Apple to spend $1 billion making movies for theaters, matching Amazon: Report
Apple (AAPL) is leaning into the theatrical experience as it looks to establish itself as a serious player in Hollywood.
According to a new report from Bloomberg, the tech behemoth plans to spend $1 billion a year to produce movies that will be released in theaters, and has already approached movie studios about partnering on certain titles for releases this year and in the future.
Although plans are still being finalized, the company wants to air movies in thousands of theaters for at least one month — bucking its previous strategy of streaming exclusives and limited box office releases.
Potential films includes Martin Scorsese’s "Killers of the Flower Moon," Matthew Vaughn's "Argylle," and Ridley Scott’s "Napoleon," the report noted.
The report sent shares of theatrical giants like AMC (AMC), IMAX (IMAX) and Cinemark (CNK) higher in early trading on Thursday, gaining as much as 5%, 5%, and 8.5%, respectively.
Apple did not immediately respond to Yahoo Finance's request for comment.
'The pendulum is certainly swinging back'
This report comes after Apple rival Amazon (AMZN) formulated similar plans to invest $1 billion to produce 12-15 movies a year exclusively for theaters, Bloomberg reported in November.
Amazon closed its $8.5 billion deal to acquire MGM early last year.
"Now that streaming has begun to mature, the pendulum is certainly swinging back toward a balance as these distributors see the kind of success they've been leaving on the table with an all-in approach to streaming," Shawn Robbins, chief analyst at Box Office Pro, told Yahoo Finance at the time.
More streamers committing to the "lucrative" theatrical window will also help fill in calendar gaps for cinemas, in Robbins' view.
Theaters, still reeling from the pandemic, have yet to see ticket sales bounce back 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.
However, investments from companies like Amazon and Apple could help the battered industry recover at a faster pace.
"Comcast's Universal spent about $1 billion a year in 2018-19 on film releases, generating some $1.6 billion in average domestic box-office receipts. This suggests that Apple and Amazon could each bring in roughly $1-$1.5 billion in ticket sales, boosting the box office by over 20% vs. an estimated $8.3-$8.5 billion in 2023," Geetha Ranganathan, Bloomberg Intelligence media analyst, wrote in reaction to the news.
Ranganathan added the developments could also up the ante for Netflix (NFLX), which has been largely resistant to the theatrical window.
Big tech increasing streaming investments
Apple and Amazon's reported plans comes at a time when many media giants have pulled back on spending in favor of profitability. Apple and Amazon have increased their respective streaming and content investments, while cutting costs in other areas.
Most recently, Amazon revealed it will be cutting 9,000 jobs after laying off 18,000 employees in January. Bloomberg reported Apple has pushed back product launches, delayed bonuses, and cut budgets in order to avoid layoffs.
As Apple looks to increase its streaming presence, the company has 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.
On Wednesday, the company announced it will now require a $6.99 subscription to stream MLB games on Apple TV+. Previously, users were able to watch the games for free after signing up for an account.
Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at email@example.com
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