| In a world full of killer bugs, we certainly don't seem to be missing the movie theater much. We have Hamilton at home, Hanks reprising his WWII heroics and similar summer big-screen bait gone streaming. When lockdowns hit, Hollywood had plenty of content in the can, as they say. And yet there's still a fierce battle over when we can see it. This week, there was a cease-fire on that front as AMC Entertainment Holdings, the world's largest theater operator, cut a deal with Comcast's Universal Pictures in which it agreed to shorten the time a movie can be shown only theaters and when it is allowed to appear on the smaller screens via Amazon Prime, Netflix, and others. The so-called exclusivity window is sacred and designed on sound economic principles. For decades, it's been a way to separate consumers by willingness to pay. The problem is the willingness-to-pay play only works if the higher priced option is a vastly better experience (think: first-class/coach). If Apple makes the entry-level iPhone too slick, few will buy the top-of-the-line version (even those with the money and inclination to pay up for it). Tesla is finding this out the hard way, as customers appear to abandon its $75,000 flagship sedan for the perfectly capable Model 3, which starts at half the price. Even before COVID, it was getting difficult to justify the price of a movie ticket for offering more luxurious experience than a home screening. There's a reason all of the cinema chains suddenly wanted to sell you a $16 cocktail and boast about their new reclining loungers. Dealmakers like to talk about BATNA — the best alternative to a negotiated agreement. The side with an improved BATNA presumably has more power at the negotiating table. That's precisely what the pandemic provided Hollywood hitmakers. With cinemas closed, Universal tested the waters most aggressively, skipping theaters with a few of its most anticipated films, including Trolls World Tour and King of Staten Island. Then it not-so-subtly raved about how well they performed on on small screens. Hollywood needs theaters in the same way apparel companies need landlords. AMC, which hasn't budged on the streaming window for years, no doubt felt compelled to make a deal. And for a business facing such an existential crisis, AMC doesn't seem to have cut a bad one. The window between a theatrical and streaming release will close to 17 days, from a standard 75 to 90. Though that's just for the "premium rental" of films on streaming, which costs about $20 a pop. Universal still won't be able to rent its fare cheaply, or sell it, until three months after a cinema debut. AMC also negotiated a slice of the tail revenue, reportedly up to 10% of the first streaming windfall. More importantly, the theater operator has set a sort of precedent for negotiation with the other studios, which no doubt will be coming. Universal, meanwhile, has a little bit more control over its product and a little more gravity to keep top directors and producers from shopping their projects directly to streaming studios. And just because the streaming window can be shorter, doesn't mean it has to be. Universal's biggest tentpoles will likely stay exclusively in theaters for just as long as they used to. The films that will show up early on Netflix will probably be the type of stuff that is already migrating there -- comedies, horror, and mid-budget drama. Nevertheless, AMC is sanguine about its post-pandemic prospects. Here's the company line from Chief Executive Officer Adam Aron: "As people enjoy getting out of their homes, we believe the mystical escape and magical communal experience offered at our theaters will always be a compelling draw." Perhaps for some, but if I were Aron, I'd be building drive-ins. A car is as COVID-proof as a couch and people seem to love them just as much, if not more.  Featured in the Aug. 3, 2020 issue of Bloomberg Businessweek. Subscribe now. Illustration: Chris Nosenzo Photographer: Illustration: Chris Nosenzo | 
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