APPLE TV+ JUMPS INTO THEATRICAL MOVIE DISTRIBUTION


Most movie theater stocks got a nice bump the last couple of days after Bloomberg reported on Thursday that Apple planned to spend $1 billion per year producing movies that will be released widely in theaters. This is welcome news since most theater chains still haven’t recovered from the pandemic. Still, in this world of $100-$200 million streaming movies, $1 billion might not go as far as some hope.

Performance of select theater stocks, March 22-March 24

Stock Ticker March 22 March 24 Change Change

AMC Ent. Holdings AMC $4.34 $4.47 $0.13 3.0%

Cinemark Holdings CNK $12.52 $13.42 $0.90 7.2%

Cineplex CGX.TO $7.70 $8.12 $0.42 5.5%

IMAX IMAX $17.62 $18.07 $0.45 2.6%

The report stated that a few movies will be released widely in theaters this year, but it will ramp up production in future years so it can focus on more theatrical releases. Apple
AAPL
TV+ recently hired Disney+ President of Content and Marketing Ricky Strauss, likely in anticipation of this.

Netflix
NFLX
and Apple have historically released some movies as a limited release so that they could qualify for Oscar nominations, but few films have been marketed as wide releases as they prefer to drive traffic to their own streaming platforms.

Although Netflix still appears to be focusing on producing films and TV shows for its streaming platform, this is an about-face for Apple, which is trying to gain more power in Hollywood following Amazon’s
AMZN
$8.45 billion acquisition of the renowned MGM studio. Amazon has announced its own $1 billion planned theatrical slate, releasing 12-15 movies per year.

Apple’s push into theatrical could enable it to attract more stars to its slate without having to overpay because many actors feel that films that are released widely in theaters boosts their prestige. They also help them to build their brand better than being in a streaming only film or a limited release would.

That being said, film budgets have been so bloated on many of these star-packed streaming films that $1 billion may not go a long way. Apple TV+ has spent more than $100 million on Ridley Scott’s Napoleon, with Joaquin Phoenix playing Napoleon Bonaparte. In addition, Killers of the Flower Moon, starring Leonardo DiCaprio, Brendan Frasier and Martin Scorsese has a budget estimated at $225 million.

Apple TV+ bought the film from Paramount Pictures, who had become concerned about its rapidly escalating budget. The film will be co-distributed by Apple TV+ and Paramount when it debuts in theaters later this year.

Argylle, the $200+ million star-studded film with Henry Cavill, Sam Rockwell, Bryce Dallas Howard, Bryan Cranston, Catherine O’Hara, John Cena, Samuel L. Jackson and Dua Lipa making her acting debut, also is expected to be a 2023 theatrical release.



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