HomeLatestBehind Apple and Amazon’s Billion-Dollar Bet on Movie Theaters
Behind Apple and Amazon’s Billion-Dollar Bet on Movie Theaters
April 29, 2023
You know what’s cool? A billion dollars. Theater stocks jumped when Amazon pledged to spend that amount on movies destined for the big screen last year. Now Apple reportedly plans to take a similar chunk of its multibillion-dollar content budget and allocate it to theatrical releases.
Netflix alone, still steadfast in its commitment to treating theatrical as a sop to throw at feisty actors or fussy awards-show rulemakers, risks losing out on high-level talent and top-tier cultural impact — as well as the financial rewards from a film that moves the needle on streaming.
Two years after “Godzilla vs. Kong” proved the multiplex wouldn’t go down without a fight, an old-fashioned wide release now signals seriousness in the streaming wars. Executives at the major Hollywood studios have all pointed to strong box office as contributing to streaming views.
When Amazon bought MGM last year, it didn’t just get the James Bond franchise and other IP. It got a full-fledged distribution infrastructure to supplement the one Amazon Studios was building in-house. The industry took Amazon’s big investment — MGM cost it $8.45 billion — and commitment to theatrical distribution as a sign that it was a serious player in entertainment. The April 5 theatrical release of Amazon Studios’s Matt Damon-Ben Affleck dramedy “Air,” its first theater-only release since 2019 and the first since the MGM deal closed, is a test of the strategy.
While Amazon readies “Air,” Apple’s plans are more amorphous. Only one of its upcoming films, Martin Scorsese’s “Killers of the Flower Moon,” has an announced distribution partner — in that case, Paramount. Yet it needs to do something: Experts agree that Apple TV+ suffers from a brand awareness problem which is limiting the return it’s getting on its relatively small investment in content. Releasing movies in theaters, with the attendant buzz and lift in perceived value it gives films, could be part of the answer. Apple didn’t immediately respond to TheWrap’s request for comment.
Netflix has built out in-house distribution capabilities and hired Spencer Klein from Fox in 2019 to oversee theatrical distribution, but it’s used its powers sparingly on limited releases, to the frustration of theater owners who’d like to see more of its fare play for longer windows. As far back as May 2021, Netflix was giving high-profile, non-awards season titles like Zack Snyder’s “Army of the Dead” week-long engagements on Cinemark screens to boost their profile. Yet insiders believe Netflix left $100 million on the table with the short release of “Glass Onion: Knives Out” last fall, with filmmaker Rian Johnson pushing for a longer theatrical run for the sequel.
Will Apple partner with Hollywood or fly solo?
For a company Apple’s size, laying out $1 billion on movies is a relatively small investment. It’s even small against its annual $6.5 billion overall spending on content. The real question is whether Apple will follow Amazon and Netflix and build its own distribution infrastructure or sign a big partnership with an existing player.
Apple’s Paramount distribution deal for “Killers of the Flower Moon” is a legacy of the studio coming to Apple to help finance the expensive and commercially risky Leonardo DiCaprio vehicle.
“You can pay a studio a distribution fee, but for a company as big as Apple, I cannot see them handing over creative control in terms of marketing and promotion,” a distribution insider told TheWrap, speaking on condition of anonymity to preserve industry relationships.
And Apple is Apple, a company famous for seeking control of everything from the chips inside its phones to the venues where it unveils products. That makes it a cultural likelihood that Apple will eventually build its own distribution arm. Spending millions on new talent in this arena is likely to feel safer for Apple than allowing a third party a hand in the marketing of Apple-branded entertainment. But such an investment would only make sense if Apple were to make a sustained push to place movies in theaters.
Will Netflix cave to peer pressure?
So far, Netflix co-CEOs Ted Sarandos and Greg Peters haven’t shown signs of straying from co-founder Reed Hastings’ playbook. Netflix Films chairman Scott Stuber remains likewise adamant about producing content for streaming subscribers. Yet the company now risks becoming the last one in the pool, as Amazon and Apple seem poised to build stronger relationships with cinema owners with a steady supply of movies.
Netflix’s key advantage is a massive subscriber base, which drives viewership for non-franchise fare like “The Unforgivable,” “Don’t Look Now” and “The Adam Project.” But films like those tend to fade from the cultural consciousness in just a few weeks, to the frustration of stars and filmmakers.
“It’ll be hard to ignore if Amazon or Apple end up playing a significant role in helping mid-range and prestige films experience even more of a box office comeback in the next few years,” said Boxoffice Pro chief analyst Shawn Robbins.
If Netflix’s rivals are offering full-throated theatrical releases, both in terms of wide distribution and conventional multiplex-friendly promotion, offering a week in 600 theaters isn’t going to cut it.
If this all happens, major theater chains like AMC, Regal and Cinemark could potentially see two to three dozen more films in their multiplexes on an annual basis — particularly the non-tentpole type that help fill out the calendar and steady box office booms and busts.
This was the idea a decade ago when Open Road and STX Entertainment popped up on the scene with the promise of delivering non-franchise, star-driven studio programmers to keep theaters busier in between major releases. That backfired as studios embraced year-round tentpole scheduling and casual moviegoers gravitated to streaming and left non-event films fighting for box office crumbs.
The hope is that a theatrically rejuvenated Warner Bros. Discovery, a Disney no longer as wedded to Disney+ and Hulu, and two major tech streamers seeing theatrical releases as a strategic advantage will contribute to a genuine content windfall for multiplexes.
Some in Hollywood have come to see a theatrical release as a marketing campaign that pays for itself. That was the logic in Warner Bros.’ comparatively “responsible” multiplex release for “Magic Mike’s Last Dance,” as domestic distribution chief Jeff Goldstein explained it to TheWrap: enough to “cover promotional costs and perhaps earn a little money on the side.”
The $56 million earned by “Last Dance” is 100% more than Warner Bros. Discovery and the theater chains would have banked had the Channing Tatum film gone straight to HBO Max. And that’s before DVD, VOD and related revenue opportunities.
These confluent factors may provide theaters with a welcome flow, if not a deluge, of varied films on a regular basis, films that will still move concession sales even if they do not break box office records.
The doom and gloom chatter around movie theaters, which predated COVID, seems to have subsided in the face of the industry’s bounceback. The prestige and promotional value of a theatrical release have now made it an ironically vital tool in the streaming era. Studios and tech companies alike are learning that it’s no longer theaters versus streaming. It’s only Netflix that might need a copy of the memo.
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