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What groundbreaking AMC, NBCUniversal deal means for struggling theater industry

Yahoo Finance's Alexandra Canal breaks down what's next for the theater industry after NBCUniversal and AMC ink a historic theatrical deal.

Video Transcript

JULIA DE ROCHE: It's time for our Fame and Fortune segment with our very own Alexandra Canal. Ali, so great to be with you for the first time for Fame and Fortune actually.

ALEXANDRA CANAL: Yeah, Julia, I'm so happy to have you. Girls rule!

[INTERPOSING VOICES]

JULIA DE ROCHE: That's right. I know you're watching Facebook closely. What's going on in the world of Facebook as it relates to entertainment?

ALEXANDRA CANAL: Yeah, so Facebook, it looks like they're looking to compete with YouTube in terms of those advertising dollars. Just a few moments ago in a blog post, the company announced that they will be releasing music videos to the platform. They signed deals with big music companies like Sony, Universal, and Warner Music Group. Some artists that have already signed on include Blake Shelton, Diplo, the Jonas Brothers. I love me a good Jonas Brothers music video.

And the company said this will become a lot more personalized as time goes on, with users being able to share these music videos across their timelines, newsfeeds, as well as Facebook Messenger. So I do think this is a really smart move for the company, along with its various ancillary businesses, especially as it looks to take on the competition and establish itself as a big tech giant and a big player in all things social and entertainment.

JULIA DE ROCHE: Yeah, certainly interesting timing as well, given everything we've gone through this-- this week to close off that way. I know you're also watching Comcast, which they reported earnings, and there was quite a bit of news as it relates to the entertainment world. Break it down for us. What'd we learn?

ALEXANDRA CANAL: Yeah, so-- yeah, so yesterday, Comcast reported their second quarter earnings results, and we did get an update on the pulse at what's happening at Universal. For example, revenue at Universal fell 25% last quarter to 6.1 billion. Within that revenue of its film division, it fell 18% to 1.2 billion. Now, one bright spot for the company has been the success of PVOD offerings. Executives were boasting how well films like the "King of Staten Island," along with "Trolls World Tour," have done within this pandemic.

Both of those films bypassed the theatrical experience entirely and went straight to on demand. But while we're talking about the success of PVOD, we also got a little more color on that historic deal that was recently signed between AMC and NBC Universal. So within this deal, the studio's films would be available on demand just 17 days, including three weekends, in the theater. Now, this is unprecedented and a lot shorter than the traditional window, which is around three months. So, many were pretty surprised by this move.

Some analysts thinking that AMC should have pushed for a 30-day window rather than a 17-day window, the general consensus being that consumers might just hang around and wait those 17 days in order to watch a film in the comfort of their own homes. But all that being said, this does seem to put a Band-Aid on a much larger wound for AMC. The company has been bleeding money within this pandemic. They were on the brink of bankruptcy. And although the financial stipulations of this deal have not yet been released, it is largely assumed that AMC will receive a pretty sizable portion of the PVOD revenue.

Now, NBC Universal CEO Jeff Shell, he said he didn't want this to totally replace the theatrical experience. He wanted it to complement it. But to be completely honest, I find it a little hard that this will be a viable long-term solution, especially for these much smaller theater companies. But I think the real winner here, no matter which way you slice it, is the consumer. It puts a lot more power in the consumer-- consumer's hands. It gives them a lot more options. But again, we are left with the fate of the future of the movie theater industry just hanging in the balance.

JULIA DE ROCHE: Yeah, something we're all missing these days. Another thing that stood out to a lot of folks, Peacock and the sign-up. So what did you learn there?

ALEXANDRA CANAL: Oh, yeah, Peacock was another bright spot in this earnings report. The company saying that that streaming platform amassed 10 million sign-ups since its launch. Remember, Peacock launched April 15 to just Comcast subscribers, and then we had that nationwide rollout a couple weeks ago on July 15. But this number is especially impressive considering Peacock cannot be found on two of the biggest devices, Roku as well as the Amazon TV Fire Stick. Comcast has yet to strike deals with those two companies, and that's pretty important because they reportedly control about 70% of the connected TV market.

Now, if we want to compare Peacock to another streaming newbie, AT&T recently said that HBO Max garnered around 4.1 million sign-ups just one month post-launch. So pretty strong start for Peacock here. It's an ad-supported platform. It has that three-tier pricing strategy. So a different business model than what we've seen with some of the other streamers out there. But clearly at this point in time, consumers seem to be attracted to it.

JULIA DE ROCHE: Ali, thank you so much for breaking it down for us for this week's Fame and Fortune.