Apple will spend $1 billion annually on films to break into theaters

In a bold move to boost its reputation in Hollywood and entice customers to its streaming service, Apple Inc. plans to invest $1 billion annually in the production of films that will be released in theaters.

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According to the people, who declined to be named because the plans are confidential, Apple has approached film studios about collaborating. This could enable them to distribute a few films in theaters this year and a slate of further movies in the future. The list of probable releases also includes Ridley Scott's Napoleon and Martin Scorsese's drama Killers of the Flower Moon, which stars Leonardo DiCaprio. Apple's spokesman declined to comment.

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The investment represents a huge increase from prior years. The majority of Apple's prior original films have either been released exclusively on the streaming service or in a small number of cinemas. In spite of the fact that no plans are in stone, the company has promised to screen movies in thousands of theaters for a minimum of a month.

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Apple has yet to announce how it will release these films in theaters. The company has engaged outside distributors because it lacks the internal competence to simultaneously release movies in thousands of theaters around the world. Nevertheless, Apple must first agree with its partners on distribution costs and marketing budgets. Movie studios can spend up to $100 million or more marketing their most popular films, significantly more than streaming platforms do.

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Due to the fact that the Scorsese film was created in that studio, Paramount Pictures will release it there and charge a 10% distribution fee. No other titles will be distributed by the studio on Apple.

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Apple TV+ spends a larger portion of its cash on TV shows than the majority of streaming services. The comedy series Ted Lasso was its first major success. Yet, Apple has supported movies ever since the establishment of its Hollywood studio. The smartphone manufacturer's goals in the movie industry have expanded ever since CODA 2021 won the Oscar Award for best picture. Apple released that film simultaneously in cinemas and on TV+ after purchasing it at the Sundance Film Festival for a record-breaking $25 million.

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For its earlier films, the kind of theatrical release envisioned for its next titles was not given. CODA's box office revenue was less than $2 million. Tom Holland starred in the criminal drama Cherry, which debuted in a few cinemas in 2021 for a brief period of time. Apple did not disclose its ticket sales.

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Although lowering expenditures elsewhere, tech giants Apple and Amazon.com Inc. are increasing their investment in entertainment. While Apple is reducing costs without letting personnel go as far, Amazon has sacked hundreds of employees.

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Apple's intentions will help theater chains that are currently battling pandemic recovery. Ticket sales are still around a third below 2019 levels, and the financial health of two of the biggest businesses is precarious. The largest movie theater operator in the world, AMC Entertainment Holdings Inc., has sought to acquire additional funds by selling shares after its competitor, Cineworld Group Plc, declared bankruptcy last year. Instead of blaming moviegoers' lack of desire to visit theaters again, the chains have consistently cited the lack of studio-available movies as the cause of their problems.

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There will be more assistance in the near future. According to a story from Bloomberg News from last year, Amazon, which paid $8.5 billion to acquire Metro-Goldwyn-Mayer, the production company that created the James Bond films, plans to release 12 to 15 films a year in theaters. Warner Bros., Paramount, and Walt Disney Co. After experimenting with solely distributing movies via streaming services, Discovery Corp. is trying to expand the number of films it produces for cinemas.

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Netflix Inc. is the one outlier in this return to theaters; it wants its films to be available both in theaters and online simultaneously, or within a few weeks. Major movie theater chains rejected this agreement. Compared to Apple or Amazon, Netflix spends more on original movies.