Disney To US Theatres Showing The Last Jedi: I Am Altering The Deal, Pray I Don't Alter It Any Further

Image: Lucasfilm

Disney has revealed the conditions local theatres have to abide by in order to show Star Wars: The Last Jedi, and much like the dealings of the Empire, Disney's deal doesn't shake out great for local business.

According to the Wall Street Journal, theatre owners have to agree to a serious and unusual set of terms in order to earn the privilege of showing the new Star Wars movie.

First, Disney is insisting on a 65 per cent share of ticket-sales revenue, up from a standard 55 per cent asked by most Hollywood studios, what WSJ calls "a new benchmark."

Disney is also requiring theatres to reserve at least four weeks in the largest auditorium available exclusively for The Last Jedi screenings. If a theatre violates any of the above terms? Well, then Disney reserves the right to charge an additional five per cent of ticket sales revenue as penalty for the violation.

This includes if the theatre cancels even one screening of the film without Disney's consent.

And if you don't like those terms, as a theatre owner, there's little to be done. Disney has oversized power in the modern theatrical market, with box-office sales down and Disney's significant stake in the remaining releases — 26 per cent market share, as of last year — leaving theatres with little in the way of bargaining power. The Last Jedi is far too lucrative to pass up.

"They're in the most powerful position any studio has ever been in, maybe since MGM in the 1990s," the WSJ quotes one film buyer as saying. Like Lando Calrissian before the might of Vader, there's not much to do for the business owners behind theatres except grin, bear it, and try to keep the Wookiee from choking anyone.

Star Wars: The Last Jedi hits theatres December 14. [Wall Street Journal, via Screen Rant]


Comments

    Well, I'm glad the previous movies have done a good job in taking away my interests in seeing anymore Star Wars movies again.

      I use to watch A New Hope every weekend as a kid, That & Willow & Halloween 4, These new starwars films seem to be just nostalgic pieces in my opinion & that's bad because i feel like i've already seen them, I should have loved The Force Awakens but i got bored & fell asleep.

      I did not enjoy TFA as much as I thought I would, and certainly not as much as everyone else seemed to. I think I'll be fine waiting for it to turn up on 4K Netflix.

    Is this confirmed worldwide or just US?

      Just US for now. My bad, I should have made that clearer in an edit. That's fixed in the headline.

        They altered the ticket price last year in Australia

      Last year for Rogue One the Australian cinemas had to give Disney a bigger cut on all Disney films.

      Cineplex the discount cinena chain had to raise their ticket price to cover that increase. If they chabged the deal again... we will see it in their prices soon.

    So what I got out of this sensationalist article attempting to make me mad at a non-issue. Disney wants 5% more than normal. It's not that big of a OMG LETS BE MAD deal. But of course, this is the internet, where breathing the wrong way will get people trying to have you censured.

      It's 10% more than normal (65 up from 55), which for an industry that has thin margins to begin with is pretty significant. An additional 5% penalty for doing basically anything wrong pushes that up to 70%, which is a crazy share of the revenue.

      No. Disney wants to increase their share from 55% to 65%. That's a 10 percentage point increase, or 18% more than normal.

      Plus, they want an EXTRA 5% on top of that it the movie somehow bombs and the theatre owners need to free up some of their screens for other opportunities that might actually make them some money.

      Meanwhile, theatre owners have exactly the same overheads that they've always had, and other film makers are completely locked out of the largest screen in most if not all major cinemas for the entire month around peak Christmas season.

      It's a story of monopoly power changing the rules of the game in one sided take it or leave it contract that potentially puts theatre owners at significant potential risk of loss, and possibly even bankruptcy if the deal becomes the 'new normal'.

      There are dozens of reasons here for the story to be eminently newsworthy.

        So what both of you missed from the WSJ report is that the major blockbusters get a maximum of 60%. Movies range from 50-60, depending on the movie. While it's not reported, I would be shocked if most of the major Disney movies (Marvel, SW, etc) were not already at 60%. Which is where my "only additional 5%" comes from.

        Last edited 03/11/17 7:04 am

          No worries. Please continue fighting the good fight in defense of helpless global corporate mega conglomerates under assault from Kotaku and other biased left wing media.

            Time for a celebratory Cornetto ice cream.

          I didn't miss anything from the WSJ article, I'm not a subscriber and don't have access to the full article to be able to read it in the first place. What I do have to go on is both the Kotaku and Screen Rant articles reporting that the standard share is 55%, while Disney is asking for 65% - 10% more than the standard share. If Disney was previously asking for 60%, then they were already taking 5% more than the standard share and are increasing that to 10%.

          The reality is ticket sales make up very little of a movie theatre's revenue, they don't even cover operating expenses in most cases which is why they have to sell overpriced food/drink and are plastered with print and preroll advertising.

          Taking an even greater chunk of that away from them will just force them to get more money out of you as a customer through other means. Maybe 30 minutes of ads at the start of your favourite movie, or maybe a $50 chocolate bar. All of which drives more people to home entertainment and makes theatres even less viable to operate.

            But you did miss it, there are other facts involved in the case that you didn't know, in this case, it's the fact that blockbusters in general get a 60% share, not 55%. This article doesn't really explain how it works at all, as that percentage isn't a flat fee, it's a sliding scale drops as the weeks go (that convinces cinemas to hold movies for longer, as they see more of a return on investment). For reference Star Wars: Attack of the Clones received 100% for the first full week of release, so Star Wars way pulling this BS well before Disney came along.

            You can lay the blame at the greedy studio for all of this, but the fault also lies at the feet of the bigger cinema chains that can sustain this model and still make money, as they have enough screens to keep the older new releases running at a profit. Smaller cinemas have to make the choice of either screening Star Wars and lose money or not screening Star Wars and lose customers (funnily enough, they lose customers to the bigger cinema chains that have the power to refuse thee demands, so don't lose too many tears over the likes of Village or Hoyts).

            This is getting into the territory of why a growing amount of people believe the reliance on blockbusters that are having their budgets constantly expanding is leading the film industry into a massive crash (the reason these harsh terms are being pushed at cinemas is that studios are now relying on having to make at least a billion for the film to be a success). It's turning into a "too big to fail" situation.

              If you could quote the section from the WSJ about 60%, that'd be great. Niomo's comment was that he would be surprised if Disney's films weren't already at 60%, which is an opinion rather than the article's statement itself.

              I don't place the blame solely at the feet of any particular side, but there's no denying that Disney has considerable and one-sided power to negotiate these terms to the detriment of theatre operators. And I mostly agree with your characterisation that the industry is headed for a crash: digital adoption is the only clear path forward given the death spiral of increasing prices and more intrusive advertising in the theatre component of the industry, but it's also a path that studios have been reluctant to adopt. And they'll have to.

                Oh! I just found another site with more information that shows the the difference between TLJ and TFA is even slimmer than @niomo suggested.

                This is in contrast to previous requirements of 64 percent of profits and four-week runs for previous Star Wars films.

                This is from an article for independant.co.uk (I'm not sure about the link policy in comments)

                So it's only a 1% increase and an extra week on the biggest screen. Not that this is a non-issue, the fact that this is the norm is pretty gross.

                  It may be a 1% increase on Disney's previous terms, I'm more concerned with its comparison to the industry average, which is what I take the 55% figure to refer to.

              Non-edit side note, I'm aware of the sliding percentage terms most theatre operators sign up to. The only way for the 55% (and 65%) figure to make sense would be as a total target across a set screening period, which I've assumed currently to be the intended meaning. I've never seen a studio negotiate a flat percentage with a threatre operator.

    It is even worse because it will mean they look at increased ticket prices or add ons that you never needed before (reserved seating, first entry to the cinema and many other things I can't think about) but the first thing to go will be staff, 1 less person on the candy bar and the ticket booth, one less person to clean up the popcorn we spill. And less maintenance of the cinemas common areas and toilets.

    This is the first... Marvel will follow suit as well as Pixar and the major releases so that will be at least 4 major releases a year, at major times when Disney will 'own' the biggest screens lowering the capacity for the other studios to make money.
    To my mind this is very close to what Microsoft was doing and they were sued and fined for their monopolising

    But they can still charge $8.10 for a medium coke (that's NOT an exaggeration) ... so all is well.

    Movie theaters make fuck all from ticket sales, they make the majority of their money from the candy bar.

    The conditions detailed are what cinemas will be doing anyway - showing Star Wars on their biggest auditoriums. Even if it does "bomb" (which is near impossible) ALL cinemas WILL be packed out for weeks.

      Lots of things going on here. I wanted to point out that Geelong has $10 movie ticets for all movies and Readings also has $12 for Titan xe.
      This is awesome compared to Melbourne that still charge $18 per ticket. What's come out of this is that the drop in price has increased the customers 3 fold, what used to be an empty place is now full almost every session, while during school holidays has people seeing two or three films because of the price difference.

      This got me thinking, if it is percent driven just drop the price? Or do what Apple, and Jet Star do, from what I've read there isn't any minimum recovery cost back to the studio before or after the percent is initiated, so...
      if the "ticket" price to the customer is $2 then the price back to the studio is only $1.30, from there as a cinema you charge a "processing fee" of $8 , if the overall cost of the admission is under the regular charge I've got no problem with it, but the studio gets shafted.

      Surly it can't be that simple?

    Disney rose their Australian ticket price share last year above the nornal rate when Rogue One was released. The fact they are doinfmg it in the US means its probably the last regional market (not the first)

    Wookiees don't choke people, they just rip your arms off.

    TFA is slowly getting recognised as the trash that it was. Just a boring, designed-by-committee, soft reboot.

    Star Wars is pretty much on it's last breath, for me. That trailer did nothing for me and with this news that Disney are using this franchise to strong-arm theatres and forcing them to agree to unreasonable terms which are just going to make it harder and harder for cinemas to operate, then I don't even think I'll see it....

    ....who am I kidding. I'll still see it, but I won't like it.

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