first six days. The same sources suggest that it is also doing well in foreign territories — but unlike the theatrical norm, North American grosses are taking the lead.
We have no verification; nor do we know how much of the VOD total is returned to Universal, although the consensus is two-thirds or more. That would indicate that they have already realized over $35 million, at least.
However, this much we know is true: What was once a poppy animated sequel is now viewed as a canary in the coal mine. Its performance could have effects both short term (should other films go this route?) and long (is skipping theaters a viable model?). It also addresses the question of pricing models: Should studios sell to a streaming company (if, unlike Disney, one doesn’t exist internally) for a set price, versus participating in VOD revenues? If so, for sale before rental?
Some thoughts on the incomplete data we have so far:
The estimated production budget of “Trolls” is estimated at $90 million-$100 million. By the time Universal switched to VOD, worldwide marketing was likely in tens of millions. It could need to gross upward of $150 million to be in profit.
Going this route (which, weeks from now, will mean a price reduction) will reduce its value on other platforms. However, Universal and owner Comcast are seeing income and cash flow at a precipitous moment. Even if “Trolls” ends up with a loss, Wall Street is likely to appreciate the attempt.
There’s also value in being first. All studios theorized about going VOD; Universal broke the barrier with a major title, saw immediate response, and now has a real-time test that puts it ahead of the competition.
For theaters that want to reopen to the same business model they know and love, this is all scary stuff. The test reinforced what is now a given: Studios have the upper hand, and are likely to favor giving theaters franchises, sequels, and blockbusters. Everything else is a streaming candidate.
However, before anyone rushes into declaring that this is the way of the future, the test doesn’t address all variables. For one thing, at $100 million this is still a less-expensive tentpole. And “Trolls” has the benefit of being a presold sequel to a family film. That gave it high awareness further buttressed by recent rentals of the 2016 original (at a much lower price). For parents with two children, the VOD cost is significantly less than going to a theater to see it.
Also: Has there ever been a better time to try this? Kids are stuck at home, parents are desperate for new diversions — and here’s “Trolls World Tour.” There are a finite number of titles like this, and none will be first.
Going forward in a struggling economy, it may be different. People will be able to leave their homes, and eager to do so. it’s possible that spending $20 on a movie at may seem less doable. (Of course, if that’s the case, going to the theaters is also likely out of the question, too.) Subscription platforms loaded with content could be more attractive.
Finally, we haven’t seen what happens when the public learns to gauge the VOD pricing shifts; consumers could decide to wait? Or, the need will be more acute with some films; clamoring kids can be very convincing.
So far, there’s been no triumphant press releases from Universal or the platforms — only early confirmation that it performed well. Exhibition sources prefer to argue for its limited relevance, the ongoing commitments they hear from studios to returning to something like normal, and cautioning to not regard this success as a game changer.
The truth lies in between, and we’ll only learn more as others dare to try VOD. And they might; President Trump announced April 16 a set of states’ guidelines for reopening that suggest it will be a good while before theaters can return to normal. Theaters can reopen after a state achieves markers in reduced deaths, or fewer positive tests — but social distancing rules still apply.
Ironically, at this writing there is no 2020 release calendar for premium VOD; we’ve burned through all of them. That could soon change: The opportunity to cash in on a viable title could be too great to resist.