Apple (AAPL) is making a bold move into Hollywood by investing $1 billion annually to produce movies that will be exclusively released in theaters. T
Apple (AAPL) is making a bold move into Hollywood by investing $1 billion annually to produce movies that will be exclusively released in theaters. This marks a significant shift from its previous strategy of releasing movies exclusively on streaming platforms or with limited box office releases. The new approach would see Apple partnering with studios to release movies in thousands of theaters for at least one month.
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Plans for the Future
According to a report from Bloomberg, Apple has already approached movie studios to partner on certain titles to be released this year and in the future. The potential movies reportedly include Martin Scorsese’s “Killers of the Flower Moon,” Matthew Vaughn’s “Argylle,” and Ridley Scott’s “Napoleon.”
The news has sent shares of theatrical giants like AMC (AMC), IMAX (IMAX), and Cinemark (CNK) soaring in early trading on Thursday, gaining as much as 5%, 5%, and 8.5%, respectively.
Rivaling Amazon’s Investment
Apple’s move follows Amazon’s (AMZN) similar announcement in November 2022, stating plans to invest $1 billion annually to produce 12-15 movies exclusively for theaters. The investments from both Apple and Amazon could help the battered industry recover at a faster pace and could generate over $1 billion each in ticket sales, boosting the box office by over 20% compared to estimated 2023 ticket sales.
The Pandemic Effect on Theaters
Theaters are still reeling from the pandemic, with ticket sales yet to recover to pre-pandemic levels, despite blockbuster showings from films like “Avatar: The Way of Water” and “Creed III.” According to data from Comscore, the domestic box office brought in an estimated $7.5 billion last year, representing a roughly 70% year-over-year increase but still 30% below pre-pandemic levels when total North American ticket sales hit $11 billion.
The Impact on Netflix
The reported plans from Apple and Amazon could also up the ante for Netflix (NFLX), which has been largely resistant to the theatrical window. The move could force Netflix to reconsider its approach to releasing movies in theaters.
The Future of Big Tech Investments
Apple and Amazon’s reported plans come at a time when many media giants have pulled back on spending in favor of profitability. Both companies have increased their respective streaming and content investments while cutting costs in other areas.
As Apple looks to increase its streaming presence, it has also leaned further into sports, reportedly weighing bids to secure the streaming rights for English football games after locking in a 10-year, $2.5 billion deal with Major League Soccer and Friday night Major League Baseball showings.
Conclusion
Apple’s plans to spend $1 billion annually to make movies for theaters marks a significant shift from its previous strategy. By partnering with studios to release movies in thousands of theaters for at least one month, Apple hopes to establish itself as a serious player in Hollywood. The move also puts pressure on Netflix to reconsider its approach to theatrical releases. This investment could also help the battered industry recover at a faster pace, generating over $1 billion each in ticket sales and boosting the box office by over 20% compared to estimated 2023 ticket sales.
COMMENTS
I still think $1 billion is not that much but it’s a start. Amazon and Apple should be investing at least 10 times that in this industry. With the right directors and cast, these movies should bring a nice ROI. I would also love to see these bigger companies have an indie program where they support indie movies. Maybe spend $50 million on such things? It would boost the indie movie scene tremendously.
Netflix will probably follow and may even invest more than these two companies put together. They have much more experience in this industry and the move to theaters shouldn’t be that difficult for them.