Why Apple Wants to Show Movies in Theaters

Apple is making a big bet on Old Hollywood and taking on Netflix. According to Bloomberg, Apple plans to spend $1 billion a year to produce movies that will be released in theaters.

Reportedly, Apple has approached movie studios about partnering to release a few titles in theaters this year and a slate of more films in the future.

Releases might include Martin Scorsese’s Killers of the Flower Moon (starring Leonardo DiCaprio); Matthew Vaughn’s spy thriller Argylle; and Ridley Scott’s drama Napoleon.

This story follows a November 2022 report that Amazon was also planning to spend $1 billion on movies in theaters. But Amazon’s ambitions might have been hampered by its focus on efficiency amid a challenging economic climate.

Apple has good reason to dip its toes into theatrical releases:

• Attract A-list Hollywood talent. Regardless of how popular New Hollywood streaming has become, Hollywood stars still prefer seeing their films distributed in theaters first. Nothing quite beats the big screen for a star to make a splash and generate bigger income streams. Movies in theaters are still major events that appeal to the big Hollywood names.
• Drive subscribers for Apple TV+, Apple’s streaming service. Theatrical releases can create buzz prior to their release to streaming, which New Hollywood has been discovering in recent months. For example, The Batman earned $750 million globally before Warner Brothers premiered the film the HBO Max streaming service. The Batman then enjoyed a first-week viewership of an estimated 4.1 million households, the second best first-week for a theatrical release on HBO Max.
• Beat Netflix. Apple is still playing catch-up in the streaming wars, but the company is making good progress with a steady release of popular TV programs. But movies are still largely unchartered territory for Apple. Theaters give Apple a way to give its movies much more visibility and buzz — not to mention big money — before they go to streaming. By contrast, Netflix continues to insist on a streaming-first strategy with movie releases. The company has occasionally distributed movies in theaters prior to streaming (e.g., Glass Onion: A Knives Out Mystery), leaving a lot of money on the table by foregoing lengthy theatrical release windows. Apple sees an opportunity to exploit a Netflix vulnerability.

Apple’s ace in the hole has always been cash and patience. It use both assets to steadily turn Apple Music into a global music streaming powerhouse. Apple is apparently once again doing the same as it becomes a New Hollywood player.

Meanwhile, movie theaters are still in recovery mode following a disastrous drop in attendance during the worst of the Covid-19 pandemic. Big Tech to the rescue?