AMC Theatres Gets Into VOD at Just the Wrong Time

Ocean’s 8 is not currently streaming on Netflix, Hulu or Prime Video, but the movie is available on at least seven VOD platforms. You can buy it on iTunes, Amazon, Vudu, FandangoNow, Google Play, Xbox One and Xfinity.

You think we need one more? George Clooney would probably say we do, but the reality is that renting and buying video-on-demand movies is a commodified market with established services that offer the same movies at the same time on (more or less) the same terms. And with Movies Anywhere, most movie purchases you make on one of the VOD platforms listed above are automatically available to play on all of the other platforms.

So what’s the consumer rationale for AMC Theatres, the largest U.S. theatrical chain, launchings its own AMC Theatres on Demand service this week? As best I can tell, there’s not one. The service offers new releases from the major studios for the same rental and purchase prices as iTunes, Amazon, Vudu, etc., but has fewer catalog titles, is available on fewer smart TVs, and does not authenticate to other services with Movies Anywhere.

The only plus that remotely sets AMC Theatres on Demand apart from other VOD services is that your digital rentals and purchases generate points toward the AMC Stubs rewards program that you can redeem at the concession stand. That amounts to a 10% credit if you’re a member of AMC’s $20-a-month membership program that allows you see up to three movies a week or $15-a-year membership that gets you free upgrades and refills and a 2% credit for non-members.

AMC’s business rationale for launching a VOD platform is that the company’s efforts to partner with the studios on a premium-VOD window ended unsuccessfully in early 2018, and it desperately needs a new revenue stream to offset declining ticket sales. AMC wanted to partner with the studios on a new home-video window starting as early as three weeks after a film’s theatrical release and price films in that window at $30-$40.

There was little evidence of consumer demand for $40 VOD movies, and AMC had no business rationale for why the four largest studios — Disney, Warner Bros., Universal and Sony — should create a new revenue stream and share it with a struggling theater chain. The only path left for AMC to get into streaming was to launch a VOD platform that’s largely identical to all the other VOD platforms.

Consumer spending on streaming video is soaring, but nearly all of the growth is in subscription services like Netflix and Hulu. The amount that U.S. households spend on transactional video, which includes Blu-ray and VOD, has declined 23% in the last four years from $13 billion in 2014 to $10 billion in 2018, according to Digital Entertainment Group data.

As consumers continue to shift their entertainment spending from theatrical and VOD movies to subscription video, theatre chains and VOD services will suffer the consequences. That is exactly what has happened in the music business over the last several years as consumers have shifted from CDs and digital downloads to Spotify and Apple Music.

AMC is diversifying its declining theatrical business by getting into digital rentals and purchases at exactly the wrong time.

Scott Porch writes about the TV business for Decider and is a contributing writer for The Daily Beast. You can follow him on Twitter @ScottPorch.

Where to stream Ocean's 8