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For the first time, Apple (AAPL) financed and produced a major full-length movie, “Killers of the Flower Moon,” a 3-1/2 hour film that involved director Martin Scorsese and actors Leonardo DiCaprio and Robert De Niro. The movie, due out in theaters on October 20, is the most expensive ever released by Apple’s four-year-old studio and a sign the company is expanding further into movie production.
Apple’s new strategy is to expand into movie-making and boost its presence in video streaming. It plans to spend $1 billion a year on movies that will appear in theaters for weeks before they’re available on its streaming service. Apple will release the new “Killers of the Flower Moon” movie in more than 10,000 theaters later this month and, at least 45 days later, put the movie on its Apple TV+ streaming service. It plans a similar strategy with its Napolean movie in November and its Argylle movie in February.
Apple hopes to make itself a destination for premier filmmakers who want audiences to see their work on big screens. Apple believes that supporting its movies in multimillion-dollar marketing campaigns could turn a portion of moviegoers into buying new Apple TV+ subscriptions.
Initially, Apple is willing to lose money on its movie plans. It spent between $200 million and $250 million on the production of the “Killers of the Flower Moon” movie, and according to Boxoffice Pro, the movie is expected to open with $29 million to $38 million in ticket sales, far below what legacy studios would typically expect from a film of such a budget.
Since the end of the pandemic, attendance at movie theaters is down roughly 33% from pre-pandemic levels. Imax Corp, which is set to play some of Apple’s movies on its large-format screens around the world, believes Apple’s foray into adult-focused event films that have been missing at movie theaters could draw viewers back to the big screen, saying, “The film industry has reawakened to the value of theatrical-filmmakers that audiences want, and it’s irreplaceable as a global launch platform.”
According to Nielsen, Apple TV+ currently accounts for less than 1% of TV viewing in the U.S. However, Ampere Analysis estimates Apple TV+ subscribers will climb to 40 million by the end of the year, saying, “Apple has a unique strategy of curated, high-budget, premium original content.” Apple thinks Hollywood films and TV shows on Apple TV+ can keep iPhone and iPad users interacting with its devices more, boosting its services. The strategy is already successful, transforming Apple’s services into substantial profit makers. Apple made $21.2 billion last quarter from its service divisions, including iCloud, Music, and Arcade.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
